N-4/A 1 d451526dn4a.txt DEFINED INCOME (PDI) NY Filed with the Securities and Exchange Commission on February 12, 2013 Registration No. 333-184542 Investment Company Act No. 811-07975 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. 2 [X] Post-Effective Amendment No. [_] and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 132 [X] ----------------- PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT (Exact Name of Registrant) ----------------- PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (Name of Depositor) ----------------- 213 WASHINGTON STREET NEWARK, NEW JERSEY 07102-2992 (973) 802-7333 (Address and telephone number of depositor's principal executive offices) SUN-JIN MOON, ESQ. PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY 213 WASHINGTON STREET NEWARK, NEW JERSEY 07102-2992 (973) 802-6000 (Name, address and telephone number of agent for service) ----------------- COPIES TO: LYNN K. STONE VICE PRESIDENT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY 213 WASHINGTON STREET NEWARK, NJ 07102-2992 (203) 402-1382 ----------------- Approximate Date of Proposed Sale to the Public: As soon as practicable after effectiveness of the registration statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Title of Securities Being Registered: Interests in a separate account issued through variable annuity contracts. ================================================================================ PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY A Prudential Financial Company 751 Broad Street, Newark, NJ 07102-3777 PRUDENTIAL DEFINED INCOME (PDI) VARIABLE ANNUITY FLEXIBLE PREMIUM DEFERRED ANNUITY PROSPECTUS: FEBRUARY 14, 2013 This prospectus describes a flexible premium deferred annuity offered by Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey", "we", "our", or "us"), which we refer to as the Prudential Defined Income Variable Annuity ("Annuity"). The Annuity will be offered as an individual annuity contract. Financial Professionals may be compensated for the sale of the Annuity. Selling broker-dealer firms through which the Annuity is sold may impose restrictions (e.g., maximum issue age). Please speak to your Financial Professional for further details. The guarantees provided by the variable annuity contract described in this prospectus are the obligations of and subject to the claims paying ability of Pruco Life of New Jersey. Certain terms are capitalized in this prospectus. Those terms are either defined in the Glossary of Terms or in the context of the particular section. THE SUB-ACCOUNT The Pruco Life of New Jersey Flexible Premium Variable Annuity Account is a Separate Account of Pruco Life of New Jersey, and is the investment vehicle in which your Purchase Payments invested in the Sub-account are held. Currently only one Sub-account is available under the Annuity. The Sub-account offered in connection with the Annuity of the Pruco Life of New Jersey Flexible Premium Variable Annuity Account invests in the AST Long Duration Bond Portfolio ("Portfolio"), a series of the Advanced Series Trust mutual fund. PLEASE READ THIS PROSPECTUS THIS PROSPECTUS SETS FORTH INFORMATION ABOUT THE ANNUITY THAT YOU OUGHT TO KNOW BEFORE INVESTING. PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL FUND. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a replacement for an existing variable annuity or variable life coverage, or a fixed insurance policy, you should consider any surrender or penalty charges you may incur and any benefits you may also be forfeiting when replacing your existing coverage and that this Annuity may be subject to a Contingent Deferred Sales Charge if you elect to surrender the Annuity or take a partial withdrawal. You should consider your need to access the Annuity's Account Value and whether the Annuity's liquidity features will satisfy that need. Please note that if you are investing in this Annuity through a tax-advantaged retirement plan (such as an Individual Retirement Account or 401(k) plan), you will get no additional tax advantage through the Annuity itself. AFTER FEBRUARY 24, 2013, THIS PROSPECTUS MUST BE ACCOMPANIED BY THE APPLICABLE RATE SHEET PROSPECTUS SUPPLEMENT SETTING FORTH THE THEN CURRENT INCOME GROWTH RATE AND INCOME PERCENTAGE RATES, WHICH RATES ARE DEFINED AND DISCUSSED HEREIN. OTHER CONTRACTS We offer a variety of fixed and variable annuity contracts. They may offer features, including investment options, and have fees and charges, that are different from the annuity contracts offered by this prospectus. Not every annuity contract we issue is offered through every selling broker-dealer firm. Upon request, your financial professional can show you information regarding other Pruco Life of New Jersey annuity contracts that he or she distributes. You can also contact us to find out more about the availability of any of the Pruco Life of New Jersey annuity contracts. You should work with your financial professional to decide whether this annuity contract is appropriate for you based on a thorough analysis of your particular needs, financial objectives, investment goals, time horizons and risk tolerance. AVAILABLE INFORMATION We have also filed a Statement of Additional Information dated the same date as this prospectus that is available from us, without charge, upon your request. The contents of the Statement of Additional Information are described at the end of this prospectus - see Table of Contents. The Statement of Additional Information is incorporated by reference into this prospectus. This prospectus is part of the registration statement we filed with the SEC regarding this offering. Additional information on us and this offering is available in the registration statement and the exhibits thereto. You may review and obtain copies of these materials at no cost to you by contacting us. These documents, as well as documents incorporated by reference, may also be obtained through the SEC's Internet Website (www.sec.gov) for this registration statement as well as for other registrants that file electronically with the SEC. Please see the section of this prospectus entitled "How to Contact Us" for our Service Office address. THE ANNUITY IS NOT A DEPOSIT OR OBLIGATION OF, OR ISSUED, GUARANTEED OR ENDORSED BY, ANY BANK, IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN AN ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF VALUE. -------------------------------------------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PRUDENTIAL, PRUDENTIAL FINANCIAL, PRUDENTIAL ANNUITIES AND THE ROCK LOGO ARE SERVICEMARKS OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA AND ITS AFFILIATES. OTHER PROPRIETARY PRUDENTIAL MARKS MAY BE DESIGNATED AS SUCH THROUGH USE OF THE SM OR (R) SYMBOLS. -------------------------------------------------------------------------------- FOR FURTHER INFORMATION CALL: 1-888-PRU-2888 OR GO TO OUR WEBSITE AT HTTP://WWW.PRUDENTIALANNUITIES.COM Prospectus dated: Statement of Additional February 14, 2013 Information dated: February 14, 2013 PLEASE SEE OUR IRA, ROTH IRA AND FINANCIAL DISCLOSURE STATEMENTS ATTACHED TO THE BACK COVER OF THIS PROSPECTUS. CONTENTS GLOSSARY OF TERMS............................................................... 1 SUMMARY OF CONTRACT FEES AND CHARGES............................................ 3 EXPENSE EXAMPLES................................................................ 5 SUMMARY......................................................................... 6 INVESTMENT OPTION............................................................... 8 DEFINED INCOME BENEFIT.......................................................... 9 PURCHASING YOUR ANNUITY......................................................... 15 REQUIREMENTS FOR PURCHASING THE ANNUITY........................................ 15 SETTING UP YOUR ANNUITY........................................................ 16 RIGHT TO CANCEL................................................................ 17 SALARY REDUCTION PROGRAMS...................................................... MANAGING YOUR ANNUITY........................................................... 18 CHANGE OF OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS........................ 18 MANAGING YOUR ACCOUNT VALUE..................................................... 20 FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS.......... 20 ACCESS TO YOUR ACCOUNT VALUE.................................................... 21 TYPES OF DISTRIBUTIONS AVAILABLE TO YOU........................................ 21 SYSTEMATIC WITHDRAWALS FROM YOUR ANNUITY DURING THE ACCUMULATION PERIOD........ 21 SYSTEMATIC WITHDRAWALS UNDER SECTIONS 72(t)/72(q) OF THE INTERNAL REVENUE CODE. 21 REQUIRED MINIMUM DISTRIBUTIONS................................................. 21 SURRENDERS...................................................................... 23 SURRENDER VALUE................................................................ 23 MEDICALLY-RELATED SURRENDERS................................................... 23 ANNUITY OPTIONS................................................................. 24 DEATH BENEFIT................................................................... 26 DEATH BENEFIT UNDER THE DEFINED INCOME BENEFIT................................. 26 DEATH BENEFIT UPON TERMINATION OF THE DEFINED INCOME BENEFIT................... 26 GENERAL DEATH BENEFIT PROVISIONS............................................... 26 SPOUSAL CONTINUATION OF YOUR ANNUITY........................................... 27 PAYMENT OF DEATH BENEFITS...................................................... 27 FEES, CHARGES AND DEDUCTIONS.................................................... 29 ANNUITY PAYMENT OPTION CHARGES................................................. 30 EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES...................................... 30 VALUING YOUR INVESTMENT......................................................... 31 VALUING THE SUB-ACCOUNT........................................................ 31 PROCESSING AND VALUING TRANSACTIONS............................................ 31 TAX CONSIDERATIONS.............................................................. 33 OTHER INFORMATION............................................................... 42 PRUCO LIFE OF NEW JERSEYAND THE SEPARATE ACCOUNT............................... 42 LEGAL STRUCTURE OF THE UNDERLYING FUND......................................... 43 DISTRIBUTION OF ANNUITIES OFFERED BY PRUCO LIFE OF NEW JERSEY.................. 44 FINANCIAL STATEMENTS........................................................... 47 INDEMNIFICATION................................................................ 47 LEGAL PROCEEDINGS.............................................................. 47 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............................ 49 HOW TO CONTACT US.............................................................. 49 APPENDIX A - ACCUMULATION UNIT VALUES........................................... A-1 APPENDIX B - DEFINED INCOME BENEFIT SAMPLE CALCULATIONS......................... B-1
(i) GLOSSARY OF TERMS We set forth here definitions of some of the key terms used throughout this prospectus. In addition to the definitions here, we also define certain terms in the section of the prospectus that uses such terms. ACCOUNT VALUE: The total value of all allocations to the Sub-account on any Valuation Day. ACCUMULATION PERIOD: The period of time from the Issue Date through the last Valuation Day immediately preceding the Annuity Date. ANNUITANT: The natural person upon whose life annuity payments made to the Owner are based. ANNUITIZATION: Annuitization is the process by which you "annuitize" your Account Value. When you annuitize, we apply the Account Value to one of the available annuity options to begin making periodic payments to the Owner. ANNUITY DATE: The date on which we apply your Account Value to the applicable annuity option and begin the payout period. As discussed in the Annuity Options section, there is an age by which you must begin receiving annuity payments, which we call the "Latest Annuity Date." ANNUITY YEAR: The first Annuity Year begins on the Issue Date and continues through and includes the day immediately preceding the first anniversary of the Issue Date. Subsequent Annuity Years begin on the anniversary of the Issue Date and continue through and include the day immediately preceding the next anniversary of the Issue Date. BENEFICIARY(IES): The natural person(s) or entity(ies) designated as the recipient(s) of the Death Benefit or to whom any remaining period certain payments may be paid in accordance with the annuity payout options section of this Annuity. CODE: The Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated thereunder. CONTINGENT DEFERRED SALES CHARGE (CDSC): This is a sales charge that may be deducted when you make a surrender or take a partial withdrawal from your Annuity. We refer to this as a "contingent" charge because it is imposed only if you surrender or take a withdrawal from your Annuity. The charge is a percentage of each applicable Purchase Payment that is being surrendered or withdrawn. EXCESS INCOME: All or any portion of a Lifetime Withdrawal that exceeds the Guaranteed Income Amount for that Annuity Year is considered excess income ("Excess Income"). Each withdrawal of Excess Income proportionally reduces the Guaranteed Income Amount available for future Annuity Years. DUE PROOF OF DEATH: Due Proof of Death is satisfied when we receive all of the following in Good Order: (a) a death certificate or similar documentation acceptable to us; (b) all representations we require or which are mandated by applicable law or regulation in relation to the death claim and the payment of death proceeds; and (c) any applicable election of the method of payment of the Death Benefit, if not previously elected by the Owner, by at least one Beneficiary. FREE LOOK: The right to examine your Annuity, during a limited period of time, to decide if you want to keep it or cancel it. The length of this time period, and the amount of refund, depends on applicable law and thus may vary. In addition, there is a different Free Look period that applies if your Annuity is held within an IRA. In your Annuity contract, your Free Look right is referred to as your "Right to Cancel." FIRST DEATH: The first of the Spousal Designated Lives to die, provided they are each other's spouse at that time. GOOD ORDER: Good Order is the standard that we apply when we determine whether an instruction is satisfactory. An instruction will be considered in Good Order if it is received at our Service Office: (a) in a manner that is satisfactory to us such that it is sufficiently complete and clear that we do not need to exercise any discretion to follow such instruction and complies with all relevant laws and regulations; (b) on specific forms, or by other means we then permit (such as via telephone or electronic submission); and/or (c) with any signatures and dates as we may require. We will notify you if an instruction is not in Good Order. GUARANTEED INCOME AMOUNT (GIA): This is the annual amount of income you are eligible to receive for life under the Defined Income Benefit. The initial Guaranteed Income Amount is determined by multiplying the applicable Income Percentage by the Account Value on the Issue Date. INCOME GROWTH RATE: The Income Growth Rate is the guaranteed compounded rate of return credited to your Guaranteed Income Amount up until your first Lifetime Withdrawal. The Income Growth Rate is set at Annuity issue, and will not change for the life of your Annuity. 1 INCOME PERCENTAGE: The Income Percentage is used to determine the Guaranteed Income Amount associated with each Purchase Payment when it is allocated to the Annuity. The percentage based on the attained age of the Single Designated Life, or the younger of the Spousal Designated Lives on the date each Purchase Payment is allocated to the annuity. The income percentages are set at Annuity issue and will not change for the life of your Annuity. INVESTMENT OPTION: The Sub-account as of any given time to which Account Value may be allocated. ISSUE DATE: The effective date of your Annuity. LIFETIME WITHDRAWAL: Any withdrawal of assets from your Annuity that you do not designate as a Non-Lifetime Withdrawal. Once you have taken your first Lifetime Withdrawal from the Annuity, all further withdrawals will be deemed to be Lifetime Withdrawals. OWNER: With an Annuity issued as an individual annuity contract, the Owner is either an eligible entity or person named as having ownership rights in relation to the Annuity. PURCHASE PAYMENT: A cash consideration in currency of the United States of America given to us in exchange for the rights, privileges, and benefits of the Annuity. NON-LIFETIME WITHDRAWAL: A withdrawal of assets from your Annuity that you elect and designate as such by you. REMAINING DESIGNATED LIFE: A natural person who must have been listed as one of the Spousal Designated Lives on the Issue Date. A Spousal Designated Life will become the Remaining Designated Life upon the earlier of the First Death, provided that they are each other's spouses at that time, or divorce from the other Spousal Designated Life while the Defined Income Benefit is in effect. SERVICE OFFICE: The place to which all requests and payments regarding the Annuity are to be sent. We may change the address of the Service Office at any time, and will notify you in advance of any such change of address. Please see the section of this prospectus entitled "How to Contact Us" for the Service Office address. SEPARATE ACCOUNT: Referred to as the "Variable Separate Account" in your Annuity, this is the variable Separate Account(s) shown in the Annuity. SINGLE DESIGNATED LIFE: The natural person who is the measuring life for the Defined Income Benefit that is designated at purchase of the annuity and cannot be changed for the life of the contract. SPOUSAL DESIGNATED LIVES: The natural persons who are the measuring lives for the Defined Income Benefit that are designated at purchase of the annuity and cannot be changed for the life of the contract. SUB-ACCOUNT: A division of the Separate Account. SURRENDER VALUE: The Account Value, less any applicable CDSC, any applicable tax charges, and any Annual Maintenance Fee. UNIT: A share of participation in the Sub-account used to calculate your Account Value prior to the Annuity Date. VALUATION DAY: Every day the New York Stock Exchange is open for trading or any other day the Securities and Exchange Commission requires mutual funds or unit investment trusts to be valued. WE, US, OUR: Pruco Life Insurance Company of New Jersey. YOU, YOUR: The Owner(s) shown in the Annuity. 2 SUMMARY OF CONTRACT FEES AND CHARGES The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Annuity. The first table describes the fees and expenses that you will pay at the time you surrender the Annuity, or take a partial withdrawal.
------------------------------------------------------------------------------------------ ANNUITY OWNER TRANSACTION EXPENSES ------------------------------------------------------------------------------------------ CONTINGENT DEFERRED SALES CHARGE /1/ ------------------------------------------------------------------------------------------ AGE OF PURCHASE PAYMENT BEING WITHDRAWN PERCENTAGE APPLIED AGAINST PURCHASE PAYMENT BEING WITHDRAWN ------------------------------------------------------------------------------------------ LESS THAN 1 YEAR OLD 7.0% ------------------------------------------------------------------------------------------ 1 YEAR OLD OR OLDER, BUT NOT YET 2 YEARS OLD 7.0% ------------------------------------------------------------------------------------------ 2 YEAR OLD OR OLDER, BUT NOT YET 3 YEARS OLD 6.0% ------------------------------------------------------------------------------------------ 3 YEAR OLD OR OLDER, BUT NOT YET 4 YEARS OLD 6.0% ------------------------------------------------------------------------------------------ 4 YEAR OLD OR OLDER, BUT NOT YET 5 YEARS OLD 5.0% ------------------------------------------------------------------------------------------ 5 YEAR OLD OR OLDER, BUT NOT YET 6 YEARS OLD 5.0% ------------------------------------------------------------------------------------------ 6 YEAR OLD OR OLDER, BUT NOT YET 7 YEARS OLD 5.0% ------------------------------------------------------------------------------------------ 7 YEARS OLD OR OLDER 0.0% ------------------------------------------------------------------------------------------
1 The years referenced in the above CDSC tables refer to the length of time since a Purchase Payment was made (i.e., the age of the Purchase Payment). Contingent Deferred Sales Charges are applied against the Purchase Payment(s) being withdrawn. Thus, the appropriate percentage is multiplied by the Purchase Payment(s) being withdrawn to determine the amount of the CDSC. Purchase Payments are withdrawn on a "first-in, first-out" basis. The following table describes the fees and charges that you will pay periodically during the time that you own your Annuity, not including the underlying portfolio annual fees and expenses.
----------------------------------------------------------------- PERIODIC FEES AND CHARGES ----------------------------------------------------------------- ANNUAL MAINTENANCE FEE /2/ Lesser of $50 or 2% of Account Value
---------------------------------------------------- ANNUALIZED INSURANCE FEES/CHARGES (assessed daily as a percentage of the Sub-account) ---------------------------------------------------- MAXIMUM CURRENT MORTALITY & EXPENSE RISK CHARGE 0.95% 0.95% ---------------------------------------------------- ADMINISTRATION CHARGE 0.15% 0.15% ---------------------------------------------------- DEFINED INCOME BENEFIT CHARGE 1.50% /3/ 0.80% ---------------------------------------------------- TOTAL INSURANCE CHARGE /4/ 2.60% /3/ 1.90% ----------------------------------------------------
2 Assessed annually on the Annuity's anniversary date or upon surrender. Only applicable if the sum of the Purchase Payments at the time the fee is due is less than $100,000. 3 The Defined Income Benefit Charge may be increased one or more times on or after the 5th anniversary of the Issue Date up to the maximum annual rate of 1.50%. We will notify you in advance of any change to the charge. 4 The Insurance Charge has three components: (1) a Mortality & Expense Risk Charge (2) an Administration Charge, and (3) a Defined Income Benefit Charge. The Defined Income Benefit is neither optional nor revocable. However, if the Defined Income Benefit terminates according to the terms of the benefit, then the Defined Income Benefit Charge component of the Insurance Charge will no longer be assessed.
---------------------------------------------------- TOTAL ANNUAL MUTUAL FUND OPERATIONG EXPENSES ----------------------------------------------------
The next item shows the total annual operating expenses charged by the underlying mutual fund ("Portfolio") that you may pay periodically during the time that you own your Annuity. The "Total Annual Portfolio Operating Expenses" reflect the combination of the underlying Portfolio's investment management fee, other expenses, 12b-1 fees, and certain other expenses. Each figure is stated as a percentage of the underlying Portfolio's average daily net assets. 3 See the prospectus or statement of additional information of the underlying Portfolio for further details. The current prospectus and statement of additional information for the underlying Portfolio can be obtained by calling 1-888-PRU-2888. ----------------------------------------------------------------- TOTAL ANNUAL UNDERLYING MUTUAL FUND OPERATING EXPENSE /1/ 0.84% -----------------------------------------------------------------
------------------------------------------------------------------------ UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES (as a percentage of the average net assets of the underlying Portfolio) ------------------------------------------------------------------------ Total Distribution Annual and/or Portfolio Management Other Service Fees Operating Fees Expenses/ 1/ (12b-1 fees) Expenses ----------------------------------------------------------------------- Advanced Series Trust AST Long Duration Bond Portfolio 0.70% 0.04% 0.10% 0.84%
1 The Portfolio will commence operations on or about February 25, 2013. Estimate based in part on assumed average daily net assets of $500 million for the Portfolio for the fiscal year ending December 31, 2013. 4 EXPENSE EXAMPLES These examples are intended to help you compare the cost of investing in this Annuity with the cost of investing in other variable annuity contracts. Below are examples showing what you would pay cumulatively in expenses at the end of the stated time periods had you invested $10,000 in the Annuity and your investment has a 5% return each year. The examples reflect the following fees and charges as described in "Summary of Contract Fees and Charges." . Maximum Total Insurance Charge . Contingent Deferred Sales Charge (if applicable) . Annual Maintenance Fee The examples also assume the following for the period shown: . Investment of Account Value in the Sub-account, with the gross total operating expenses remaining the same each year /1/ . You make no withdrawals of Account Value . No tax charge applies Amounts shown in the examples are rounded to the nearest dollar. THE EXAMPLES ARE ILLUSTRATIVE ONLY. THEY SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE UNDERLYING PORTFOLIO. If you surrender your Annuity at the end of the applicable time period:
1 YR 3 YRS 5 YRS 10 YRS ------------------------------- $1,092 $1,795 $2,522 $4,200 -------------------------------
If you do not surrender your Annuity, or if you annuitize your Annuity:
1 YR 3 YRS 5 YRS 10 YRS ----------------------------- $392 $1,195 $2,022 $4,200 -----------------------------
1 Gross total operating expenses for the Portfolio are based, in part, on estimated amounts for the current fiscal year. ACCUMULATION UNIT VALUES No table of accumulation unit values is included in this prospectus as this Annuity was not available for investment as of December 31, 2012. 5 SUMMARY This Summary describes key features of the Annuity offered in this prospectus. It is intended to give you an overview, and to point you to sections of the prospectus that provide greater detail. You should not rely on the Summary alone for all the information you need to know before purchasing the Annuity. You should read the entire prospectus for a complete description of the Annuity. Your Financial Professional can also help you if you have questions. THE ANNUITY: The variable annuity contract issued by Pruco Life of New Jersey is a contract between you, the Owner, and Pruco Life of New Jersey, an insurance company. It is designed for retirement purposes, or other long-term investing, to help you save money for retirement, on a tax deferred basis, and provide income during your retirement. Although this prospectus describes key features of the variable annuity contract, the prospectus is a distinct document, and is not part of the Annuity. Investing in a variable annuity involves risk and you can lose your money. On the other hand, investing in a variable annuity can provide you with the opportunity to grow your money through participation in an "underlying" mutual fund. GENERALLY SPEAKING, VARIABLE ANNUITIES ARE INVESTMENTS DESIGNED TO BE HELD FOR THE LONG TERM. WORKING WITH YOUR FINANCIAL PROFESSIONAL, YOU SHOULD CAREFULLY CONSIDER WHETHER A VARIABLE ANNUITY IS APPROPRIATE FOR YOU, GIVEN YOUR LIFE EXPECTANCY, NEED FOR INCOME, AND OTHER PERTINENT FACTORS. INVESTMENT OPTION: The AST Long Duration Bond Sub-account is the only Investment Option available under the Annuity. The Sub-account invests in the AST Long Duration Bond Portfolio, an underlying mutual fund of Advanced Series Trust. The underlying mutual fund is described in its own prospectus, which you should read before investing. There is no assurance that the Investment Option will meet its investment objective. Please note that the Annuity has only the one Investment Option; the AST Long Duration Bond Portfolio, which seeks to maximize total return consistent with the preservation of capital. The Annuity does not provide a diverse set of investment choices that would provide the option to allocate money among a variety of investment choices with different investment styles, objectives, strategies and risks. Please see "Investment Option," and "Managing Your Account Value" for information. LIVING BENEFIT: The Defined Income Benefit is a guaranteed lifetime withdrawal benefit, under which, subject to the terms of the benefit, we guarantee you the ability to take a certain annual withdrawal amount until the death of a certain designated life (or lives) regardless of the impact of Sub-account performance on the Account Value, subject to our rules regarding the timing and amount of withdrawals. This benefit also provides for a death benefit equal to the greater of the Account Value and the Return of Purchase Payments Amount, subject to its terms. While the Defined Income Benefit is in effect, a change in the Owner/Annuitant designations may cause the Defined Income Benefit to terminate, and you would lose all associated benefits. You should carefully consider whether to purchase the Annuity if you anticipate changing the Owner/Annuitant designations. Please see "Change of Owner, Annuitant and Beneficiary Designations" and "Termination of Benefits" for more information. PURCHASE: Your eligibility to purchase is based on your age and the amount of your initial Purchase Payment. See your Financial Professional to complete an application.
MINIMUM AGE FOR INITIAL PURCHASE MAXIMUM AGE FOR MINIMUM INITIAL INITIAL PURCHASE PURCHASE PAYMENT ------------------------------------------------------------------- 45 85 $25,000 -------------------------------------------------------------------
We limit additional Purchase Payments to the first Annuity Year, however at any time during this year, with prior notice to you, we may limit your right to add additional Purchase Payments to the Annuity. If we exercise this right, your ability to invest in your Annuity, increase your Account Value and, consequently, increase your Guaranteed Income Amount or death benefit will be limited. This would also impact your ability to make annual contributions to certain qualified plans. The "Minimum Age for Initial Purchase" applies to the age of the Designated Life or youngest age of the Spousal Designated Lives, and the "Maximum Age for Initial Purchase" applies to the age of the Designated Life or oldest of the Spousal Designated Lives as of the day we would issue the Annuity. If the Annuity is to be owned by an entity, the maximum age applies to the Annuitant as of the day we would issue the Annuity. After you purchase your Annuity, you will have a limited period of time during which you may cancel (or "Free Look") the purchase of your Annuity. Your request for a Free Look must be received in Good Order. 6 Please see "Requirements for Purchasing One of the Annuities" for more detail. ACCESS TO YOUR MONEY: You can receive income by taking withdrawals or electing annuity payments. Please note that withdrawals may be subject to tax, and may be subject to a Contingent Deferred Sales Charge (discussed below). You may elect to receive income through annuity payments over your lifetime, also called "Annuitization". If you elect to receive annuity payments, you convert your Account Value into a stream of future payments. This means you no longer have an Account Value and therefore cannot make withdrawals. We offer different types of annuity options to meet your needs. Please see "Access to Account Value" and "Annuity Options" for more information. DEATH BENEFIT: During the Accumulation Period, you may name a Beneficiary(ies) to receive the proceeds of your Annuity upon your death provided you still have an Account Value. Your Death Benefit must be distributed within the time period required by the tax laws. Please see "Death Benefit" for more information FEES AND CHARGES: The Annuity, including the living benefit, is subject to certain fees and charges, as discussed in the "Summary of Contract Fees and Charges" table in the prospectus. In addition, there are fees and expenses of the underlying Portfolio. WHAT DOES IT MEAN THAT YOUR ANNUITY IS "TAX DEFERRED"? Variable annuities are "tax deferred", meaning you pay no taxes on any earnings from your Annuity until you withdraw the money. When you take your money out of the Annuity, however, you will be taxed on the earnings at ordinary income tax rates. If you withdraw money before you reach age 59 1/2, you also may be subject to a 10% federal tax penalty. You may also purchase our Annuity as a tax-qualified retirement investment such as an IRA, SEP-IRA, Roth IRA, 401(a) plan, or non-ERISA 403(b) plan. Although there is no additional tax advantage to a variable annuity purchased through one of these plans, the Annuity has features and benefits other than tax deferral that may make it an important investment for a qualified plan. You should consult your tax advisor regarding these features and benefits prior to purchasing a contract for use with a tax-qualified plan. OTHER INFORMATION: Please see the section entitled "Other Information" for more information about the Annuity, including legal information about Pruco Life of New Jersey, the Separate Account, and underlying fund. 7 INVESTMENT OPTION The AST Long Duration Bond Sub-account is the only Investment Option available under the Annuity. The Sub-account invests in the underlying Portfolio whose share price generally fluctuates each Valuation Day. You bear the investment risk for amounts allocated to the Sub-account. If in the future we make two or more Investment Options available under the Annuity, we may allow transfer privileges and we may impose transfer restrictions and transfer fees. In addition, if we make more than one Investment Option available with the Annuity, we may impose investment restrictions and/or conditions on Purchase Payments or allocations to one or more Investment Options. Because one Investment Option is currently available under the Annuity, an investment in the Annuity involves certain additional limitations and risks. For example, the Annuity does not provide a diverse set of investment choices providing the option to allocate your Purchase Payments or Account Value among a variety of investment choices with different investment styles, objectives, strategies and risks. The performance of your Account Value will depend entirely on the performance of the one underlying Portfolio. The Annuity currently does not offer certain standard investment product features such as portfolio rebalancing, dollar-cost-averaging or transfer privileges. An investment in the Annuity, by itself, generally does not provide a complete investment program but rather is intended to serve as part of an investor's overall portfolio of investments. The Annuity may not be suitable for all investors. You may want to consult with your Financial Professional to determine if this Annuity is suitable for you. VARIABLE INVESTMENT OPTION: The Investment Option is a Sub-account of the Pruco Life of New Jersey Flexible Premium Variable Annuity Account (see "Pruco Life of New Jersey and the Separate Account" for more detailed information). The Sub-account invests exclusively in the AST Long Duration Bond Portfolio. You should carefully read the prospectus for the AST Long Duration Bond Portfolio. The Portfolio is not a publicly traded mutual fund. The Portfolio is only available as an Investment Option in variable annuity contracts and variable life insurance policies issued by insurance companies, or in some cases, to participants in certain qualified retirement plans. Details about the investment objective, policies, risks, costs and management of the Portfolio are found in the prospectus for the Portfolio. THE CURRENT PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR THE UNDERLYING PORTFOLIO IS ATTACHED HERETO AND CAN ALSO BE OBTAINED BY CALLING 1-888-PRU-2888. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The investment objective, style/type, and name of the advisor/sub-advisor for the Portfolio appears in the table below.
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO TYPE ADVISOR/ SUB-ADVISER -------------------------------------------------------------------- ADVANCED SERIES TRUST -------------------------------------------------------------------- AST LONG DURATION BOND PORTFOLIO: LONG Prudential seeks to maximize total return DURATION Investment consistent with the preservation of BOND Management, Inc. capital. Total return is comprised of current income and capital appreciation. Under normal market conditions, the Portfolio will invest at least 80% of its investable assets in bonds. For purposes of this 80% policy, bonds include: (i) all debt securities and all fixed-income securities, excluding preferred stock, issued by corporate and government issuers, and (ii) all derivatives and synthetic instruments that have economic characteristics that are similar to such debt securities and such fixed-income securities. --------------------------------------------------------------------
The Portfolio is a series of the Advanced Series Trust. The Portfolio is co-managed by AST Investment Services, Inc. and Prudential Investments LLC, both of which are affiliated companies of Pruco Life of New Jersey. A sub-advisor, as noted above, has been engaged to conduct day-to-day management. Allocations made to the AST Long Duration Bond Portfolio benefits us financially. Please see the Additional Information section, under the heading concerning "Service Fees Payable to Pruco Life of New Jersey" for a discussion of fees that we may receive from the underlying Portfolio and/or its affiliates. 8 DEFINED INCOME BENEFIT The Defined Income Benefit is a guaranteed lifetime withdrawal benefit, under which, subject to the terms of the benefit, we guarantee your ability to take a certain annual withdrawal amount over your lifetime ("Single Designated Life"), or over your and your spouse's lives ("Spousal Designated Lives"). Generally, if your Account Value is reduced to zero and you meet certain requirements, we pay a remaining value, as described below under "Guarantee Payments." This benefit also provides for a death benefit equal to the greater of the Account Value and the Return of Purchase Payments Amount (described below), subject to the terms of the benefit. The Defined Income Benefit is part of your Annuity and is not an optional benefit. You may not terminate the Defined Income Benefit. The Defined Income Benefit will terminate only upon specified events (see "Termination of the Benefit," below). When you purchase the Annuity, you must make a permanent decision whether you wish to own the Single or Spousal version of the Defined Income Benefit. Based upon your decision, the Defined Income Benefit guarantees the ability to withdraw the Guaranteed Income Amount each Annuity Year until the death of the Single Designated Life or Remaining Designated Life regardless of the impact of Sub-account performance on the Account Value. The benefit is subject to our rules regarding the timing and amount of withdrawals. Please see below under "Impact of Non-Lifetime Withdrawals" and "Impact of Lifetime Withdrawals." The Income Growth Rate and Income Percentages that are used to determine the Guaranteed Income Amount are initially shown in this prospectus and are effective for applications signed on February 14, 2013 through February 24, 2013. After February 24, 2013, we will disclose the rates used to determine the Guaranteed Income Amount for new annuity applications in a prospectus supplement that will be filed monthly ("Rate Sheet Prospectus Supplement") . Rates and effective dates reflected in the Rate Sheet Prospectus Supplements will replace and supersede those reflected herein. AS NOTED ABOVE, THE INCOME GROWTH RATE AND INCOME PERCENTAGES APPLICABLE TO THE CALCULATION OF THE GUARANTEED INCOME AMOUNT ARE DISCLOSED IN THIS PROSPECTUS, OR IN RATE SHEET PROSPECTUS SUPPLEMENTS. PLEASE NOTE, IN ORDER TO RECEIVE THE APPLICABLE INCOME GROWTH RATE AND INCOME PERCENTAGES STATED IN THIS PROSPECTUS, OR A RATE SHEET PROSPECTUS SUPPLEMENT, YOUR APPLICATION MUST BE SIGNED AND RECEIVED BY US IN GOOD ORDER WITHIN THE STATED TIME PERIOD DURING WHICH SUCH RATES WILL BE APPLICABLE. THE RATES APPLICABLE TO YOUR ANNUITY WILL NOT CHANGE FOR THE LIFE OF YOUR ANNUITY. THIS MEANS THAT THE INCOME GROWTH RATE AND INCOME PERCENTAGES FOR YOUR ANNUITY WILL NOT CHANGE. RATES REFLECTED IN THIS PROSPECTUS, OR ANY RATE SHEET PROSPECTUS SUPPLEMENT, WITH AN EFFECTIVE PERIOD THAT DOES NOT INCLUDE THE DATE YOU SIGNED YOUR ANNUITY APPLICATION AND THE DATE WE RECEIVE IT IN GOOD ORDER WILL NOT APPLY TO YOUR ANNUITY. AFTER FEBRUARY 24, 2013, YOU SHOULD NOT PURCHASE THE ANNUITY WITHOUT FIRST OBTAINING THE APPLICABLE RATE SHEET PROSPECTUS SUPPLEMENT, CONTAINING THE AVAILABLE INCOME GROWTH RATE AND INCOME PERCENTAGES APPLICABLE AT THE TIME. PLEASE SEE APPENDIX B TO THIS PROSPECTUS FOR EXAMPLES DEMONSTRATING HOW THE GUARANTEED INCOME AMOUNT IS CALCULATED USING VARIOUS, ASSUMED INCOME GROWTH RATES AND INCOME PERCENTAGES. THE EXAMPLES ARE PURELY HYPOTHETICAL AND ARE INTENDED TO ILLUSTRATE HOW WE WOULD DETERMINE THE GUARANTEED INCOME AMOUNT FOR AN ANNUITY. YOUR GUARANTEED INCOME AMOUNT WOULD BE DIFFERENT THAN THE EXAMPLES IN THE APPENDIX DEPENDING ON THE INCOME GROWTH RATE AND INCOME PERCENTAGES EFFECTIVE AT THE TIME YOU SIGNED YOUR APPLICATION, YOUR AGE AT THE TIME THE INITIAL PURCHASE PAYMENT IS APPLIED, THE AMOUNT OF YOUR INITIAL PURCHASE PAYMENT, AND WHETHER YOU HAVE ELECTED THE SINGLE OR THE SPOUSAL VERSION. FOR MORE INFORMATION ABOUT CURRENTLY AVAILABLE INCOME PERCENTAGES AND INCOME GROWTH RATES, PRIOR TO FEBRUARY 24, 2013 PLEASE SEE THE RATES REFLECTED BELOW IN THIS PROSPECTUS, AND AFTER FEBRUARY 24, 2013 PLEASE SEE THE CURRENT RATE SHEET PROSPECTUS SUPPLEMENT. You are guaranteed to be able to withdraw the Guaranteed Income Amount for the lifetime of the designated life (or lives) provided that you do not take withdrawals of Excess Income that result in your Account Value being reduced to zero. (See "Living Benefit - Owner, Annuitant and Beneficiary Designations" below for details regarding the designated life (or lives).) Withdrawals are taken first from your own Account Value. We are only required to begin making lifetime income payments to you under our guarantee when and if your Account Value is reduced to zero for any reason other than a withdrawal of Excess Income ("Guarantee Payments"). The Defined Income Benefit may be appropriate if you intend to make periodic withdrawals from your Annuity, and wish to ensure that Sub-account performance will not affect your ability to receive annual payments, and also wish to provide a death benefit to your beneficiaries. You are not required to take withdrawals as part of the benefit - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the benefit. ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR GUARANTEED INCOME AMOUNT FOR LIFE EVEN IF YOUR ACCOUNT VALUE FALLS TO ZERO, IF THAT PARTICULAR WITHDRAWAL OF EXCESS INCOME (DESCRIBED BELOW) BRINGS YOUR ACCOUNT VALUE TO ZERO, YOUR GUARANTEED INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND THE BENEFIT AND THE ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER AMOUNT WOULD BE PAYABLE UNDER THE DEFINED INCOME BENEFIT (AND THE DEATH BENEFIT WOULD NOT BE PAYABLE UPON DEATH). PLEASE NOTE THAT YOUR ACCOUNT VALUE IS NOT GUARANTEED, CAN FLUCTUATE AND MAY LOSE VALUE. 9 GUARANTEED INCOME AMOUNT The initial Guaranteed Income Amount is determined on the Issue Date. It is determined by applying the applicable Income Percentage to the Account Value on the Issue Date. The applicable Income Percentage is based on the age of the Single Designated Life, or the younger of the Spousal Designated Lives, on the Issue Date. On each Valuation Day thereafter, until the date of the first Lifetime Withdrawal, the Guaranteed Income Amount is equal to: . the Guaranteed Income Amount on the immediately preceding Valuation Day (the "Prior Valuation Day"), appreciated at the daily equivalent of the Income Growth Rate for each calendar day between the Prior Valuation Day and the Current Valuation Day, . reduced for any Non-Lifetime Withdrawals and increased for any Purchase Payments, if any, made on the Current Valuation Day, as described in the "Impact of Non-Lifetime Withdrawals" and "Additional Purchase Payments(s)" sections below. Once you have taken the first Lifetime Withdrawal, in any Annuity Year, the remaining Guaranteed Income Amount for that Annuity Year is reduced for Lifetime Withdrawals and increased for Purchase Payments as described in the "Impact of Lifetime Withdrawals" and "Additional Purchase Payment(s)" sections below. However, once you have made the first Lifetime Withdrawal, the Guaranteed Income Amount will no longer increase based on the Income Growth Rate and will not increase due to fluctuations in your Account Value. On each anniversary of the Issue Date, your remaining Guaranteed Income Amount is increased to equal your then current Guarantee Income Amount. Lifetime Withdrawals that exceed the Guaranteed Income Amount in an Annuity Year will be considered Excess Income and will proportionally reduce the Guaranteed Income Amount available for future Annuity Years. INCOME GROWTH RATE AND INCOME PERCENTAGES EFFECTIVE BETWEEN FEBRUARY 14, 2013 AND FEBRUARY 24, 2013 THE RATES BELOW APPLY FOR APPLICATIONS SIGNED BETWEEN FEBRUARY 14, 2013 AND FEBRUARY 24, 2013. THE INCOME GROWTH RATE AND INCOME PERCENTAGES MAY BE DIFFERENT THAN THOSE LISTED BELOW FOR APPLICATIONS SIGNED ON OR AFTER FEBRUARY 25, 2013. INCOME GROWTH RATE: 5.50% ----- INCOME PERCENTAGES The applicable guaranteed Income Percentage is based on the attained age of the Annuitant (youngest Designated Life for Spousal) as of the date the purchase payment(s) is received in Good Order, according to the following tables listed below: SINGLE SPOUSAL SINGLE SPOUSAL AGE PERCENTAGE PERCENTAGE AGE PERCENTAGE PERCENTAGE --- ---------- ---------- ---- ---------- ---------- 45 3.00% 2.50% 66 5.10% 4.60% 46 3.10% 2.60% 67 5.20% 4.70% 47 3.20% 2.70% 68 5.30% 4.80% 48 3.30% 2.80% 69 5.40% 4.90% 49 3.40% 2.90% 70 5.50% 5.00% 50 3.50% 3.00% 71 5.60% 5.10% 51 3.60% 3.10% 72 5.70% 5.20% 52 3.70% 3.20% 73 5.80% 5.30% 53 3.80% 3.30% 74 5.90% 5.40% 54 3.90% 3.40% 75 6.00% 5.50% 55 4.00% 3.50% 76 6.10% 5.60% 56 4.10% 3.60% 77 6.20% 5.70% 57 4.20% 3.70% 78 6.30% 5.80% 58 4.30% 3.80% 79 6.40% 5.90% 59 4.40% 3.90% 80 6.50% 6.00% 60 4.50% 4.00% 81 6.60% 6.10% 61 4.60% 4.10% 82 6.70% 6.20% 62 4.70% 4.20% 83 6.80% 6.30% 63 4.80% 4.30% 84 6.90% 6.40% 64 4.90% 4.40% 85+ 7.00% 6.50% 65 5.00% 4.50% 10 PLEASE NOTE: In order for you to receive the Income Growth Rate and Income Percentages reflected above, your application must be signed within the time period disclosed above. Pruco Life of New Jersey must also receive your application in Good Order within 15 calendar days of the date you sign it, and the annuity must be funded within 45 calendar days of the date you sign your application. If these conditions are not met, your application will be considered Not in Good Order. If you decide to proceed with the purchase of the annuity, further paperwork will be required to issue the contract with the applicable rates then available, as reflected above or in the Rate Sheet Prospectus Supplement in effect at that time. ADDITIONAL PURCHASE PAYMENT(S): You may make additional Purchase Payments to your Annuity at any time within the first Annuity Year, however at any time during this year, with prior notice to you, we may limit your right to add additional Purchase Payments. Additional Purchase Payments increase the Guaranteed Income Amount by an amount obtained by multiplying the Purchase Payment we accept by the applicable Income Percentage. The applicable Income Percentage is based on the attained age of the Single Designated Life, or the younger of the Spousal Designated Lives, on the date the Purchase Payment is allocated to the Annuity. If this Defined Income Benefit has been issued on a Spousal Designated Lives basis, and one of the Spousal Designated Lives becomes the Remaining Designated Life, we will continue to use the date of birth of the younger of the Spousal Designated Lives for purposes of determining the applicable Income Percentage. Please see "Purchasing Your Annuity - Purchase Payment Limitation" below. IMPACT OF NON-LIFETIME WITHDRAWALS: You may designate one or more withdrawals as a Non-Lifetime Withdrawal before you take your first Lifetime Withdrawal. Non-Lifetime Withdrawals, including any Required Minimum Distribution amount you designate as a Non-Lifetime Withdrawal, proportionally reduce the Guaranteed Income Amount by the ratio of the Non-Lifetime Withdrawal amount to the Account Value immediately prior to the Non-Lifetime Withdrawal. Non-Lifetime Withdrawals that are not Required Minimum Distribution amounts are subject to any applicable Contingent Deferred Sales Charge. There is no limit on the number of Non-Lifetime Withdrawals that you can take. However, Non-Lifetime Withdrawals are subject to the minimum Surrender Value. IMPACT OF LIFETIME WITHDRAWALS: Lifetime Withdrawals reduce the remaining Guaranteed Income Amount available during an Annuity Year by the amount of the withdrawal on a dollar-for-dollar basis in that Annuity Year. If your cumulative Lifetime Withdrawals in an Annuity Year are less than or equal to the Guaranteed Income Amount, they will not reduce your Guaranteed Income Amount in subsequent Annuity Years and you cannot carry over the unused portion of the Guaranteed Income Amount to subsequent Annuity Years. Such withdrawals are not subject to Contingent Deferred Sales Charges, are not treated as withdrawals of Purchase Payments and are not subject to the minimum Surrender Value. In general, withdrawals made from the Annuity during an Annuity Year to meet the Required Minimum Distributions will not be treated as Excess Income if you meet the requirements outlined in the Required Minimum Distributions section. All or any portion of a Lifetime Withdrawal that exceeds the Guaranteed Income Amount for that Annuity Year is considered Excess Income. Each withdrawal of Excess Income proportionally reduces the Guaranteed Income Amount available for future Annuity Years. Each proportional reduction is calculated by multiplying the Guaranteed Income Amount by the ratio of the Excess Income to the Account Value immediately subsequent to the withdrawal of any Guaranteed Income Amount and prior to the withdrawal of the Excess Income (even if both withdrawals occurred in the same day or as one withdrawal request). Each withdrawal of Excess Income is subject to any applicable Contingent Deferred Sales Charge. WITHDRAWAL FLEXIBILITY: Lifetime Withdrawals are not required. However, once you take the first Lifetime Withdrawal, the Guaranteed Income Amount is not increased in subsequent Annuity Years if you decide not to take a Lifetime Withdrawal in an Annuity Year or take Lifetime Withdrawals in an Annuity Year that, in total, are less than the Guaranteed Income Amount. You may use the systematic withdrawal program to make withdrawals of the Guaranteed Income Amount. Any systematic withdrawal will be deemed a Lifetime Withdrawal under this benefit. The Defined Income Benefit does not affect your ability to take partial withdrawals under your Annuity, or limit your ability to take partial withdrawals that exceed the Guaranteed Income Amount, subject to the minimum Surrender Value (see "Surrender Value" below for more detail). Because the Guaranteed Income Amount is determined in a way that is not related to Account Value, it is possible for the Account Value to fall to zero, even though the Guaranteed Income Amount remains. Please note that there is a possibility you may pass away before receiving lifetime payments from the Defined Income Benefit, or may not receive enough lifetime income to exceed the amount of fees you have paid us for the benefit. However when you pass away, your beneficiaries may receive a death benefit as described in this prospectus. Please see "Death Benefit" in the prospectus. If you purchased the spousal version of this Annuity, then your spousal designated life will have the option to continue the Annuity provided he/she is the sole primary beneficiary and opts to receive the Guaranteed Income Amount. 11 Examples of dollar-for-dollar and proportional reductions are set forth below. The values shown here are purely hypothetical, and do not reflect the charges for the Defined Income Benefit or any other fees and charges under the Annuity. We assume the following for the first two examples: . The Issue Date is November 1 . The first withdrawal is a Lifetime Withdrawal . On October 24/th/ of the following calendar year, $2,500 is withdrawn from the Annuity . On October 29/th/ of the same year, $5,000 is also withdrawn from the Annuity, EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS On October 24, Guaranteed Income Amount is $6000. The Return of Purchase Payment Death Benefit Amount is $115,420. When $2,500 is withdrawn from the Annuity on this date, the remaining Guaranteed Income Amount for that Annuity Year (up to and including October 31) is $3,500. This is the result of a dollar-for-dollar reduction of the Guaranteed Income Amount ($6,000 less $2,500 = $3,500) and the Return of Purchase Payment Death Benefit Amount ($115,420 less $2,500 = $112,920). EXAMPLE OF PROPORTIONAL REDUCTIONS Continuing the previous example, when the withdrawal of $5,000 occurs on October 29, the Account Value at the time and immediately prior to this withdrawal is $118,000. The first $3,500 of this withdrawal reduces the Guaranteed Income Amount for that Annuity Year to $0 and the Return of Purchase Payment Death Benefit Amount to $109,420 ($112,920 less $3,500 = $109,420). The remaining withdrawal amount of $1,500 reduces the Guaranteed Income Amount in future Annuity Years and the Return of Purchase Payment Death Benefit Amount on a proportional basis based on the ratio of the Excess Income to the Account Value immediately prior to the Excess Income. (Note that if there are other future withdrawals in that Annuity Year, each would result in another proportional reduction to the Guaranteed Income Amount and the Return of Purchase Payment Death Benefit Amount). HERE IS THE CALCULATION: Account Value before Lifetime Withdrawal $118,000.00 Less amount of "non" Excess Income $ 3,500.00 Account Value immediately before Excess Income of $1,500 $114,500.00 Excess Income amount $ 1,500.00 Ratio 1.31% Guaranteed Income Amount $ 6,000.00 Less ratio of 1.31% $ 78.60 Guaranteed Income Amount for future Annuity Years $ 5,921.40 Return of Purchase Payment Death Benefit Amount after "non" Excess Income $109,420.00 Less ratio of 1.31% $ 1,433.40 Return of Purchase Payment Death Benefit Amount after Excess Income $107,986.60
EXAMPLE - NON-LIFETIME WITHDRAWAL (PROPORTIONAL REDUCTION) This example is purely hypothetical and does not reflect the charges for the benefit or any other fees and charges under the Annuity. It is intended to illustrate the proportional reduction of the Non-Lifetime Withdrawal under this benefit. Assume the following: . The Issue Date is December 3 . On October 3 of the following calendar year, the Guaranteed Income Amount is $6,000, the Return of Purchase Payment Death Benefit Amount is $115,420, and the Account Value is $120,000. . Also on that same October 3, $15,000 is withdrawn from the Annuity and is designated as a Non-Lifetime Withdrawal. All guarantees associated with the Annuity will be reduced by the ratio the total withdrawal amount represents of the Account Value just prior to the withdrawal being taken. HERE IS THE CALCULATION: Withdrawal amount $ 15,000.00 Divided by Account Value before withdrawal $120,000.00 Equals ratio 12.5% All guarantees will be reduced by the above ratio (12.5%) Guaranteed Income Amount before Non-Lifetime withdrawal $ 6,000.00 Less ratio of 12.5% $ 750.00 Guaranteed Income Amount for future Annuity Years $ 5,250.00 Return of Purchase Payment Death Benefit Amount before Non-Lifetime withdrawal $115,420.00 Less ratio of 12.5% $ 14,427.50 Return of Purchase Payment Death Benefit Amount after Non-Lifetime withdrawal $100,992.50
12 WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED THE GUARANTEED INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE. THE PORTION OF A WITHDRAWAL THAT EXCEEDED YOUR GUARANTEED INCOME AMOUNT (IF ANY) WOULD BE TREATED AS EXCESS INCOME AND THUS WOULD REDUCE YOUR GUARANTEED INCOME AMOUNT IN SUBSEQUENT YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING ACCOUNT VALUE. IN THE LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR GUARANTEED INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR GUARANTEED INCOME AMOUNT IN SUBSEQUENT YEARS. ACCOUNT VALUE IS REDUCED TO ZERO To the extent that your Account Value was reduced to zero as a result of withdrawals in an Annuity Year that are less than or equal to the Guaranteed Income Amount, and Guarantee Payments are still payable under the Defined Income Benefit. We will make an additional payment, if any, for that Annuity Year equal to the remaining Guaranteed Income Amount for the Annuity Year. Thus, in that scenario, the remaining Guaranteed Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Guaranteed Income Amount as described in this section. We will make payments until the death of the Single Designated Life, the simultaneous deaths of both Spousal Designated Lives, or the death of the Remaining Designated Life, as applicable. After the Account Value is reduced to zero, you will not be permitted to make additional Purchase Payments to your Annuity. IF YOU TAKE A WITHDRAWAL OF EXCESS INCOME (I.E., A LIFETIME WITHDRAWAL THAT EXCEEDS THE GUARANTEED INCOME AMOUNT) THAT REDUCES YOUR ACCOUNT VALUE TO ZERO OR IF YOU TAKE A NON-LIFETIME WITHDRAWAL THAT REDUCES YOUR ACCOUNT VALUE TO ZERO, THE ANNUITY TERMINATES AND WE WILL PAY NO ADDITIONAL AMOUNTS TO YOU. Unless you request an alternate mode of payment we make available, we make such Guarantee Payments once each Annuity Year. We will commute any Guarantee Payments due and pay you a lump sum if the total Guarantee Payment due each Annuity Year is less than $100. We commute the Guarantee Payments in a manner equivalent to commuting payments for: . a joint life and last survivor fixed annuity if both Spousal Designated Lives are living and each other's spouse when Guarantee Payments would begin, or . a single life fixed annuity if there is a Remaining Designated Life under this Rider, or if the Defined Income Benefit was issued with a Single Designated Life. We use the same basis that is used to calculate the guaranteed annuity rates in the Annuity. Please note that if your Account Value is reduced to zero, all subsequent payments will be treated as guarantee payments. Further, payments that we make under this benefit after the Latest Annuity Date will be treated as annuity payments. If your Account Value is reduced to zero due to withdrawals of Excess Income or annuitization, any Death Benefit value, including the Return of Purchase Payments Amount, will terminate and no Death Benefit amount is payable. IN ADDITION TO THE GUARANTEED LIFETIME INCOME FEATURE, THE DEFINED INCOME BENEFIT ALSO PROVIDES FOR ANNUITY PAYMENTS AND A DEATH BENEFIT. PLEASE SEE THE "ANNUITY OPTIONS - ANNUITY PAYMENTS UNDER THE DEFINED INCOME BENEFIT" SECTION BELOW FOR A DESCRIPTION OF ANNUITY OPTIONS THAT APPLY UNDER THE DEFINED INCOME BENEFIT. PLEASE SEE THE "DEATH BENEFIT - RETURN OF PURCHASE PAYMENTS DEATH BENEFIT" SECTION BELOW FOR A DESCRIPTION OF THE RETURN OF PURCHASE PAYMENTS DEATH BENEFIT THAT APPLIES UNDER THE DEFINED INCOME BENEFIT. OTHER IMPORTANT CONSIDERATIONS . You should carefully consider when to begin taking Lifetime Withdrawals. If you begin taking withdrawals shortly after you purchase the Annuity, you may maximize the time during which you may take Lifetime Withdrawals due to longer life expectancy, but may limit your ability to take advantage of the opportunity to increase your future Guaranteed Income Amount by the Income Growth Rate. You should discuss with your Financial Professional when it may be appropriate for you to begin taking Lifetime Withdrawals. . The current annualized charge for the Defined Income Benefit is 0.80% of the average daily net assets of the Sub-account. You will begin paying this charge on the Issue Date even if you do not begin taking withdrawals for many years, or ever. We will not refund the charges you have paid if you choose never to take any withdrawals and/or if you never receive any lifetime income payments. We may increase the Defined Income Benefit Charge one or more times at any time on or after the 5th anniversary of your Issue Date. The maximum annualized charge for the Defined Income Benefit is 1.50% of the average daily net assets of the Sub-account. We will notify you in advance of any change in the Charge. 13 FACILITY OF PAYMENT: We reserve the right, in settlement of full liability, to make Guarantee Payments to a guardian, relative, or other person deemed eligible by us if a Designated Life payee is deemed to be legally incompetent, as permitted by law. PROOF OF SURVIVAL: Any Guarantee Payment is subject to evidence we receive in Good Order that the Single Designated Life, at least one of the Spousal Designated Lives, or the Remaining Designated Life is then alive. We may withhold such Guarantee Payments until we receive such evidence or evidence satisfactory to us of the life of the Single Designated Life, at least one of the Spousal Designated Lives or the Remaining Designated Life. We credit interest on such withheld Guarantee Payments at the rate required by law. Should we subsequently determine withheld Guarantee Payments are payable, we will pay the withheld Guarantee Payments and any applicable interest credited in a lump sum. RECOVERY OF EXCESS GUARANTEE PAYMENTS: We may recover from you or your estate any Guarantee Payments made after the death of the Single Designated Life or the Remaining Designated Life. TERMINATION OF THE BENEFIT You may not elect to cancel the Defined Income Benefit. THE BENEFIT AUTOMATICALLY TERMINATES UPON THE FIRST TO OCCUR OF THE FOLLOWING: (I) YOUR SURRENDER OF THE ANNUITY; (II)WHEN ANNUITY PAYMENTS BEGIN (ALTHOUGH IF YOU HAVE ELECTED TO RECEIVE THE GUARANTEED INCOME AMOUNT IN THE FORM OF ANNUITY PAYMENTS, WE WILL CONTINUE TO PAY THE GUARANTEED INCOME AMOUNT); (III)OUR RECEIPT OF DUE PROOF OF DEATH OF THE FIRST DEATH WHO IS AN OWNER (OR WHO IS THE ANNUITANT IF ENTITY OWNED), IF THE REMAINING DESIGNATED LIFE ELECTS NOT TO CONTINUE THE ANNUITY; (IV)OUR RECEIPT OF DUE PROOF OF DEATH OF THE OWNER (OR THE ANNUITANT, IF THE ANNUITY IS ENTITY OWNED) AND THERE IS STILL AN ACCOUNT VALUE AVAILABLE IN THE ANNUITY AND THE SURVIVING SPOUSE IS NOT ELIGIBLE TO CONTINUE THE BENEFIT BECAUSE SUCH SPOUSE IS NOT A SPOUSAL DESIGNATED LIFE; (V) THE DATE OF RECEIPT OF DUE PROOF OF DEATH OF THE SINGLE DESIGNATED LIFE OR THE REMAINING DESIGNATED LIFE IF A DEATH BENEFIT IS PAYABLE UNDER THE DEFINED INCOME BENEFIT; (VI)THE DATE OF DEATH OF THE SINGLE DESIGNATED LIFE OR THE REMAINING DESIGNATED LIFE WHEN ACCOUNT VALUE IS REDUCED TO ZERO AS OF THE DATE OF DEATH; (VII)BOTH THE ACCOUNT VALUE AND GUARANTEED INCOME AMOUNT EQUAL ZERO; OR (VIII)WE PROCESS A REQUEST TO CHANGE THE ANNUITANT, OWNER OR BENEFICIARY IN THE CERTAIN SITUATIONS THAT WOULD CAUSE TERMINATION, AS DISCUSSED IN THE "CHANGE OF OWNER, ANNUITANT, AND BENEFICIARY DESIGNATIONS" SECTION OF THIS PROSPECTUS. ADDITIONAL TAX CONSIDERATIONS If you purchase an annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts beginning after age 70 1/2 . For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than five (5) percent Owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. In addition, the amount and duration of payments under the annuity payment provision may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution rules under the tax law. As indicated, withdrawals made while this benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. We do not address each potential tax scenario that could arise with respect to this benefit here. However, we do note that if you participate in the Defined Income Benefit through a non-qualified annuity, as with all withdrawals, once all Purchase Payments are returned under the Annuity, all subsequent withdrawal amounts will be taxed as ordinary income. 14 PURCHASING YOUR ANNUITY REQUIREMENTS FOR PURCHASING THE ANNUITY WE MAY APPLY CERTAIN LIMITATIONS, RESTRICTIONS, AND/OR UNDERWRITING STANDARDS AS A CONDITION OF OUR ISSUANCE OF THE ANNUITY AND/OR ACCEPTANCE OF PURCHASE PAYMENTS. ALL SUCH CONDITIONS ARE DESCRIBED BELOW. AGE RESTRICTIONS: Unless we agree otherwise and subject to our rules, the Single Designated Life or Spousal Designated Lives, each, must not be younger than 45 or older than age 85 on the Issue Date of the Annuity. The broker-dealer firm through which you are purchasing the Annuity may impose a younger maximum issue age than what is described above - check with the broker-dealer firm for details. The "Annuitant" refers to the natural person upon whose life annuity payments payable to the Owner are based. INITIAL PURCHASE PAYMENT: An initial Purchase Payment is considered the first Purchase Payment received by us in Good Order. This is the payment that issues your Annuity. All subsequent Purchase Payments allocated to the Annuity will be considered Additional Purchase Payments. Unless we agree otherwise and subject to our rules, you must make a minimum initial Purchase Payment of $25,000. We must approve any initial and additional Purchase Payments where the total amount of Purchase Payments equals $1,000,000 or more with respect to this Annuity and any other annuities you are purchasing from us (or that you already own) and/or our affiliates. To the extent allowed by state law, that required approval also will apply to a proposed change of owner of the Annuity, if as a result of the ownership change, total Purchase Payments would equal or exceed that $1,000,000 threshold. Applicable laws designed to counter terrorists and prevent money laundering might, in certain circumstances, require us to block an Annuity Owner's ability to make certain transactions, and thereby refuse to accept Purchase Payments or requests for transfers (if applicable), partial withdrawals, total withdrawals, death benefits, or income payments until instructions are received from the appropriate regulator. We also may be required to provide additional information about you and your Annuity to government regulators. ADDITIONAL PURCHASE PAYMENTS: You may make additional purchase payments to the Annuity during the first Annuity Year provided the Account Value has not been reduced to zero, however at any time during this year, with prior notice to you, we may limit your right to allocate additional Purchase Payments to the Annuity. Additional Purchase Payments are subject to the maximum total Purchase Payment amount of $1,000,000 as noted above, and a minimum amount of $100. Purchase payments are not permitted on or after the Annuity Date. WE MAY LIMIT, RESTRICT, SUSPEND OR REJECT ANY PURCHASE PAYMENT, BUT WOULD DO SO ONLY ON A NON-DISCRIMINATORY BASIS. SEE "PURCHASE PAYMENT LIMITATION," BELOW, FOR MORE INFORMATION. During the time you are permitted to make additional Purchase Payments to the Annuity, on a non-discriminatory basis, we may limit, restrict, suspend or reject any Purchase Payment: (i) if we determine that as a result of the timing and amounts of your additional Purchase Payments and withdrawals, the Guaranteed Income Amount is being increased in an unintended fashion. A factor we will use in making a determination as to whether an action is designed to increase the Guaranteed Income Amount in an unintended fashion is the relative size of additional Purchase Payment(s); and (ii) if the Income Percentages and/or Income Growth Rates have changed for new purchasers of the Annuity. IF WE EXERCISE THIS RIGHT TO LIMIT YOUR PURCHASE PAYMENT(S), YOUR ABILITY TO INVEST IN YOUR ANNUITY, INCREASE YOUR ACCOUNT VALUE AND, CONSEQUENTLY, INCREASE YOUR GUARANTEE INCOME AMOUNT OR DEATH BENEFIT WILL BE LIMITED. THIS WOULD ALSO IMPACT YOUR ABILITY TO MAKE ANNUAL CONTRIBUTIONS TO CERTAIN QUALIFIED PLANS. Depending on the tax status of your Annuity (e.g., if you own the Annuity through an IRA), there may be annual contribution limits dictated by applicable law. Please see the Tax Considerations section for additional information on these contribution limits. SPECULATIVE INVESTING: Do not purchase this Annuity if you, anyone acting on your behalf, and/or anyone providing advice to you plan to use it, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme now or at any time prior to termination of the Annuity. Your Annuity may not be traded on any stock exchange or secondary market. By purchasing this Annuity, you represent and warrant that you are not using this Annuity, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. We will not issue an Annuity, permit changes in ownership or allow assignments to certain ownership types, including: corporations, partnerships, endowments and grantor trusts with multiple grantors. Further, we will only issue an Annuity, allow changes of ownership and/or permit assignments to certain ownership types if the Annuity is held exclusively for the benefit of the designated annuitant. These rules are subject to state law. We may issue an Annuity in ownership structures where the annuitant is also the participant in a Qualified or Non-Qualified employer sponsored plan and the Annuity represents his or her segregated interest in such plan. Further, please be aware that we do not provide administrative services for employer sponsored plans, and may limit the number of plan participants that may elect to use our Annuity as a funding vehicle. 15 Except as noted below, Purchase Payments must be submitted by check drawn on a U.S. bank, in U.S. dollars, and made payable to Pruco Life of New Jersey. Purchase Payments may also be submitted via 1035 exchange or direct transfer of funds. Under certain circumstances, Purchase Payments may be transmitted to Pruco Life of New Jersey via wiring funds through your Financial Professional's broker-dealer firm. We may reject any payment if it is received in an unacceptable form. Our acceptance of a check is subject to our ability to collect funds. SETTING UP YOUR ANNUITY IF YOU ELECT THE SINGLE VERSION OF THE DEFINED INCOME BENEFIT: SINGLE DESIGNATED LIFE If the Owner is a natural person, the Owner must also be the Annuitant and the Single Designated Life. If the Owner is an entity that we permit, the Annuitant must be the Single Designated Life. You may not name multiple Owners if a Single Designated Life is listed in the Schedule Supplement. IF YOU ELECT THE SPOUSAL VERSION OF THE DEFINED INCOME BENEFIT: SPOUSAL DESIGNATED LIVES Such persons must be each other's Spouse on the Issue Date and at the death of the first of the Spousal Designated Lives to die ("First Death"). If the Owner is a natural person, he/she must be the Annuitant, and one of the Spousal Designated Lives. The sole primary Beneficiary must be the other Spousal Designated Life for as long as the first Spousal Designated Life Owner is alive. If two Owners are named, each must be a Spousal Designated Life. No additional Owners may be named. While both Spousal Designated Lives are alive, each Owner must be designated as the other Owner's primary Beneficiary. If the Owner is an entity that we permit, the Annuitant must be a Spousal Designated Life, and the Annuitant's Spouse must be the other Spousal Designated Life. This benefit cannot be utilized when the Owner is an entity unless we allow for the continuation of the Annuity and the Defined Income Benefit by the Remaining Designated Life after the First Death. Remaining Designated Life A Remaining Designated Life must be a natural person and must have been listed as one of the Spousal Designated Lives on the Issue Date. A Spousal Designated Life will become the Remaining Designated Life on the earlier of the First Death, or divorce from the other Spousal Designated Life while the Defined Income Benefit is in effect. In the event of the divorce of the Spousal Designated Lives, and the resulting removal of one of the Spousal Designated Lives as an Owner, Annuitant or Beneficiary under the Annuity, the other Spousal Designated Life will become the Remaining Designated Life under the Defined Income Benefit if we receive notice of the divorce, and any other documentation we require, in Good Order, at our Service Office. Any new Beneficiary(ies) named by the Remaining Designated Life will not be a Spousal Designated Life. GENERAL INFORMATION REGARDING OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: The selections you make for these designations is dependent upon your decision to purchase lifetime income for your life or you and your spouse's lives. . Owner: Each Owner holds all rights under the Annuity. You may name up to two Owners in which case all ownership rights are held jointly. Generally, joint Owners are required to act jointly; however, if each Owner provides us with an instruction that we find acceptable, we will permit each Owner to act independently on behalf of both Owners. All information and documents that we are required to send you will be sent to the first named Owner. Co-ownership by entity Owners or an entity Owner and an individual is not permitted. Refer to the Glossary of Terms for additional information regarding the term "Owner." Prior to Annuitization, there is no right of survivorship (other than any spousal continuance right that may be available to a surviving spouse). . Annuitant: The Annuitant is the person upon whose life we make annuity payments. You must name an Annuitant who is a natural person. We do not accept a designation of joint Annuitants during the Accumulation Period. In limited circumstances and where allowed by law, we may allow you to name one or more "Contingent Annuitants" with our prior approval. Generally, a Contingent Annuitant will become the Annuitant if the Annuitant dies before the Annuity Date. Please refer to the discussion of "Considerations for Contingent Annuitants" in the Tax Considerations section of the prospectus. . Beneficiary: The Beneficiary is the person(s) or entity you name to receive the Death Benefit. Your Beneficiary designation should be the exact name of your Beneficiary, not only a reference to the Beneficiary's relationship to you. If you use a class designation in lieu of designating individuals (e.g. "surviving children"), we will pay the class of Beneficiaries as determined at the time of your death and not the class of Beneficiaries that existed at the time the designation was made. If no Beneficiary is named, the Death Benefit will be paid to you or your estate. If an Annuity is co-owned by spouses, we will assume that the sole primary Beneficiary is the surviving spouse that was named as the co-Owner, unless you elect an alternative Beneficiary designation. Your right to make certain designations may be limited if your Annuity is to be used as an IRA or other "qualified" investment that is given beneficial tax treatment under the Code. You should seek competent tax advice on the income, estate and gift tax implications of your designations. Please see "Tax Considerations" for information on the effect of applicable law if you are in a civil union, domestic partnership or same-sex marriage. 16 RIGHT TO CANCEL You may cancel (or "Free Look") your Annuity for a refund by notifying us in Good Order or by returning the Annuity to our Service Office or to the representative who sold it to you within 10 days after you receive it (or such other period as may be required by applicable law). The Annuity can be mailed or delivered either to us, at our Service Office, or to the Financial Professional who sold it to you. Return of the Annuity by mail is effective on being postmarked, properly addressed and postage prepaid. Unless required by applicable law, the amount of the refund will equal the Account Value as of the Valuation Day we receive the returned Annuity at our Service Office or the cancellation request in Good Order, plus any fees or tax charges deducted from the Purchase Payment. However, where we are required by applicable law to return Purchase Payments, we will return the greater of Account Value and Purchase Payments. 17 MANAGING YOUR ANNUITY CHANGE OF OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS Subject to the limitations described above, in general, you may change the Owner, Annuitant and Beneficiary designations by sending us a request in Good Order, which will be effective upon receipt at our Service Office. As of the Valuation Day we receive an ownership change, including an assignment, any withdrawal programs will be canceled. The new Owner must submit the applicable program enrollment if they wish to participate in such a program. Where allowed by law, such changes will be subject to our acceptance. Any change we accept is subject to any transactions processed by us before we receive the notice of change at our Service Office. WHILE THE DEFINED INCOME BENEFIT IS IN EFFECT If you have the single life version of the Defined Income Benefit, any change of the Annuitant under the Annuity will result in the cancellation of the Defined Income Benefit. Similarly, any change of Owner will result in cancellation of the Defined Income Benefit, except if (a) the new Owner has the same taxpayer identification number as the previous Owner, (b) ownership is transferred from a custodian or other entity to the Annuitant, or vice versa or (c) ownership is transferred from one entity to another entity that satisfies our administrative ownership guidelines. If you have the spousal version of the Defined Income Benefit, a change to the Owner or Annuitant will result in the cancellation of the Defined Income Benefit in all cases, except as follows: (a) if one Owner dies and the Remaining Designated Life assumes the Annuity, or (b) if the Annuity initially is co-owned, but thereafter the Owner who is not the Annuitant is removed as Owner. We permit changes of Beneficiary designations under this benefit, however, if the Beneficiary is changed, the benefit may not be eligible to be continued upon the First Death. If the Spousal Designated Lives divorce, the Defined Income Benefit may not be divided as part of the divorce settlement or judgment. Nor may the divorcing spouse who retains ownership of the Annuity appoint a new Spousal Designated Life upon re-marriage. IF THE DEFINED INCOME BENEFIT TERMINATES If the Defined Income Benefit terminates, you would lose all guarantees provided by the Defined Income Benefit, and thus the ability to withdraw the Guaranteed Income Amount and receive the Death Benefit with the Return of Purchase Payments Amount. We will cease to deduct the Defined Income Benefit charge after the Benefit terminates. However we will not refund any Defined Income Benefit charges previously assessed. If the Defined Income Benefit terminates, you will not be able to re-elect the benefit later. If the Defined Benefit terminates, you would still have the right to annuitize the Account Value. Depending on the tax status of the annuity, you may receive tax deferral prior to annuitization. YOU SHOULD CAREFULLY CONSIDER PURCHASING THE ANNUITY IF YOU ANTICIPATE CHANGING THE OWNER/ANNUITANT DESIGNATIONS. You may name a new Beneficiary(ies), subject to the other limitations on Beneficiary designations noted above with respect to Spousal Designated Lives and a Remaining Designated Life. However, such new Beneficiary(ies) will not be a Spousal Designated Life, and would therefore result in the Defined Income Benefit terminating at the death of the Remaining Designated Life. In general, you may change the Owner, Annuitant, and Beneficiary designations as indicated above, and also may assign the Annuity. WE WILL ALLOW CHANGES OF OWNERSHIP AND/OR ASSIGNMENTS ONLY IF THE ANNUITY IS HELD EXCLUSIVELY FOR THE BENEFIT OF THE ANNUITANT OR CONTINGENT ANNUITANT. WE WILL REJECT THE FOLLOWING PROPOSED CHANGE OF OWNER, ANNUITANT, OR BENEFICIARY, AS WELL AS ANY PROPOSED ASSIGNMENT OF THE ANNUITY: . a new Annuitant prior to the Annuity Date if the Owner is an entity; . a new Owner such that the new Owner is older than the age for which we would then issue the Annuity as of the effective date of such change, unless the change of Owner is the result of spousal continuation; . a new Owner or Annuitant that is a certain ownership type, including but not limited to corporations, partnerships, endowments, and grantor trusts with multiple grantors; and . a new Annuitant for a contract issued to a grantor trust where the new Annuitant is not the grantor of the trust. SPOUSAL DESIGNATIONS If an Annuity is co-owned by spouses, we will assume that the sole primary Beneficiary is the surviving spouse that was named as the co-Owner unless you elect an alternative Beneficiary designation. Certain spousal rights under the contract, and our administration of such spousal rights and related tax reporting comport with our understanding of the Defense of Marriage Act (which defines a "marriage" as a legal union between a man and a woman and a "spouse" as a person of the opposite sex). To the extent allowed by state law, we may offer certain spousal benefits to civil union couples, domestic partners or same-sex marriages. You should be aware, however, that federal tax law does not recognize civil union couples, domestic partners or marriage spouses of the same sex. Therefore, we cannot permit a same-sex civil union partner, domestic partner or spouse to continue the annuity within the meaning of the tax law upon the death of the first partner under the annuity's "spousal continuance" provision. Please note there may be federal tax consequences at the death of the first same-sex civil union partner, domestic partner or spouse. Civil union couples, domestic partners and spouses of the same sex should consider that limitation before selecting a spousal benefit under the annuity. 18 CONTINGENT ANNUITANT Generally, if an Annuity is owned by an entity and the entity has named a Contingent Annuitant, the Contingent Annuitant will become the Annuitant upon the death of the Annuitant, and no death benefit is payable. Unless we agree otherwise, the Annuity is only eligible to have a Contingent Annuitant designation if the entity which owns the Annuity is (1) a plan described in Internal Revenue Code Section 72(s)(5)(A)(i) (or any successor Code section thereto); (2) an entity described in Code Section 72(u)(1) (or any successor Code section thereto); or (3) a Custodial Account established to hold retirement assets for the benefit of the natural person Annuitant pursuant to the provisions of Section 408(a) of the Internal Revenue Code (or any successor Code section thereto) ("Custodial Account"). Where the Annuity is held by a Custodial Account, the Contingent Annuitant will not automatically become the Annuitant upon the death of the Annuitant. Upon the death of the Annuitant, the Custodial Account will have the choice, subject to our rules, to either elect to receive the Death Benefit or elect to continue the Annuity. 19 MANAGING YOUR ACCOUNT VALUE FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS Unless you direct otherwise, your Financial Professional may forward instructions regarding your Account Value. IF YOUR FINANCIAL PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL SUCH TRANSACTIONS THAT ARE DIRECTED BY YOUR FINANCIAL PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE BEEN AUTHORIZED BY YOU. You will receive a confirmation of any financial transaction involving the purchase or sale of Units of your Annuity. You must contact us immediately if and when you revoke such authority. We will not be responsible for acting on instructions from your Financial Professional until we receive notification of the revocation of such person's authority. We may also suspend, cancel or limit these authorizations at any time. We will notify you and your Financial Professional if we implement any such restrictions or prohibitions. 20 ACCESS TO YOUR ACCOUNT VALUE TYPES OF DISTRIBUTIONS AVAILABLE TO YOU During the Accumulation Period you can access your Account Value through partial withdrawals, systematic withdrawals, and where required for tax purposes, Required Minimum Distributions. The minimum amount for each partial withdrawal is $100. You can also surrender your Annuity at any time. Depending on your instructions, we may deduct a portion of the Account Value being withdrawn or surrendered as a CDSC. Cumulative withdrawals within an Annuity Year that are less than or equal to the Guaranteed Income Amount are not subject to a CDSC. If you surrender your Annuity, in addition to any CDSC, we may deduct the Annual Maintenance Fee, and any Tax Charge that applies. Each of these types of distributions is described more fully below. SYSTEMATIC WITHDRAWALS FROM YOUR ANNUITY DURING THE ACCUMULATION PERIOD You can receive systematic withdrawals. Systematic withdrawals may be subject to any applicable CDSC. We will determine whether a CDSC applies and the amount of the CDSC in the same way as we would for a partial withdrawal. The minimum amount for each systematic withdrawal is $100. If any scheduled systematic withdrawal is for less than $100, we may postpone the withdrawal and add the expected amount to the amount that is to be withdrawn on the next scheduled systematic withdrawal. Ownership changes to and assignment of your Annuity will terminate any systematic withdrawals that had been in effect on the date of the change. Non Lifetime Withdrawals may not be taken as systematic withdrawals. SYSTEMATIC WITHDRAWALS UNDER SECTIONS 72(T)/72(Q) OF THE INTERNAL REVENUE CODE If your Annuity is used as a funding vehicle for certain retirement plans that receive special tax treatment under Sections 401, 403(b), 408 or 408A of the Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax on distributions made prior to age 59 1/2 if you elect to receive distributions as a series of "substantially equal periodic payments." For Annuities issued as non-qualified annuities, the Code may provide a similar exemption from penalty under Section 72(q) of the Code. Systematic withdrawals under Sections 72(t)/72(q) will be subject to a CDSC if they exceed the Guaranteed Income Amount under the Defined Income Benefit. To request a program that complies with Sections 72(t)/72(q), you must provide us with certain required information in writing on a form acceptable to us. We may require advance notice to allow us to calculate the amount of 72(t)/72(q) withdrawals. There is no minimum Surrender Value we require to allow you to begin a program for withdrawals under Sections 72(t)/72(q). The minimum amount for any such withdrawal is $100 and payments may be made monthly, quarterly, semi-annually or annually. You may also annuitize your Annuity and begin receiving payments for the remainder of your life (or life expectancy) as a means of receiving income payments before age 59 1/2 that are not subject to the 10% penalty. Please note that if a withdrawal under Sections 72(t) or 72(q) was scheduled to be effected between December 25/th/ and December 31/st/ of a given year, then we will implement the withdrawal on December 28 or on the last Valuation Day prior to December 28/th/ of that year. REQUIRED MINIMUM DISTRIBUTIONS Required Minimum Distributions ("RMDs") are a type of partial withdrawal we allow to meet distribution requirements under Sections 401, 403(b) or 408 of the Code. Under the Code, you may be required to begin receiving periodic amounts from your Annuity. In such case, we will allow you to make systematic withdrawals in amounts that satisfy the minimum distribution rules under the Code. RMDs for this Annuity must be taken by April 1st in the year following the date you turn age 70 1/2 and by December 31st for subsequent calendar years. Unless designated as a Non-Lifetime Withdrawal, an RMD is considered a Lifetime Withdrawal from the Annuity. The following rules apply to determine if any portion of an RMD amount will be treated as Excess Income. For purposes of this provision, in relation to any Annuity Year, the "Second Calendar Year" is the calendar year following the calendar year in which the Annuity Year began. In general, withdrawals made from the Annuity during an Annuity Year to meet the RMD provisions of the Code will not be treated as Excess Income. However, if in any Annuity Year, you take a Lifetime Withdrawal in the Second Calendar Year, then the amount which will not be treated as Excess Income is the greater of: (1)the remaining Guaranteed Income Amount for that Annuity Year, and (2)the difference between the Second Calendar Year's remaining RMD amount and the Guaranteed Income Amount. Any remaining RMD amount for the Second Calendar Year can be taken in the following Annuity Year. 21 If, in any Annuity Year, your RMD amount is not greater than the Guaranteed Income Amount, any withdrawals in excess of the Guaranteed Income Amount will be treated as Excess Income. RMD taken as systematic withdrawals will be considered Lifetime Withdrawals. Please see hypothetical examples below for details. If you do not comply with the rules described above, any withdrawal that exceeds the Guaranteed Income Amount will be treated as a withdrawal of Excess Income, which will reduce your Guaranteed Income Amount in future Annuity Years. This may include situations where you comply with the rules outlined above and then decide to take additional withdrawals after satisfying your RMD requirement from the Annuity. For purposes of this provision, RMDs are determined based on the value of this Annuity, and do not include the value of any other annuities, savings or investments subject to the RMD rules. We require three (3) days advance written notice to calculate and process the amount of your withdrawals. You must elect to have RMDs paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount that applies to systematic withdrawals applies to monthly RMDs but does not apply to RMDs taken out on a quarterly, semi-annual or annual basis. In any year in which the requirement to take RMDs is suspended by law, we reserve the right, regardless of any position taken on this issue in a prior year, to treat any amount that would have been considered as an RMD if not for the suspension as eligible for treatment under this provision. Please note that if an RMD was scheduled to be effected between December 25/th/ and December 31st of a given year, then we will implement the RMD on December 28 or on the last Valuation Day prior to December 28/th/ of that year. The following applies in the event the Defined Income Benefit terminates: We do not assess a CDSC (if applicable) on RMDs from your Annuity if you are required by law to take such RMDs from your Annuity at the time it is taken, provided the amount withdrawn is the amount we calculate as the RMD. However, a CDSC (if applicable) may be assessed on that portion of a systematic withdrawal that is taken to satisfy the RMD rules in relation to other savings or investment plans under other qualified retirement plans. You may also annuitize your Annuity and begin receiving payments for the remainder of your life (or life expectancy) as a means of receiving income payments and satisfying the RMD rules under the Code. RMD rules do not apply to Roth IRAs during the Owner's lifetime. See "Tax Considerations" for a further discussion of RMDs. EXAMPLE The following example is purely hypothetical and intended to illustrate a scenario as described above. Note that withdrawals must comply with all IRS guidelines in order to satisfy the RMD for the current calendar year. Assumptions: RMD Calendar Year 01/01/2013 to 12/31/2013 Annuity Year 06/01/2012 to 05/31/2013 Guaranteed Income Amount and RMD Amount Guaranteed Income Amount = $5,000 Remaining Guaranteed Income Amount as of 1/3/2013 = $3,000 (a $2,000 withdrawal was taken on 7/1/2012) RMD Amount for Calendar Year 2013 = $6,000 The amount you may withdraw in the current Annuity Year (between 1/3/2013 and 5/31/2013) without it being treated as Excess Income is $4,000. Here is the calculation: $3,000 + ($6,000 - $5,000) = $4,000. If the $4,000 withdrawal is taken in the current Annuity Year (prior to 6/1/2013), the remaining Guaranteed Income Amount will be zero and the remaining RMD amount of $2,000 may be taken in the subsequent Annuity Year beginning on 6/1/2013 (when your Guaranteed Income Amount is reset to $5,000). If you had chosen to not take any additional withdrawals until on or after 6/1/2013, then you would be eligible to withdraw $6,000 without it being treated as a withdrawal of Excess Income. 22 SURRENDERS SURRENDER VALUE During the Accumulation Period you can surrender your Annuity at any time, and you will receive the Surrender Value. Upon surrender of your Annuity, you will no longer have any rights under the surrendered Annuity. Your Surrender Value is equal to the Account Value less any applicable CDSC, any applicable tax charges, and any Annual Maintenance Fee. We require a minimum Surrender Value of $2,000 after any Partial Withdrawal. We waive this requirement while the Defined Income Benefit is in effect, if you are withdrawing the Guaranteed Income Amount, provided you do not take a withdrawal of Excess Income. See "Annuity Options" for information on the impact of the minimum Surrender Value at annuitization. MEDICALLY-RELATED SURRENDERS Where permitted by law, you may request to surrender all or part of your Annuity prior to the Annuity Date without application of any otherwise applicable CDSC upon occurrence of a medically-related "Contingency Event" as described below (a "Medically-Related Surrender"). Please note, this applies to either owner if you elected the spousal version of the benefit. If you request a full surrender, the amount payable will be your Account Value. Although a CDSC will not apply to qualifying Medically-Related Surrenders, please be aware that a withdrawal from the Annuity before you have reached age 59 1/2 may be subject to a 10% tax penalty and other tax consequences - see the Tax Considerations section of this prospectus. We waive any applicable CDSC only if: . the Owner is an entity, the Annuitant must have been named or any change of Annuitant must have been accepted by us, prior to the "Contingency Event" described below in order to qualify for a Medically-Related Surrender; . the Owner is an entity, the Annuitant must be alive as of the date we pay the proceeds of such surrender request; . the Owner is one or more natural persons, all such Owners must also be alive at such time; . we receive satisfactory proof of the Owner's (or the Annuitant's if entity-owned) confinement in a Medical Care Facility or Fatal Illness in writing on a form satisfactory to us; and/or . no additional Purchase Payments can be made to the Annuity. We reserve the right to impose a maximum amount of a Medically-Related Surrender (equal to $500,000), but we do not currently impose that maximum. That is, if the amount of a partial medically-related withdrawal request, when added to the aggregate amount of Medically-Related Surrenders you have taken previously under this Annuity and any other annuities we and/or our affiliates have issued to you exceeds that maximum amount, we reserve the right to treat the amount exceeding that maximum as not an eligible Medically-Related Surrender. A "Contingency Event" occurs if the Owner (or Annuitant if entity-owned) is: . first confined in a "Medical Care Facility" after the Issue Date and while the Annuity is in force, remains confined for at least 90 consecutive days, and remains confined on the date we receive the Medically-Related Surrender request at our Service Office; or . first diagnosed as having a "Fatal Illness" after the Issue Date and while the Annuity is in force. We may require a second or third opinion by a licensed physician chosen by us regarding a diagnosis of Fatal Illness. We will pay for any such second or third opinion. "Fatal Illness" means a condition (a) diagnosed by a licensed physician; and (b) that is expected to result in death within 24 months after the diagnosis in 80% of the cases diagnosed with the condition. "Medical Care Facility" means a facility operated and licensed pursuant to the laws of any United States jurisdiction providing medically necessary in-patient care, which is (a) prescribed by a licensed physician in writing; (b) recognized as a general hospital or long-term care facility by the proper authority of the United States jurisdiction in which it is located; (c) recognized as a general hospital by the Joint Commission on the Accreditation of Hospitals; and (d) certified as a hospital or long-term care facility; OR (e) a nursing home licensed by the United States jurisdiction in which it is located and offers the services of a Registered Nurse (RN) or Licensed Practical Nurse (LPN) 24 hours a day that maintains control of all prescribed medications dispensed and daily medical records. 23 ANNUITY OPTIONS Annuitization involves converting your Account Value to an annuity payment stream, the length of which depends on the terms of the applicable annuity option. Thus, once annuity payments begin any payment upon death is determined solely under the terms of the applicable annuity payment option, and you no longer participate in the Defined Income Benefit (unless you have annuitized under that benefit). We currently make annuity options available that provide fixed annuity payments. Fixed annuity payments provide the same amount with each payment. You must annuitize your entire Account Value; partial annuitizations are not allowed. You have a right to choose your annuity start date, provided that it is no later than the first day of the calendar month next following the 95th birthday of the oldest of any Owner and Annuitant whichever occurs first ("Latest Annuity Date") and no earlier than the earliest permissible Annuity Date. You may choose one of the Annuity Options described below, and the frequency of annuity payments. You may change your choices before the Annuity Date. If you have not provided us with your Annuity Date or annuity payment option in writing, then your Annuity Date will be the Latest Annuity Date. Certain annuity options and/or periods certain may not be available, depending on the age of the Annuitant. If a CDSC is still remaining on your Annuity, any period certain must be at least 10 years (or the maximum period certain available, if life expectancy is less than 10 years). If needed, we will require proof in Good Order of the Annuitant's age before commencing annuity payments. Likewise, we may require proof in Good Order that an Annuitant is still alive, as a condition of our making additional annuity payments while the Annuitant lives. We will seek to recover any life income annuity payments that we made after the death of the Annuitant. If the initial monthly annuity payment would be less than $100, we will not allow you to annuitize (except as otherwise specified by applicable law). Instead, we will pay you your current Account Value in a lump sum and terminate your Annuity. Similarly, we reserve the right to pay your Account Value in a lump sum, rather than allow you to annuitize, if the Surrender Value of your Annuity is less than $2,000 on the Annuity Date. Once annuity payments begin, you no longer receive benefits under the Defined Income Benefit (unless you have annuitized under that benefit) or the Death Benefit described below. Certain of these annuity options may be available as "settlement options" to Beneficiaries who choose to receive the Death Benefit proceeds as a series of payments instead of a lump sum payment. Please note that you may not annuitize within the first Annuity Year (except as otherwise specified by applicable law). ANNUITY PAYMENTS UNDER THE DEFINED INCOME BENEFIT If annuity payments are to begin under the terms of your Annuity, or if you decide to begin receiving annuity payments and there is a Guaranteed Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value, less any applicable tax charges, to any other annuity option available for annuity payments not under the Defined Income Benefit (annuity Option 1 and Option 2, described below); or (2)request that, as of the date annuity payments are to begin, we make annuity payments each year equal to the Guaranteed Income Amount on that date. If this option is elected, the Guaranteed Income Amount will not increase after annuity payments have begun. We will make payments until the death of the Single Designated Life or the Remaining Designated Life. We must receive your request in a form acceptable to us at our Service Office. If applying your Account Value, less any applicable tax charges, to the life-only annuity payment rates results in a higher annual payment, we will give you the higher annual payment. In the absence of an election when mandatory annuity payments are to begin we currently make annual annuity payments as: . a joint life and last survivor fixed annuity if both Spousal Designated Lives are living and each other's Spouse on the date annual annuity payments would begin, or . as a single life fixed annuity if there is a Remaining Designated Life, or this Rider was issued with a Single Designated Life. In addition, each of the payments above will consist of ten payments certain (or a lesser number of payments certain if the life expectancy of the Annuitant at the time payments are to begin is less than 10 years, based on applicable Internal Revenue Service tables), by applying the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. We reserve the right at any time to increase or decrease the length of any annuity payout option, including but not limited to any period certain in order to comply with the Code (e.g., to shorten the period certain to match life expectancy under applicable Internal Revenue Service tables). The amount that will be applied to provide such annuity payments will be the greater of: (1)the present value of the future Guaranteed Income Amount payments; and (2)the Account Value. Once we receive your election to commence annuity payments, or we make the first payment under a default annuity payment option provision, we will only make annuity payments guaranteed under the specific annuity payment option, and the annuity payment option cannot be changed. 24 ONCE ANNUITY PAYMENTS BEGIN UNDER THE TERMS OF THE ANNUITY OR THE DEFINED INCOME BENEFIT, THE DEATH BENEFIT FEATURE OF THE DEFINED INCOME BENEFIT WILL TERMINATE. ANNUITY PAYMENT OPTIONS If annuity payments are to begin under the terms of your Annuity, you can elect to apply your Account Value less any applicable tax charges to one of the following two options. Annuity Options 1 and 2 will always be available for election. OPTION 1 ANNUITY PAYMENTS FOR A PERIOD CERTAIN: Under this option, we will make equal payments for the period chosen, up to 25 years (but not to exceed the life expectancy of the Annuitant at the time the Annuity Option becomes effective, as computed under applicable IRS tables). The annuity payments may be made monthly, quarterly, semiannually, or annually, as you choose, for the fixed period. If the Owner dies during the income phase, payments will continue to any surviving Owner, or if there is no surviving Owner, the named Beneficiary or your estate if no Beneficiary is named for the remainder of the period certain. OPTION 2 LIFE INCOME ANNUITY OPTION WITH A PERIOD CERTAIN: Under this option, income is payable monthly, quarterly, semiannually, or annually for the number of years selected (the "period certain"), subject to our then current rules, and thereafter until the death of the Annuitant. Should the Owner or Annuitant die before the end of the period certain, the remaining period certain payments are paid to any surviving Owner, or if there is no surviving Owner, the named Beneficiary, or your estate if no Beneficiary is named, until the end of the period certain. If an annuity option is not selected by the Annuity Date, this is the option we will automatically select for you. We will use a period certain of 10 years, or a shorter duration if the Annuitant's life expectancy at the time the Annuity Option becomes effective, as computed under applicable IRS tables, is less than 10 years. If in this instance the duration of the period certain is prohibited by applicable law, then we will pay you a lump sum in lieu of this option. OTHER ANNUITY OPTIONS WE MAY MAKE AVAILABLE At the Annuity Date, we may make available other annuity options not described above. The additional options we currently offer are: . Life Annuity Option. We currently make available an annuity option that makes payments for the life of the Annuitant. Under that option, income is payable monthly, quarterly, semiannually, or annually, as you choose, until the death of the Annuitant. No additional annuity payments are made after the death of the Annuitant. No minimum number of payments is guaranteed. It is possible that only one payment will be payable if the death of the Annuitant occurs before the date the second payment was due, and no other payments nor death benefits would be payable. . Joint Life Annuity Option. Under the joint lives option, income is payable monthly, quarterly, semiannually, or annually, as you choose, during the joint lifetime of two Annuitants, ceasing with the last payment prior to the death of the second to die of the two Annuitants. No minimum number of payments is guaranteed under this option. It is possible that only one payment will be payable if the death of all the Annuitants occurs before the date the second payment was due, and no other payments or death benefits would be payable. . Joint Life Annuity Option With a Period Certain. Under this option, income is payable monthly, quarterly, semiannually, or annually for the number of years selected (the "period certain"), subject to our current rules, and thereafter during the joint lifetime of two Annuitants, ceasing with the last payment prior to the death of the second to die of the two Annuitants. If the Annuitants' joint life expectancy is less than the period certain, we will institute a shorter period certain, determined according to applicable IRS tables. Should the two Annuitants die before the end of the period certain, the remaining period certain payments are paid to any surviving Owner, or if there is no surviving Owner, the named Beneficiary, or to your estate if no Beneficiary is named, until the end of the period certain. We reserve the right to cease offering any of these Other Annuity Options. If we do so, we will amend this prospectus to reflect the change. We reserve the right to make available other annuity or settlement options. 25 DEATH BENEFIT DEATH BENEFIT UNDER THE DEFINED INCOME BENEFIT If you elected the Single version of the Defined Income Benefit on the Issue Date, and while it is in effect, the Death Benefit payable upon the death of the Single Designated Life, provided that we have not yet begun making Guarantee Payments, is the Return of Purchase Payments Death Benefit. If you elected the Spousal version of the Defined Income Benefit on the Issue Date, and while it is in effect, the Death Benefit payable upon the First Death is the Account Value. The Death Benefit payable upon the death of the Remaining Designated Life, provided that we have not yet begun making Guarantee Payments, is the Return of Purchase Payments Death Benefit. The Return of Purchase Payments Death Benefit is equal to the greater of: . the Account Value, or . the Return of Purchase Payments Amount described below. If we do not receive Due Proof of Death within one year of the death of the Owner (Annuitant if the Annuity is owned by an entity in the case of a Single Designated Life) or the death of the Remaining Designated Life in the case of Spousal Designated Lives, the Death Benefit payable is the Account Value. We reserve the right to waive or extend, on a non-discriminatory basis, our right to enforce the one year deadline for Due Proof of Death. This right will only apply for purposes of determining the amount payable as a Death Benefit, and in no way restricts when a claim may be filed. PLEASE NOTE THAT THE RETURN OF PURCHASE PAYMENTS DEATH BENEFIT IS PAYABLE ONLY IF THE DEFINED INCOME BENEFIT IS IN EFFECT, AND UNTIL WE MAKE GUARANTEE PAYMENTS UNDER THE DEFINED INCOME BENEFIT OR ANNUITY PAYMENTS BEGIN. ONCE GUARANTEE PAYMENTS OR ANNUITY PAYMENTS BEGIN, THERE IS NO MORE DEATH BENEFIT. ALL OTHER PROVISIONS APPLICABLE TO DEATH BENEFITS UNDER YOUR ANNUITY WILL CONTINUE TO APPLY. Return of Purchase Payments Amount On the Issue Date, the Return of Purchase Payments Amount is equal to your Account Value. On each subsequent Valuation Day, until the date we receive Due Proof of Death of the Single Designated Life or the Remaining Designated Life, as applicable, the Return of Purchase Payments Amount is: . increased by any Purchase Payments made on the current Valuation Day and, . reduced by the effect of withdrawals made on the current Valuation Day, as described below. A Non-Lifetime Withdrawal will proportionately reduce the Return of Purchase Payments Amount by the ratio of the Non-Lifetime Withdrawal to the Account Value immediately prior to the Non-Lifetime Withdrawal. A Lifetime Withdrawal that is not considered Excess Income, including Required Minimum Distributions, will reduce the Return of Purchase Payments Amount by the amount of the withdrawal. (For more information about the impact of RMDs, please see "Required Minimum Distributions" section. All or a portion of a Lifetime Withdrawal that is considered Excess Income will proportionately reduce the Return of Purchase Payments Amount by the ratio of the Excess Income to the Account Value immediately prior to the withdrawal of the Excess Income. DEATH BENEFIT UPON TERMINATION OF THE DEFINED INCOME BENEFIT If you have taken actions that have caused the Defined Income Benefit to be terminated, then the Death Benefit is equal to the Account Value, and payable: 1) If the Annuity is owned by one or more natural persons, upon the death of the Owner (or the first to die, if there are multiple Owners). 2) If an Annuity is owned by an entity, upon the Annuitant's death if there is no Contingent Annuitant. Generally, if a Contingent Annuitant was designated before the Annuitant's death and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and a Death Benefit will not be paid upon the Annuitant's death. YOU SHOULD CAREFULLY CONSIDER ANY POSSIBLE ACTIONS BY YOU THAT WOULD CAUSE THE DEFINED INCOME BENEFIT TO BE TERMINATED, AS IT WILL IMPACT THE VALUE PAYABLE AS A DEATH BENEFIT. GENERAL DEATH BENEFIT PROVISIONS We determine the amount of the Death Benefit as of the date we receive Due Proof of Death. We must be made aware of the entire universe of eligible Beneficiaries in order for us to have received Due Proof of Death. Any given Beneficiary must submit the written information we require in order to be paid his/her share of the Death Benefit. Once we have received Due Proof of Death, each eligible Beneficiary may take his/her portion of the Death Benefit in one of the forms described in this prospectus (e.g., distribution of the entire interest in the Annuity within 5 years after the date of death, or as periodic payments over a period not extending beyond the life or life expectancy of the Beneficiary - see "Payment of Death Benefits" below). 26 No Death Benefit will be payable if the Annuity terminates or your Account Value reaches zero (which can happen if, for example, you are taking withdrawals under the Defined Income Benefit). Any Death Benefit amount not paid in full on the date of Due Proof of Death is subject to fluctuation in value due to the investment performance of the Sub-account until the Death Benefit is paid out in full. Where an Annuity is structured so that it is owned by a grantor trust but the Annuitant is not the grantor, then the Annuity is required to terminate upon the death of the grantor if the grantor pre-deceases the Annuitant under Section 72(s) of the Code. Under this circumstance, the Surrender Value will be paid out to the trust and there is no Death Benefit provided under the Annuity. SPOUSAL CONTINUATION OF YOUR ANNUITY Unless you designate a Beneficiary other than your spouse, upon the death of either spousal Owner, the surviving spouse may elect to continue ownership of the Annuity instead of taking the Death Benefit. No CDSC will apply to Purchase Payments made prior to the effective date of a spousal continuance. However, any additional Purchase Payments applied after the effective date of a spousal continuation will be subject to all provisions of the Annuity, including the CDSC when applicable. If you elected the Single version of the Defined Income Benefit on the Issue Date and it is in effect on the date of Due Proof of Death, if your spouse chooses to continue ownership of the Annuity the Account Value is increased, if necessary, to equal the Return of Purchase Payments Amount, and the Defined Income Benefit will terminate. If you elected the Spousal version of the Defined Income Benefit on the Issue Date and it is in effect on the date of Due Proof of Death of the First Death, . If the Remaining Designated Life chooses to continue the Annuity, the Defined Income Benefit will remain in force. . If a Death Benefit is not payable (e.g., if the first of the Spousal Designated Lives to die is the Beneficiary but not an Owner), the Defined Income Benefit will remain in force unless we are instructed otherwise. . Upon death of the Remaining Designated Life, if their spouse chooses to continue ownership of the Annuity the Account Value is increased, if necessary, to equal the Return of Purchase Payments Amount, and the Defined Income Benefit will terminate. Spousal continuation is also permitted, subject to our rules and regulatory approval, if the Annuity is held by a custodial account established to hold retirement assets for the benefit of the natural person Annuitant pursuant to the provisions of Section 408(a) of the Code ("Custodial Account") and, on the date of the Annuitant's death, the spouse of the Annuitant is (1) the Contingent Annuitant under the Annuity and (2) the Beneficiary of the Custodial Account. The ability to continue the Annuity in this manner will result in the Annuity no longer qualifying for tax deferral under the Code. However, such tax deferral should result from the ownership of the Annuity by the Custodial Account. Please consult your tax or legal advisor. A surviving spouse's ability to continue ownership of the Annuity may be impacted by the Defense of Marriage Act (see "Managing Your Annuity - Spousal Designations"). Please consult your tax or legal advisor for more information about such impact in your state. Your Annuity may only be continued under the spousal continuation provision once. PAYMENT OF DEATH BENEFITS ALTERNATIVE DEATH BENEFIT PAYMENT OPTIONS - ANNUITIES OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED PLANS) Except in the case of a spousal continuation as described above, upon your death, certain distributions must be made under the Annuity. The required distributions depend on whether you die before you start taking annuity payments under the Annuity or after you start taking annuity payments under the Annuity. If you die on or after the Annuity Date, the remaining portion of the interest in the Annuity must be distributed at least as rapidly as under the method of distribution being used as of the date of death. In the event of the decedent's death before the Annuity Date, the Death Benefit must be distributed: . within five (5) years of the date of death (the "5 Year Deadline"); or . as a series of payments not extending beyond the life expectancy of the Beneficiary or over the life of the Beneficiary Payments under this option must begin within one year of the date of death. If the Beneficiary does not begin installments by such time, then we require that the Beneficiary take the Death Benefit as a lump sum within the 5 Year Deadline. ALTERNATIVE DEATH BENEFIT PAYMENT OPTIONS - ANNUITIES HELD BY TAX-FAVORED PLANS The Code provides for alternative death benefit payment options when an Annuity is used as an IRA, 403(b) or other "qualified investment" that requires minimum distributions. Upon your death under an IRA, 403(b) or other "qualified investment", the designated Beneficiary may generally elect to continue the Annuity and receive Required Minimum Distributions under the Annuity instead of receiving the Death Benefit in a single payment. The available payment options will depend on whether you die before the date Required Minimum Distributions under the Code were to begin, whether you have named a designated Beneficiary and whether the Beneficiary is your surviving spouse. 27 . If you die after a designated Beneficiary has been named, the death benefit must be distributed by December 31st of the year including the five year anniversary of the date of death (the "Qualified 5 Year Deadline"), or as periodic payments not extending beyond the life expectancy of the designated Beneficiary (provided such payments begin by December 31st of the year following the year of death). If the Beneficiary does not begin installments by such time, then we require that the Beneficiary take the Death Benefit as a lump sum by the Qualified 5 Year Deadline. However, if your surviving spouse is the Beneficiary, the death benefit can be paid out over the life expectancy of your spouse with such payments beginning no later than December 31st of the year following the year of death, or December 31st of the year in which you would have reached age 70 1/2, whichever is later. Additionally, if the Death Benefit is solely payable to (or for the benefit of) your surviving spouse, then the Annuity may be continued with your spouse as the Owner. . If you die before a designated Beneficiary is named and before the date Required Minimum Distributions must begin under the Code, the Death Benefit must be paid out by the Qualified 5 Year Deadline. If the Beneficiary does not begin installments by December 31st of the year following the year of death, we will require that the Beneficiary take the Death Benefit as a lump sum by the Qualified 5 Year Deadline. For Annuities where multiple Beneficiaries have been named and at least one of the Beneficiaries does not qualify as a designated Beneficiary and the account has not been divided into Separate Accounts by December 31st of the year following the year of death, such Annuity is deemed to have no designated Beneficiary. . If you die before a designated Beneficiary is named and after the date Required Minimum Distributions must begin under the Code, the Death Benefit must be paid out at least as rapidly as under the method then in effect. For Annuities where multiple Beneficiaries have been named and at least one of the Beneficiaries does not qualify as a designated Beneficiary and the account has not been divided into Separate Accounts by December 31st of the year following the year of death, such Annuity is deemed to have no designated Beneficiary. A Beneficiary has the flexibility to take out more each year than mandated under the Required Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment" continue to be tax deferred. Amounts withdrawn each year, including amounts that are required to be withdrawn under the Required Minimum Distribution rules, are subject to tax. You may wish to consult a professional tax advisor for tax advice as to your particular situation. For a Roth IRA, if death occurs before the entire interest is distributed, the Death Benefit must be distributed under the same rules applied to IRAs where death occurs before the date Required Minimum Distributions must begin under the Code. The tax consequences to the Beneficiary may vary among the different Death Benefit payment options. See the Tax Considerations section of this prospectus, and consult your tax advisor. 28 FEES, CHARGES AND DEDUCTIONS In this section, we provide detail about the charges you incur if you own the Annuity. The charges under the Annuity are designed to cover, in the aggregate, our direct and indirect costs of selling, administering and providing benefits under the Annuity. They are also designed, in the aggregate, to compensate us for the risks of loss we assume. If, as we expect, the charges that we collect from the Annuity exceed our total costs in connection with the Annuity, we will earn a profit. Otherwise we will incur a loss. For example, Pruco Life of New Jersey may make a profit on the Insurance Charge if, over time, the actual costs of providing the guaranteed insurance obligations and other expenses under the Annuity are less than the amount we deduct for the Insurance Charge. To the extent we make a profit on the Insurance Charge, such profit may be used for any other corporate purpose. The rates of certain of our charges have been set with reference to estimates of the amount of specific types of expenses or risks that we will incur. In general, a given charge under the Annuity compensates us for our costs and risks related to that charge and may provide for a profit. However, it is possible that with respect to a particular obligation we have under this Annuity, we may be compensated not only by the charge specifically tied to that obligation, but also from one or more other charges we impose. With regard to charges that are assessed as a percentage of the value of the Sub-account, please note that such charges are assessed through a reduction to the Unit value of your investment in the Sub-account, and in that way reduce your Account Value. INSURANCE CHARGE: We deduct an Insurance Charge daily based on the annualized rate shown in the "Summary of Contract Fees and Charges." The charge is assessed against the assets allocated to the Sub-account. The Insurance Charge is the combination of the Mortality & Expense Risk Charge, the Administration Charge, and the Defined Income Benefit Charge. The Insurance Charge is intended to compensate Pruco Life of New Jersey for providing the insurance benefits under the Annuity, including the Annuity's Death Benefit that provides guaranteed benefits to your Beneficiaries even if your Account Value declines, and the risk that persons we guarantee annuity payments to will live longer than our assumptions. The charge also covers administrative costs associated with providing the Annuity benefits, including preparation of the contract and prospectus, confirmation statements, annual account statements and annual reports, legal and accounting fees as well as various related expenses. The charge covers the risk that our assumptions about the mortality risks and expenses under the Annuity are incorrect and that we have agreed not to increase these charges over time despite our actual costs. Finally, the charge compensates Pruco Life of New Jersey for providing the insurance benefits provided under the Defined Income Benefit, Guarantee Payments, and the Return of Purchase Payments Death Benefit. As described in the "Summary of Contract Fees and Charges," we may adjust the Defined Income Benefit Charge one or more times at any time on or after the 5th anniversary of your Issue Date up to the maximum amount reflected therein. We will notify you in advance of any change in the Charge. The Defined Income Benefit is neither optional nor revocable. However, if the Defined Income Benefit terminates according to the terms of the benefit, then the Defined Income Benefit Charge component of the Insurance Charge will no longer be assessed. We will not refund any charges you have paid. FEES AND EXPENSES INCURRED BY THE PORTFOLIO: The Portfolio incurs total annualized operating expenses comprised of an investment management fee, other expenses and any distribution and service (12b-1) fees or short sale expenses that may apply. These fees and expenses are reflected daily by the Portfolio before it provides Pruco Life of New Jersey with the net asset value as of the close of business each Valuation Day. More detailed information about fees and expenses can be found in the prospectus for the Portfolio. ANNUAL MAINTENANCE FEE: Prior to Annuitization, we deduct an Annual Maintenance Fee. The Annual Maintenance Fee is equal to $50 or 2% of your Account Value, whichever is less. This fee will be deducted annually on the anniversary of the Issue Date of your Annuity or, if you surrender your Annuity during the Annuity Year, the fee is deducted at the time of surrender unless the surrender is taken within 30 days of most recently assessed Annual Maintenance Fee. The fee is taken from the Sub-account. The Annual Maintenance Fee is only deducted if the sum of the Purchase Payments at the time the fee is deducted is less than $100,000. We do not impose the Annual Maintenance Fee upon Annuitization (unless Annuitization occurs on an Annuity anniversary), or the payment of a Death Benefit. CONTINGENT DEFERRED SALES CHARGE ("CDSC"): The CDSC reimburses us for expenses related to sales and distribution of the Annuity, including commissions, marketing materials and other promotional expenses. We may deduct a CDSC if you surrender your Annuity or when you make a partial withdrawal. The CDSC is calculated as a percentage of your Purchase Payment being surrendered or withdrawn. The CDSC percentage varies with the number of years that have elapsed since each Purchase Payment being withdrawn was made. If a withdrawal is effective on the day before the anniversary of the date that the Purchase Payment being withdrawn was made, then the CDSC percentage as of the next following year will apply. The CDSC percentages are shown under "Summary of Contract Fees and Charges." 29 With respect to a partial withdrawal, we calculate the CDSC by assuming that partial withdrawals are taken from Purchase Payments that have not been previously withdrawn, on a first-in, first-out basis, and subsequently from any other Account Value in the Annuity (such as gains). In a "gross" withdrawal, you request a specific withdrawal amount, with the understanding that the amount you actually receive is reduced by each applicable amount. In a "net" withdrawal, you request a withdrawal for an exact dollar amount, with the understanding that any amount deducted (e.g., for a CDSC) is taken from your remaining Account Value. If you request a gross withdrawal, you may receive less than the specified dollar amount, as any applicable CDSC and tax withholding would be deducted from the amount you requested. If you request a net withdrawal, a larger amount may be deducted from your Account Value in order for you to receive the specified dollar amount after any applicable CDSC, and tax withholding is assessed. Under the Defined Income Benefit, Non-Lifetime Withdrawals, excluding those designated as Required Minimum Distributions, are subject to any applicable CDSC. Lifetime Withdrawals in an Annuity Year that, in total, do not exceed the Guaranteed Income Amount are not subject to a CDSC. Each withdrawal of Excess Income under the Defined Income Benefit is subject to any applicable CDSC. Withdrawals of Excess Income will reduce the benefits under the Defined Income Benefit. (Please see the "Living Benefit" and "Death Benefit" sections of this prospectus for information on the impact of withdrawals of Excess Income.) Please be aware that under the Defined Income Benefit: (a) for a gross withdrawal, if the amount requested exceeds the Guaranteed Income Amount, the excess portion will be treated as Excess Income and (b) for a net withdrawal, if the amount you receive plus the amount of the CDSC deducted from your Account Value exceeds the Guaranteed Income Amount, the excess portion will be treated as Excess Income. Upon surrender, we calculate a CDSC based on any Purchase Payments that have not been withdrawn. The amount of such Purchase Payments could be greater than your remaining Account Value. This could occur if you have made prior partial withdrawals or if your Account Value has declined in value due to negative market performance. Thus, for example, the CDSC could be greater than if it were calculated as a percentage of the remaining Account Value. We may waive any applicable CDSC under certain circumstances described herein. ANNUITY PAYMENT OPTION CHARGES If you select a fixed payment option the amount of each fixed payment will depend on the Account Value of your Annuity when you elected to annuitize. There is no specific charge deducted from these payments; however, the amount of each annuity payment reflects assumptions about our insurance expenses. Also, a tax charge may apply. EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES We may reduce or eliminate certain fees and charges or alter the manner in which the particular fee or charge is deducted. For example, we may reduce the amount of any CDSC or the length of time it applies, reduce or eliminate the amount of the Annual Maintenance Fee or reduce the portion of the total Insurance Charge that is deducted as an Administration Charge. We will not discriminate unfairly between Annuity purchasers if and when we reduce any fees and charges. 30 VALUING YOUR INVESTMENT VALUING THE SUB-ACCOUNT Currently only one Sub-account is available with the Annuity. When you allocate Account Value to the Sub-account, you are purchasing Units of the Sub-account. The Sub-account invests exclusively in shares of an underlying Portfolio. The value of the Units fluctuates with the market fluctuations of the Portfolio. The value of the Units also reflects the daily accrual for the Insurance Charge. Each Valuation Day, we determine the price for a Unit of the Sub-account, called the "Unit Price." The Unit Price is used for determining the value of transactions involving Units of the Sub-account. We determine the number of Units involved in any transaction by dividing the dollar value of the transaction by the Unit Price of the Sub-account as of the Valuation Day. There may be different Unit Prices for the Sub-account to reflect possible variations in charges for the Defined Income Benefit. The Unit Price for the Units you purchase will be based on the total charges that apply to your Annuity. PROCESSING AND VALUING TRANSACTIONS Pruco Life of New Jersey is generally open to process financial transactions on those days that the New York Stock Exchange (NYSE) is open for trading. There may be circumstances where the NYSE does not open on a regularly scheduled date or time or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Generally, financial transactions requested in Good Order before the close of regular trading on the NYSE will be processed according to the value next determined following the close of business. Financial transactions requested on a non-business day or after the close of regular trading on the NYSE will be processed based on the value next computed on the next Valuation Day. There may be circumstances when the opening or closing time of regular trading on the NYSE is different than other major stock exchanges, such as NASDAQ or the American Stock Exchange. Under such circumstances, the closing time of regular trading on the NYSE will be used when valuing and processing transactions. The NYSE is closed on the following nationally recognized holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those dates, we will not process any financial transactions involving purchase or redemption orders. Pruco Life of New Jersey will also not process financial transactions involving purchase or redemption orders or transfers on any day that: . trading on the NYSE is restricted; . an emergency, as determined by the SEC, exists making redemption or valuation of securities held in the Separate Account impractical; or . the SEC, by order, permits the suspension or postponement for the protection of security holders. We have arrangements with certain selling firms, under which receipt by the firm in Good Order prior to our cut-off time on a given Valuation Day is treated as receipt by us on that Valuation Day for pricing purposes. Currently, we have such an arrangement with Citigroup Global Markets Inc. ("CGM"). We extend this pricing treatment to orders that you submit directly through CGM and to certain orders submitted through Morgan Stanley Smith Barney LLC ("MSSB") where CGM serves as clearing firm for MSSB. Your MSSB registered representative can tell you whether your order will be cleared through CGM. The arrangements with CGM and MSSB may be terminated at any time or modified in certain circumstances. INITIAL PURCHASE PAYMENTS: We are required to allocate your initial Purchase Payment to the Sub-account within two (2) Valuation Days after we receive the Purchase Payment in Good Order at our Service Office. If we do not have all the required information to allow us to issue your Annuity, we may retain the Purchase Payment while we try to reach you or your representative to obtain all of our requirements. If we are unable to obtain all of our required information within five (5) Valuation Days, we are required to return the Purchase Payment to you at that time, unless you specifically consent to our retaining the Purchase Payment while we gather the required information. Once we obtain the required information, we will invest the Purchase Payment and issue an Annuity within two (2) Valuation Days. With respect to your initial Purchase Payment that is pending investment in our separate account, we may hold the amount temporarily in a suspense account and may earn interest on such amount. You will not be credited with interest during that period. As permitted by applicable law, the broker-dealer firm through which you purchase your Annuity may forward your initial Purchase Payment to us prior to approval of your purchase by a registered principal of the firm. These arrangements are subject to a number of regulatory requirements, including that until such time that we are notified of the firm's principal approval and is provided with the application, or we are notified of the firm principal's rejection, your funds will be held by us in a segregated bank account. In addition, we must promptly return your funds at your request prior to the firm's principal approval or upon the firm's rejection of the application. The monies held in the bank account will be held in a suspense account within our general account and we may earn interest on amounts held in that suspense account. You will not be credited with any interest earned on amounts held in that suspense account. The monies in such suspense account may be subject to our general creditors. Moreover, because the FINRA rule authorizing the use of such accounts is new, there may be uncertainty as to the segregation and treatment of such insurance company general account assets under applicable Federal and State laws. ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase Payments we accept on the Valuation Day that we receive the Purchase Payment at our Service Office in Good Order. 31 SCHEDULED TRANSACTIONS: Scheduled transactions include transfers under systematic withdrawals, Required Minimum Distributions, substantially equal periodic payments under section 72(t)/72(q) of the Code, and annuity payments. Scheduled transactions are processed and valued as of the date they are scheduled, unless the scheduled day is not a Valuation Day. In that case, the transaction will be processed and valued on the next Valuation Day, unless (with respect to Required Minimum Distributions, substantially equal periodic payments under Section 72(t)/72(q) of the Code, and annuity payments only), the next Valuation Day falls in the subsequent calendar year, in which case the transaction will be processed and valued on the prior Valuation Day. UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other non-scheduled partial withdrawals or Surrenders. With respect to certain written requests to withdraw Account Value, we may seek to verify the requesting Owner's signature. Specifically, we reserve the right to perform a signature verification for (a) any withdrawal exceeding a certain dollar amount and (b) a withdrawal exceeding a certain dollar amount if the payee is someone other than the Owner. In addition, we will not honor a withdrawal request in which the requested payee is the Financial Professional or agent of record. We reserve the right to request a signature guarantee with respect to a written withdrawal request. If we do perform a signature verification, we will pay the withdrawal proceeds within 7 days after the withdrawal request was received by us in Good Order, and will process the transaction in accordance with the discussion in "Processing And Valuing Transactions" MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender requests and Death Benefit claims require our review and evaluation before processing. We price such transactions as of the date we receive at our Service Office in Good Order all supporting documentation we require for such transactions. We are generally required by law to pay any surrender request or death benefit claims from the Separate Account within 7 days of our receipt of your request in Good Order at our Service Office. 32 TAX CONSIDERATIONS The tax considerations associated with an Annuity vary depending on whether the contract is (i) owned by an individual or non-natural person, and not associated with a tax-favored retirement plan, or (ii) held under a tax-favored retirement plan. We discuss the tax considerations for these categories of contracts below. The discussion is general in nature and describes only federal income tax law (not state or other tax laws). It is based on current law and interpretations, which may change. The information provided is not intended as tax advice. You should consult with a qualified tax advisor for complete information and advice. References to Purchase Payments below relate to your cost basis in your contract. Generally, your cost basis in a contract not associated with a tax-favored retirement plan is the amount you pay into your contract, or into annuities exchanged for your contract, on an after-tax basis less any withdrawals of such payments. Cost basis for a tax-favored retirement plan is provided only in limited circumstances, such as for contributions to a Roth IRA or nondeductible IRA. The discussion includes a description of certain spousal rights under the contract, and our administration of such spousal rights and related tax reporting comport with our understanding of the Defense of Marriage Act (which defines a "marriage" as a legal union between a man and a woman and a "spouse" as a person of the opposite sex). To the extent allowed by state law, we may offer certain spousal benefits to civil union couples, domestic partners or same-sex marriages. You should be aware, however, that federal tax law does not recognize civil union couples, domestic partners or marriage spouses of the same sex. Therefore, we cannot permit a same-sex civil union partner, domestic partner or spouse to continue the annuity within the meaning of the tax law upon the death of the first partner under the annuity's "spousal continuance" provision. Please note there may be federal tax consequences at the death of the first same-sex civil union partner, domestic partner or spouse. Civil union couples, domestic partners and spouses of the same sex should consider that limitation before selecting a spousal benefit under the annuity. NONQUALIFIED ANNUITY CONTRACTS IN GENERAL, AS USED IN THIS PROSPECTUS, A NONQUALIFIED ANNUITY IS OWNED BY AN INDIVIDUAL OR NON-NATURAL PERSON AND IS NOT ASSOCIATED WITH A TAX-FAVORED RETIREMENT PLAN. TAXES PAYABLE BY YOU We believe the Annuity is an annuity contract for tax purposes. Accordingly, as a general rule, you should not pay any tax until you receive money under the contract. Generally, annuity contracts issued by the same company (and affiliates) to you during the same calendar year must be treated as one annuity contract for purposes of determining the amount subject to tax under the rules described below. Charges for investment advisory fees that are taken from the contract are treated as a partial withdrawal from the contract and will be reported as such to the contract Owner. It is possible that the Internal Revenue Service (IRS) could assert that some or all of the charges for the optional benefits under the contract should be treated for federal income tax purposes as a partial withdrawal from the contract. If this were the case, the charge for this benefit could be deemed a withdrawal and treated as taxable to the extent there are earnings in the contract. Additionally, for Owners under age 59 1/2, the taxable income attributable to the charge for the benefit could be subject to a tax penalty. If the IRS determines that the charges for one or more benefits under the contract are taxable withdrawals, then the sole or surviving Owner will be provided with a notice from us describing available alternatives regarding these benefits. You must commence annuity payments or surrender your Annuity no later than the first day of the calendar month next following the maximum Annuity date for your Annuity. For some of our contracts, you are able to choose to defer the Annuity Date beyond the default Annuity date described in your Annuity. However, the IRS may not then consider your contract to be an annuity under the tax law. TAXES ON WITHDRAWALS AND SURRENDER If you make a withdrawal from your contract or surrender it before annuity payments begin, the amount you receive will be taxed as ordinary income, rather than as return of Purchase Payments, until all gain has been withdrawn. Once all gain has been withdrawn, payments will be treated as a nontaxable return of Purchase Payments until all Purchase Payments have been returned. After all Purchase Payments are returned, all subsequent amounts will be taxed as ordinary income. You will generally be taxed on any withdrawals from the contract while you are alive even if the withdrawal is paid to someone else. Withdrawals under any of the optional living benefits or as a systematic payment are taxed under these rules. If you assign or pledge all or part of your contract as collateral for a loan, the part assigned generally will be treated as a withdrawal and subject to income tax to the extent of gain. If you transfer your contract for less than full consideration, such as by gift, you will also trigger tax on any gain in the contract. This rule does not apply if you transfer the contract to your spouse or under most circumstances if you transfer the contract incident to divorce. If you choose to receive payments under an interest payment option, or a Beneficiary chooses to receive a death benefit under an interest payment option, that election will be treated, for tax purposes, as surrendering your Annuity and will immediately subject any gain in the contract to income tax. TAXES ON ANNUITY PAYMENTS A portion of each annuity payment you receive will be treated as a partial return of your Purchase Payments and will not be taxed. The remaining portion will be taxed as ordinary income. Generally, the nontaxable portion is determined by multiplying the annuity payment you receive by a fraction, the numerator of which is your Purchase Payments (less 33 any amounts previously received tax-free) and the denominator of which is the total expected payments under the contract. After the full amount of your Purchase Payments has been recovered tax-free, the full amount of the annuity payments will be taxable. If annuity payments stop due to the death of the Annuitant before the full amount of your Purchase Payments have been recovered, a tax deduction may be allowed for the unrecovered amount. If your Account Value is reduced to zero but the Annuity remains in force due to a benefit provision, further distributions from the Annuity will be reported as annuity payments, using an exclusion ratio based upon the undistributed purchase payments in the Annuity and the total value of the anticipated future payments until such time as all Purchase Payments have been recovered. PARTIAL ANNUITIZATION Effective January 1, 2011, an individual may partially annuitize their non-qualified annuity if the contract so permits. The Small Business Jobs Act of 2010 included a provision which allows for a portion of a non-qualified annuity, endowment or life insurance contract to be annuitized while the balance is not annuitized. The annuitized portion must be paid out over 10 or more years or over the lives of one or more individuals. The annuitized portion of the contract is treated as a separate contract for purposes of determining taxability of the payments under IRC section 72. We do not currently permit partial annuitization. MEDICARE TAX ON NET INVESTMENT INCOME The Patient Protection and Affordable Care Act, also known as the 2010 Health Care Act, included a new Medicare tax on investment income. This new tax, which is effective in 2013, assesses a 3.8% surtax on the lesser of (1) net investment income or (2) the excess of "modified adjusted gross income" over a threshold amount. The "threshold amount" is $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately, $200,000 for single taxpayers, and approximately $12,000 for trusts. The taxable portion of payments received as a withdrawal, surrender, annuity payment, death benefit payment or any other actual or deemed distribution under the contract will be considered investment income for purposes of this surtax. TAX PENALTY FOR EARLY WITHDRAWAL FROM A NONQUALIFIED ANNUITY CONTRACT You may owe a 10% tax penalty on the taxable part of distributions received from your Nonqualified Annuity contract before you attain age 59 1/2. Amounts are not subject to this tax penalty if: . the amount is paid on or after you reach age 59 1/2 or die; . the amount received is attributable to your becoming disabled; . generally the amount paid or received is in the form of substantially equal payments (as defined in the Code) not less frequently than annually (please note that substantially equal payments must continue until the later of reaching age 59 1/2 or 5 years and modification of payments during that time period will result in retroactive application of the 10% tax penalty); or . the amount received is paid under an immediate annuity contract (in which annuity payments begin within one year of purchase). Other exceptions to this tax may apply. You should consult your tax advisor for further details. SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035 Section 1035 of the Code permits certain tax-free exchanges of a life insurance, annuity or endowment contract for an annuity. Partial surrenders may be treated in the same way as tax-free 1035 exchanges of entire contracts, therefore avoiding current taxation of the partially exchanged amount as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. In Revenue Procedure 2011-38, the IRS has indicated that, for exchanges on or after October 24, 2011, where there is a surrender or distribution from either the initial annuity contract or receiving annuity contract within 180 days of the date on which the partial exchange was completed, the IRS will apply general tax rules to determine the substance and treatment of the original transfer. We strongly urge you to discuss any transaction of this type with your tax advisor before proceeding with the transaction. If an Annuity is purchased through a tax-free exchange of a life insurance, annuity or endowment contract that was purchased prior to August 14, 1982, then any Purchase Payments made to the original contract prior to August 14, 1982 will be treated as made to the new contract prior to that date. Generally, such pre-August 14, 1982 withdrawals are treated as a recovery of your investment in the contract first until Purchase Payments made before August 14, 1982 are withdrawn. Moreover, income allocable to Purchase Payments made before August 14, 1982, is not subject to the 10% tax penalty. TAXES PAYABLE BY BENEFICIARIES The Death Benefit is subject to ordinary income tax to the extent the distribution exceeds the cost basis in the contract. The value of the Death Benefit, as determined under federal law, is also included in the Owner's estate for federal estate tax purposes. Generally, the same tax rules described above would also apply to amounts received by your Beneficiary. Choosing an option other than a lump sum Death Benefit may defer taxes. Certain minimum distribution requirements apply upon your death, as discussed further below in the Annuity Qualification section. Tax consequences to the Beneficiary vary depending upon the Death Benefit payment option selected. Generally, for payment of the Death Benefit . As a lump sum payment: the Beneficiary is taxed in the year of payment on gain in the contract. 34 . Within 5 years of death of Owner: the Beneficiary is taxed as amounts are withdrawn (in this case gain is treated as being distributed first). . Under an annuity or annuity settlement option with distribution beginning within one year of the date of death of the Owner: the Beneficiary is taxed on each payment (part will be treated as gain and part as return of Purchase Payments). CONSIDERATIONS FOR CONTINGENT ANNUITANTS: We may allow the naming of a contingent Annuitant when a Nonqualified Annuity contract is held by a pension plan or a tax favored retirement plan, or held by a Custodial Account (as defined earlier in this prospectus). In such a situation, the Annuity may no longer qualify for tax deferral where the Annuity contract continues after the death of the Annuitant. However, tax deferral should be provided instead by the pension plan, tax favored retirement plan, or Custodial Account. We may also allow the naming of a contingent annuitant when a Nonqualified Annuity contract is held by an entity owner when such contracts do not qualify for tax deferral under the current tax law. This does not supersede any benefit language which may restrict the use of the contingent annuitant. REPORTING AND WITHHOLDING ON DISTRIBUTIONS Taxable amounts distributed from an Annuity are subject to federal and state income tax reporting and withholding. In general, we will withhold federal income tax from the taxable portion of such distribution based on the type of distribution. In the case of an annuity or similar periodic payment, we will withhold as if you are a married individual with three (3) exemptions unless you designate a different withholding status. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In the case of all other distributions, we will withhold at a 10% rate. You may generally elect not to have tax withheld from your payments. An election out of withholding must be made on forms that we provide. If you are a U.S. person (including resident alien), and your address of record is a non-U.S. address, we are required to withhold income tax unless you provide us with a U.S. residential address. State income tax withholding rules vary and we will withhold based on the rules of your State of residence. Special tax rules apply to withholding for nonresident aliens, and we generally withhold income tax for nonresident aliens at a 30% rate. A different withholding rate may be applicable to a nonresident alien based on the terms of an existing income tax treaty between the United States and the nonresident alien's country. Please refer to the discussion below regarding withholding rules for a Qualified Annuity. Regardless of the amount withheld by us, you are liable for payment of federal and state income tax on the taxable portion of annuity distributions. You should consult with your tax advisor regarding the payment of the correct amount of these income taxes and potential liability if you fail to pay such taxes. ENTITY OWNERS Where a contract is held by a non-natural person (e.g. a corporation), other than as an agent or nominee for a natural person (or in other limited circumstances), the contract will not be taxed as an annuity and increases in the value of the contract over its cost basis will be subject to tax annually. Where a contract is issued to a Charitable Remainder Trust (CRT), the contract will not be taxed as an annuity and increases in the value of the contract over its cost basis will be subject to tax annually. As there are charges for the living benefits described elsewhere in this prospectus, and such charges reduce the contract value of the Annuity, trustees of the CRT should discuss with their legal advisors whether election of such living benefits violates their fiduciary duty to the remainder beneficiary. Where a contract is issued to a trust, and such trust is characterized as a grantor trust under the Code, such contract shall not be considered to be held by a non-natural person and will be subject to the tax reporting and withholding requirements generally applicable to a Nonqualified Annuity. At this time, we will not issue an Annuity to grantor trusts with multiple grantors. At this time, we will not issue an Annuity to a grantor trust where the Grantor is not also the Annuitant. Where a previously issued contract was structured so that it is owned by a grantor trust but the Annuitant is not the grantor, then the contract is required to terminate upon the death of the grantor of the trust if the grantor pre-deceases the Annuitant under Section 72(s) of the Code. Under this circumstance, the contract value will be paid out to the trust and it is not eligible for the Death Benefit provided under the contract. ANNUITY QUALIFICATION Diversification And Investor Control. In order to qualify for the tax rules applicable to annuity contracts described above, the assets underlying the Sub-account of an Annuity must be diversified, according to certain rules under the Internal Revenue Code. The Portfolio is required to diversify its investments each quarter so that no more than 55% of the value of its assets is represented by any one investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. Generally, securities of a single issuer are treated as one investment and obligations of each U.S. Government agency and instrumentality (such as the Government National Mortgage Association) are treated as issued by separate issuers. In addition, any security issued, guaranteed or insured (to the extent so guaranteed or insured) by the United States or an instrumentality of the U.S. will be treated as a security issued by the U.S. Government or its instrumentality, where applicable. We believe the Portfolio underlying the variable Investment Option of the Annuity meets these diversification requirements. 35 An additional requirement for qualification for the tax treatment described above is that we, and not you as the contract Owner, must have sufficient control over the underlying assets to be treated as the Owner of the underlying assets for tax purposes. While we also believe these investor control rules will be met, the Treasury Department may promulgate guidelines under which a variable annuity will not be treated as an annuity for tax purposes if persons with ownership rights have excessive control over the investments underlying such variable annuity. It is unclear whether such guidelines, if in fact promulgated, would have retroactive effect. It is also unclear what effect, if any, such guidelines might have on transfers between the Investment Options offered pursuant to this prospectus. We reserve the right to take any action, including modifications to your Annuity or the Investment Options, required to comply with such guidelines if promulgated. Any such changes will apply uniformly to affected Owners and will be made with such notice to affected Owners as is feasible under the circumstances. REQUIRED DISTRIBUTIONS UPON YOUR DEATH FOR NONQUALIFIED ANNUITY CONTRACTS. Upon your death, certain distributions must be made under the contract. The required distributions depend on whether you die before you start taking annuity payments under the contract or after you start taking annuity payments under the contract. If you die on or after the Annuity Date, the remaining portion of the interest in the contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. If you die before the Annuity Date, the entire interest in the contract must be distributed within 5 years after the date of death, or as periodic payments over a period not extending beyond the life or life expectancy of the designated Beneficiary (provided such payments begin within one year of your death). Your designated Beneficiary is the person to whom benefit rights under the contract pass by reason of death, and must be a natural person in order to elect a periodic payment option based on life expectancy or a period exceeding five years. Additionally, if the Annuity is payable to (or for the benefit of) your surviving spouse, that portion of the contract may be continued with your spouse as the Owner. For Nonqualified annuity contracts owned by a non-natural person, the required distribution rules apply upon the death of the Annuitant. This means that for a contract held by a non-natural person (such as a trust) for which there is named a co-annuitant, then such required distributions will be triggered by the death of the first co-annuitant to die. CHANGES IN YOUR ANNUITY. We reserve the right to make any changes we deem necessary to assure that your Annuity qualifies as an annuity contract for tax purposes. Any such changes will apply to all contract Owners and you will be given notice to the extent feasible under the circumstances. QUALIFIED ANNUITY CONTRACTS IN GENERAL, AS USED IN THIS PROSPECTUS, A QUALIFIED ANNUITY IS AN ANNUITY CONTRACT WITH APPLICABLE ENDORSEMENTS FOR A TAX-FAVORED PLAN OR A NONQUALIFIED ANNUITY CONTRACT HELD BY A TAX-FAVORED RETIREMENT PLAN. The following is a general discussion of the tax considerations for Qualified Annuity contracts. This Annuity may or may not be available for all types of the tax-favored retirement plans discussed below. This discussion assumes that you have satisfied the eligibility requirements for any tax-favored retirement plan. Please consult your Financial Professional prior to purchase to confirm if this contract is available for a particular type of tax-favored retirement plan or whether we will accept the type of contribution you intend for this contract. A Qualified annuity may typically be purchased for use in connection with: . Individual retirement accounts and annuities (IRAs), including inherited IRAs (which we refer to as a Beneficiary IRA), which are subject to Sections 408(a) and 408(b) of the Code; . Roth IRAs, including inherited Roth IRAs (which we refer to as a Beneficiary Roth IRA) under Section 408A of the Code; . A corporate Pension or Profit-sharing plan (subject to 401(a) of the Code); . H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the Code); . Tax Sheltered Annuities (subject to 403(b) of the Code, also known as Tax Deferred Annuities or TDAs); . Section 457 plans (subject to 457 of the Code). A Nonqualified annuity may also be purchased by a 401(a) trust or custodial IRA or Roth IRA account, or a Section 457 plan, which can hold other permissible assets. The terms and administration of the trust or custodial account or plan in accordance with the laws and regulations for 401(a) plans, IRAs or Roth IRAs, or a Section 457 plan, as applicable, are the responsibility of the applicable trustee or custodian. You should be aware that tax favored plans such as IRAs generally provide income tax deferral regardless of whether they invest in annuity contracts. This means that when a tax favored plan invests in an annuity contract, it generally does not result in any additional tax benefits (such as income tax deferral and income tax free transfers). TYPES OF TAX-FAVORED PLANS IRAs. If you buy an Annuity for use as an IRA, we will provide you a copy of the prospectus and contract. The "IRA Disclosure Statement" and "Roth IRA Disclosure Statement" which accompany the prospectus contain information about eligibility, contribution limits, tax particulars, and other IRA information. In addition to this information (some of which is summarized below), the IRS requires that you have a "Free Look" after making an initial contribution to the contract. During this time, you can 36 cancel the Annuity by notifying us in writing, and we will refund all of the Purchase Payments under the Annuity (or, if provided by applicable state law, the amount credited under the Annuity, if greater), less any applicable federal and state income tax withholding. Contributions Limits/Rollovers. Subject to the minimum Purchase Payment requirements of an Annuity, you may purchase an Annuity for an IRA in connection with a "rollover" of amounts from a qualified retirement plan, as a transfer from another IRA, or in conjunction with a rollover or transfer, by making a contribution consisting of your IRA contributions and catch-up contributions, if applicable, attributable to the prior year during the period from January 1 to April 15 (or the applicable due date of your federal income tax return, without extension), or as a current year contribution. In 2012 the contribution limit is $5,000, increasing to $5,500 in 2013. The contribution amount is indexed for inflation. The tax law also provides for a catch-up provision for individuals who are age 50 and above, allowing these individuals an additional $1,000 contribution each year. The catch-up amount is not indexed for inflation. The "rollover" rules under the Code are fairly technical; however, an individual (or his or her surviving spouse) may generally "roll over" certain distributions from tax favored retirement plans (either directly or within 60 days from the date of these distributions) if he or she meets the requirements for distribution. Once you buy an Annuity, you can make regular IRA contributions under the Annuity (to the extent permitted by law). However, if you make such regular IRA contributions, you should note that you will not be able to treat the contract as a "conduit IRA", which means that you will not retain possible favorable tax treatment if you subsequently "roll over" the contract funds originally derived from a qualified retirement plan or TDA into another Section 401(a) plan or TDA. In some circumstances, non-spouse Beneficiaries may roll over to an IRA amounts due from qualified plans, 403(b) plans, and governmental 457(b) plans. However, the rollover rules applicable to non-spouse Beneficiaries under the Code are more restrictive than the rollover rules applicable to Owner/participants and spouse Beneficiaries. Generally, non-spouse Beneficiaries may roll over distributions from tax favored retirement plans only as a direct rollover, and if permitted by the plan. Under the Worker, Retiree and Employer Recovery Act of 2008, employer retirement plans are required to permit non-spouse Beneficiaries to roll over funds to an inherited IRA for plan years beginning after December 31, 2009. An inherited IRA must be directly rolled over from the employer plan or transferred from an IRA and must be titled in the name of the deceased (i.e., John Doe deceased for the benefit of Jane Doe). No additional contributions can be made to an inherited IRA. Required Provisions. Contracts that are IRAs (or endorsements that are part of the contract) must contain certain provisions: . You, as Owner of the contract, must be the "Annuitant" under the contract (except in certain cases involving the division of property under a decree of divorce); . Your rights as Owner are non-forfeitable; . You cannot sell, assign or pledge the contract; . The annual contribution you pay cannot be greater than the maximum amount allowed by law, including catch-up contributions if applicable (which does not include any rollover amounts); . The date on which required minimum distributions must begin cannot be later than April 1st of the calendar year after the calendar year you turn age 70 1/2; and . Death and annuity payments must meet "required minimum distribution" rules described below. Usually, the full amount of any distribution from an IRA (including a distribution from this contract) which is not a rollover is taxable. As taxable income, these distributions are subject to the general tax withholding rules described earlier regarding a Nonqualified Annuity. In addition to this normal tax liability, you may also be liable for the following, depending on your actions: . A 10% early withdrawal penalty described below; . Liability for "prohibited transactions" if you, for example, borrow against the value of an IRA; or . Failure to take a required minimum distribution, also described below. SEPs. SEPs are a variation on a standard IRA, and contracts issued to a SEP must satisfy the same general requirements described under IRAs (above). There are, however, some differences: . If you participate in a SEP, you generally do not include in income any employer contributions made to the SEP on your behalf up to the lesser of (a) $51,000 in 2013 ($50,000 in 2012) or (b) 25% of your taxable compensation paid by the contributing employer (not including the employer's SEP contribution as compensation for these purposes). However, for these purposes, compensation in excess of certain limits established by the IRS will not be considered. In 2013, this limit is $255,000 ($250,000 for 2012); . SEPs must satisfy certain participation and nondiscrimination requirements not generally applicable to IRAs; and . SEPs that contain a salary reduction or "SARSEP" provision prior to 1997 may permit salary deferrals up to $17,500 in 2013 with the employer making these contributions to the SEP. However, no new "salary reduction" or "SARSEPs" can be established after 1996. Individuals participating in a SARSEP who are age 50 or above by the end of the year will be permitted to contribute an additional $5,500 in 2013. These amounts are indexed for inflation. Not all Annuities issued by us are available for SARSEPs. You will also be provided the same information, and have the same "Free Look" period, as you would have if you purchased the contract for a standard IRA. 37 ROTH IRAs. The "Roth IRA Disclosure Statement" contains information about eligibility, contribution limits, tax particulars and other Roth IRA information. Like standard IRAs, income within a Roth IRA accumulates tax-free, and contributions are subject to specific limits. Roth IRAs have, however, the following differences: . Contributions to a Roth IRA cannot be deducted from your gross income; . "Qualified distributions" from a Roth IRA are excludable from gross income. A "qualified distribution" is a distribution that satisfies two requirements: (1) the distribution must be made (a) after the Owner of the IRA attains age 59 1/2; (b) after the Owner's death; (c) due to the Owner's disability; or (d) for a qualified first time homebuyer distribution within the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that is at least five tax years after the first year for which a contribution was made to any Roth IRA established for the Owner or five years after a rollover, transfer, or conversion was made from a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not qualified distributions will be treated as made first from contributions and then from earnings and earnings will be taxed generally in the same manner as distributions from a traditional IRA. . If eligible (including meeting income limitations and earnings requirements), you may make contributions to a Roth IRA after attaining age 70 1/2, and distributions are not required to begin upon attaining such age or at any time thereafter. Subject to the minimum Purchase Payment requirements of an Annuity, you may purchase an Annuity for a Roth IRA in connection with a "rollover" of amounts of another traditional IRA, SEP, SIMPLE-IRA, employer sponsored retirement plan (under sections 401(a) or 403(b) of the Code) or Roth IRA; or, if you meet certain income limitations, in conjunction with a rollover or transfer, by making a contribution consisting of your Roth IRA contributions and catch-up contributions, if applicable, attributable to the prior year during the period from January 1 to April 15 (or the applicable due date of your federal income tax return, without extension), or as a current year contribution. The Code permits persons who receive certain qualifying distributions from such non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover" of all or any part of the amount of such distribution to a Roth IRA which they establish. The conversion of non-Roth accounts triggers current taxation (but is not subject to a 10% early distribution penalty). Once an Annuity has been purchased, regular Roth IRA contributions will be accepted to the extent permitted by law. In addition, an individual receiving an eligible rollover distribution from a designated Roth account under an employer plan may roll over the distribution to a Roth IRA even if the individual is not eligible to make regular contributions to a Roth IRA. Non-spouse Beneficiaries receiving a distribution from an employer sponsored retirement plan under sections 401(a) or 403(b) of the Code can also directly roll over eligible rollover distributions to a Roth IRA. However, it is our understanding of the Code that non-spouse Beneficiaries cannot "rollover" benefits from a traditional IRA to a Roth IRA. TDAs. In general, you may own a Tax Deferred Annuity (also known as a TDA, Tax Sheltered Annuity (TSA), 403(b) plan or 403(b) annuity) if you are an employee of a tax-exempt organization (as defined under Code Section 501(c)(3)) or a public educational organization, and you may make contributions to a TDA so long as your employer maintains such a plan and your rights to the annuity are non-forfeitable. Contributions to a TDA, and any earnings, are not taxable until distribution. You may also make contributions to a TDA under a salary reduction agreement, generally up to a maximum of $17,500 in 2013. Individuals participating in a TDA who are age 50 or above by the end of the year will be permitted to contribute an additional $5,500 in 2013. This amount is indexed for inflation. Further, you may roll over TDA amounts to another TDA or an IRA. You may also roll over TDA amounts to a qualified retirement plan, a SEP and a 457 government plan. A contract may generally only qualify as a TDA if distributions of salary deferrals (other than "grandfathered" amounts held as of December 31, 1988) may be made only on account of: . Your attainment of age 59 1/2; . Your severance of employment; . Your death; . Your total and permanent disability; or . Hardship (under limited circumstances, and only related to salary deferrals, not including earnings attributable to these amounts). In any event, you must begin receiving distributions from your TDA by April 1st of the calendar year after the calendar year you turn age 70 1/2 or retire, whichever is later. These distribution limits do not apply either to transfers or exchanges of investments under the contract, or to any "direct transfer" of your interest in the contract to another employer's TDA plan or mutual fund "custodial account" described under Code Section 403(b)(7). Employer contributions to TDAs are subject to the same general contribution, nondiscrimination, and minimum participation rules applicable to "qualified" retirement plans. CAUTION: Under IRS regulations we can accept contributions, transfers and rollovers only if we have entered into an information sharing agreement, or its functional equivalent, with the applicable employer or its agent. In addition, in order to comply with the regulations, we will only process certain transactions (e.g., transfers, withdrawals, hardship distributions and, if applicable, loans) with employer approval. This means that if you request one of these transactions we will not consider your request to be in Good Order, and will not therefore process the transaction, until we receive the employer's approval in written or electronic form. REQUIRED MINIMUM DISTRIBUTIONS AND PAYMENT OPTIONS If you hold the contract under an IRA (or other tax-favored plan), required minimum distribution rules must be satisfied. This means that generally payments must start by April 1 of the year after the year you reach age 70 1/2 and must be made for each year 38 thereafter. For a TDA or a 401(a) plan for which the participant is not a greater than 5% Owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. The amount of the payment must at least equal the minimum required under the IRS rules. Several choices are available for calculating the minimum amount. More information on the mechanics of this calculation is available on request. Please contact us at a reasonable time before the IRS deadline so that a timely distribution is made. Please note that there is a 50% tax penalty on the amount of any required minimum distribution not made in a timely manner. Required minimum distributions are calculated based on the sum of the Account Value and the actuarial value of the living and death benefits riders that you have purchased under the contract. As a result, the required minimum distributions may be larger than if the calculation were based on the Account Value only, which may in turn result in an earlier (but not before the required beginning date) distribution of amounts under the Annuity and an increased amount of taxable income distributed to the Annuity Owner, and a reduction of payments under the living and death benefit riders. You can use the Minimum Distribution option to satisfy the required minimum distribution rules for the Annuity without either beginning annuity payments or surrendering the Annuity. We will distribute to you the required minimum distribution amount, less any other partial withdrawals that you made during the year. Such amount will be based on the value of the contract as of December 31 of the prior year, but is determined without regard to other contracts you may own. Although the IRS rules determine the required amount to be distributed from your IRA each year, certain payment alternatives are still available to you. If you own more than one IRA, you can choose to satisfy your minimum distribution requirement for each of your IRAs by withdrawing that amount from any of your IRAs. If you inherit more than one IRA or more than one Roth IRA from the same Owner, similar rules apply. CHARITABLE IRA DISTRIBUTIONS. The Pension Protection Act of 2006 included a charitable giving incentive permitting tax-free IRA distributions for charitable purposes. The American Taxpayer Relief Act extended this provision until the end of 2013 For distributions in tax years beginning after 2005 and before 2014, the Act provides an exclusion from gross income, up to $100,000 for otherwise taxable IRA distributions from a traditional or Roth IRA that are qualified charitable distributions. To constitute a qualified charitable distribution, the distribution must be made (1) directly by the IRA trustee to certain qualified charitable organizations and (2) on or after the date the IRA owner attains age 70 1/2. Distributions that are excluded from income under this provision are not taken into account in determining the individual's deductions, if any, for charitable contributions. The IRS has indicated that an IRA trustee is not responsible for determining whether a distribution to a charity is one that satisfies the requirements for the new income tax exclusion added by the Pension Protection Act. As a result the general rules for reporting IRA distributions apply. REQUIRED DISTRIBUTIONS UPON YOUR DEATH FOR QUALIFIED ANNUITY CONTRACTS Upon your death under an IRA, Roth IRA, 403(b) or other employer sponsored plan, the designated Beneficiary may generally elect to continue the contract and receive required minimum distributions under the contract instead of receiving the Death Benefit in a single payment. The available payment options will depend on whether you die before the date required minimum distributions under the Code were to begin, whether you have named a designated Beneficiary and whether that Beneficiary is your surviving spouse. . If you die after a designated Beneficiary has been named, the Death Benefit must be distributed by December 31st of the year including the five year anniversary of the date of death, or as periodic payments not extending beyond the life or life expectancy of the designated Beneficiary (as long as payments begin by December 31st of the year following the year of death). However, if your surviving spouse is the Beneficiary, the Death Benefit can be paid out over the life or life expectancy of your spouse with such payments beginning no later than December 31st of the year following the year of death or December 31st of the year in which you would have reached age 70 1/2, whichever is later. Additionally, if the contract is payable to (or for the benefit of) your surviving spouse as sole primary beneficiary, the contract may be continued with your spouse as the Owner. . If you die before a designated Beneficiary is named and before the date required minimum distributions must begin under the Code, the Death Benefit must be paid out by December 31st of the year including the five year anniversary of the date of death. For contracts where multiple Beneficiaries have been named and at least one of the Beneficiaries does not qualify as a designated Beneficiary and the account has not been divided into separate accounts by December 31st of the year following the year of death, such contract is deemed to have no designated Beneficiary. A designated Beneficiary may elect to apply the rules for no designated Beneficiary if those would provide a smaller payment requirement. . If you die before a designated Beneficiary is named and after the date required minimum distributions must begin under the Code, the Death Benefit must be paid out at least as rapidly as under the method then in effect. For contracts where multiple Beneficiaries have been named and at least one of the Beneficiaries does not qualify as a designated Beneficiary and the account has not been divided into separate accounts by December 31st of the year following the year of death, such contract is deemed to have no designated Beneficiary. A designated Beneficiary may elect to apply the rules for no designated Beneficiary if those would provide a smaller payment requirement. 39 A Beneficiary has the flexibility to take out more each year than mandated under the required minimum distribution rules. Until withdrawn, amounts in a Qualified Annuity contract continue to be tax deferred. Amounts withdrawn each year, including amounts that are required to be withdrawn under the required minimum distribution rules, are subject to tax. You may wish to consult a professional tax advisor for tax advice as to your particular situation. For a Roth IRA, if death occurs before the entire interest is distributed; the Death Benefit must be distributed under the same rules applied to IRAs where death occurs before the date required minimum distributions must begin under the Code. TAX PENALTY FOR EARLY WITHDRAWALS FROM QUALIFIED ANNUITY CONTRACTS You may owe a 10% tax penalty on the taxable part of distributions received from an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age 59 1/2. Amounts are not subject to this tax penalty if: . the amount is paid on or after you reach age 59 1/2 or die; . the amount received is attributable to your becoming disabled; or . generally the amount paid or received is in the form of substantially equal payments (as defined in the Code) not less frequently than annually. (Please note that substantially equal payments must continue until the later of reaching age 59 1/2 or 5 years. Modification of payments or additional contributions to the contract during that time period will result in retroactive application of the 10% tax penalty.) Other exceptions to this tax may apply. You should consult your tax advisor for further details. WITHHOLDING We will withhold federal income tax at the rate of 20% for any eligible rollover distribution paid by us to or for a plan participant, unless such distribution is "directly" rolled over into another qualified plan, IRA (including the IRA variations described above), SEP, 457 government plan or TDA. An eligible rollover distribution is defined under the tax law as a distribution from an employer plan under 401(a), a TDA or a 457 governmental plan, excluding any distribution that is part of a series of substantially equal payments (at least annually) made over the life expectancy of the employee or the joint life expectancies of the employee and his designated Beneficiary, any distribution made for a specified period of 10 years or more, any distribution that is a required minimum distribution and any hardship distribution. Regulations also specify certain other items which are not considered eligible rollover distributions. We will not withhold for payments made from trustee owned contracts or for payments under a 457 plan. For all other distributions, unless you elect otherwise, we will withhold federal income tax from the taxable portion of such distribution at an appropriate percentage. The rate of withholding on annuity payments where no mandatory withholding is required is determined on the basis of the withholding certificate that you file with us. If you do not file a certificate, we will automatically withhold federal taxes on the following basis: . For any annuity payments not subject to mandatory withholding, you will have taxes withheld by us as if you are a married individual, with 3 exemptions . If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default; and . For all other distributions, we will withhold at a 10% rate. We will provide you with forms and instructions concerning the right to elect that no amount be withheld from payments in the ordinary course. However, you should know that, in any event, you are liable for payment of federal income taxes on the taxable portion of the distributions, and you should consult with your tax advisor to find out more information on your potential liability if you fail to pay such taxes. There may be additional state income tax withholding requirements. ERISA REQUIREMENTS ERISA (the "Employee Retirement Income Security Act of 1974") and the Code prevent a fiduciary and other "parties in interest" with respect to a plan (and, for these purposes, an IRA would also constitute a "plan") from receiving any benefit from any party dealing with the plan, as a result of the sale of the contract. Administrative exemptions under ERISA generally permit the sale of insurance/annuity products to plans, provided that certain information is disclosed to the person purchasing the contract. This information has to do primarily with the fees, charges, discounts and other costs related to the contract, as well as any commissions paid to any agent selling the contract. Information about any applicable fees, charges, discounts, penalties or adjustments may be found in the applicable sections of this prospectus. Information about sales representatives and commissions may be found in the sections of this prospectus addressing distribution of the Annuity. Other relevant information required by the exemptions is contained in the contract and accompanying documentation. Please consult with your tax advisor if you have any questions about ERISA and these disclosure requirements. SPOUSAL CONSENT RULES FOR RETIREMENT PLANS - QUALIFIED CONTRACTS If you are married at the time your payments commence, you may be required by federal law to choose an income option that provides survivor annuity income to your spouse, unless your spouse waives that right. Similarly, if you are married at the time of your death, federal law may require all or a portion of the Death Benefit to be paid to your spouse, even if you designated someone else as your Beneficiary. A brief explanation of the applicable rules follows. For more information, consult the terms of your retirement arrangement. 40 Defined Benefit Plans and Money Purchase Pension Plans. If you are married at the time your payments commence, federal law requires that benefits be paid to you in the form of a "qualified joint and survivor annuity" (QJSA), unless you and your spouse waive that right, in writing. Generally, this means that you will receive a reduced payment during your life and, upon your death, your spouse will receive at least one-half of what you were receiving for life. You may elect to receive another income option if your spouse consents to the election and waives his or her right to receive the QJSA. If your spouse consents to the alternative form of payment, your spouse may not receive any benefits from the plan upon your death. Federal law also requires that the plan pay a Death Benefit to your spouse if you are married and die before you begin receiving your benefit. This benefit must be available in the form of an annuity for your spouse's lifetime and is called a "qualified pre-retirement survivor annuity" (QPSA). If the plan pays Death Benefits to other Beneficiaries, you may elect to have a Beneficiary other than your spouse receive the Death Benefit, but only if your spouse consents to the election and waives his or her right to receive the QPSA. If your spouse consents to the alternate Beneficiary, your spouse will receive no benefits from the plan upon your death. Any QPSA waiver prior to your attaining age 35 will become null and void on the first day of the calendar year in which you attain age 35, if still employed. Defined Contribution Plans (including 401(k) Plans and ERISA 403(b) Annuities). Spousal consent to a distribution is generally not required. Upon your death, your spouse will receive the entire Death Benefit, even if you designated someone else as your Beneficiary, unless your spouse consents in writing to waive this right. Also, if you are married and elect an annuity as a periodic income option, federal law requires that you receive a QJSA (as described above), unless you and your spouse consent to waive this right. IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a distribution usually is not required. Upon your death, any Death Benefit will be paid to your designated Beneficiary. GIFTS AND GENERATION-SKIPPING TRANSFERS If you transfer your contract to another person for less than adequate consideration, there may be gift tax consequences in addition to income tax consequences. Also, if you transfer your contract to a person two or more generations younger than you (such as a grandchild or grandniece) or to a person that is more than 37 1/2 years younger than you, there may be generation-skipping transfer tax consequences. ADDITIONAL INFORMATION For additional information about federal tax law requirements applicable to IRAs and Roth IRAs, see the IRA Disclosure Statement or Roth IRA Disclosure Statement, as applicable. 41 OTHER INFORMATION PRUCO LIFE OF NEW JERSEY AND THE SEPARATE ACCOUNT PRUCO LIFE OF NEW JERSEY. Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) is a stock life insurance company organized in 1982 under the laws of the State of New Jersey. It is licensed to sell life insurance and annuities in New Jersey and New York, and accordingly is subject to the laws of each of those states. Pruco Life of New Jersey is an indirect wholly-owned subsidiary of The Prudential Insurance Company of America (Prudential), a New Jersey stock life insurance company that has been doing business since 1875. Prudential is an indirect wholly-owned subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey insurance holding company. No company other than Pruco Life of New Jersey has any legal responsibility to pay amounts that it owes under its annuity contracts. Among other things, this means that where you participate in the Defined Income Benefit and the value of that benefit exceeds your current Account Value, you would rely solely on the ability of Pruco Life of New Jersey to make payments under the benefit out of its own assets. As Pruco Life of New Jersey's ultimate parent, Prudential Financial, however, exercises significant influence over the operations and capital structure of Pruco Life of New Jersey. Pruco Life of New Jersey will provide to each person, including any beneficial Owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference into the prospectus but not delivered with the prospectus. Such information will be provided upon written or oral request at no cost to the requester by writing to Pruco Life Insurance Company of New Jersey, One Corporate Drive, Shelton, CT 06484 or by calling 800-752-6342. Pruco Life of New Jersey files periodic reports as required under the Exchange Act. The public may read and copy any materials that Pruco Life of New Jersey files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 202-551-8090. The SEC maintains an Internet site that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC (see http://www.sec.gov). Our internet address is http://www.prudentialannuities.com. Pruco Life of New Jersey conducts the bulk of its operations through staff employed by it or by affiliated companies within the Prudential Financial family. Certain discrete functions have been delegated to non-affiliates that could be deemed "service providers" or "administrators" under the Investment Company Act of 1940. The entities engaged by Pruco Life of New Jersey may change over time. As of December 31, 2011, non-affiliated entities that could be deemed service providers to Pruco Life of New Jersey and/or another insurer within the Prudential Annuities business unit consisted of the following: Alliance-One Services Inc. (administration of variable life policies) located at 55 Hartland Street, East Hartford CT 06108, Ascensus (qualified plan administrator) located at 200 Dryden Road, Dresher, PA 19025, Alerus Retirement Solutions (qualified plan administrator), State Street Financial Center One, Lincoln Street, Boston, MA 02111, Aprimo (fulfillment of marketing materials), 510 East 96th Street, Suite 300, Indianapolis, IN 46240, Aplifi (order entry systems provider) located at 555 SW 12th Ave, Suite 202, Pompano Beach, FL 33069, Broadridge Investor Communication Solutions, Inc. (proxy tabulation services), 51 Mercedes Way, Edgewood, NY 11717, Consona (maintenance and storage of administrative documents), 333 Allegheny Avenue, Suite 301 North, Oakmont, PA 15139-2066, Depository Trust & Clearing Corporation (clearing and settlement services), 55 Water Street, 26th Floor, New York, NY 10041, DG3 North America, Inc. (proxy and prospectus printing and mailing services), 100 Burma Road, Jersey City, NJ 07305, DST Systems, Inc. (clearing and settlement services), 4900 Main, 7th Floor, Kansas City, MO 64112, EBIX, Inc. (order-entry system), 5 Concourse Parkway, Suite 3200, Atlanta, GA 30328, ExlService Holdings, Inc., (administration of annuity contracts), 350 Park Avenue, 10th Floor, New York, NY 10022, Diversified Information Technologies Inc. (records management), 123 Wyoming Avenue, Scranton, PA 18503, Fiserv (composition, printing and mailing of confirmation and quarterly statements), 881 Main Street, Manchester, CT 06040, Fosdick Fulfillment Corp. (fulfillment of prospectuses and marketing materials), 26 Barnes Industrial Park Road, North Wallingford, CT 06492, Insurance Technologies (annuity illustrations), 38120 Amrhein Ave., Livonia, MI 48150, Morningstar Associates LLC (asset allocation recommendations) , 225 West Wacker Drive Chicago, IL 60606, National Financial Services (clearing and settlement services), NEPS, LLC (composition, printing, and mailing of contracts and benefit documents), 12 Manor Parkway, Salem, NJ 03079, Pershing LLC (order-entry systems provider), One Pershing Plaza, Jersey City, NJ 07399, RR Donnelley Receivables, Inc. (printing annual reports and prospectuses), 111 South Wacker Drive, Chicago, IL 60606-4301, Skywire Software (composition, printing, and mailing of contracts and benefit documents), 150 Post Street, Suite 500, San Francisco, CA 94108, VG Reed & Sons, Inc. (printing and fulfillment of annual reports), 1002 South 12th Street, Louisville, KY 40210, William B. Meyer (printing and fulfillment of prospectuses and marketing materials), 255 Long Beach Boulevard, Stratford, CT 06615, Right Now Technologies (business information repository), 136 Enterprise Blvd, Bozeman, MT 59718, The Harty Press (print vendor for client communications) 25 James Street, New Haven, CT 06513. THE SEPARATE ACCOUNT. We have established a Separate Account, the Pruco Life of New Jersey Flexible Premium Variable Annuity Account (Separate Account), to hold the assets that are associated with the variable annuity contracts. The Separate Account was established under New Jersey law on May 20, 1996, and is registered with the SEC under the Investment Company Act of 1940 as a unit investment trust, which is a type of investment company. The assets of the Separate Account are held in the name of Pruco Life of New Jersey and legally belong to us. These assets are kept separate from all of our other assets and may not be charged with liabilities arising out of any other business we may conduct. Income, gains, and losses, whether or not realized, for assets allocated to the Separate Account are, in accordance with the Annuity, credited to or charged against the Separate Account 42 without regard to other income, gains, or losses of Pruco Life of New Jersey. The obligations under the Annuity are those of Pruco Life of New Jersey, which is the issuer of the Annuity and the depositor of the Separate Account. More detailed information about Pruco Life of New Jersey, including its audited consolidated financial statements, is provided in the Statement of Additional Information. We may offer new Sub-accounts, eliminate Sub-accounts (provided there is at least one Sub-account available), or combine Sub-accounts at our sole discretion. We will first notify you and receive any necessary SEC and/or state approval before making such a change. If an underlying mutual fund is liquidated, we will ask you to reallocate any amount in the liquidated fund. If you do not reallocate these amounts, we will reallocate such amounts only in accordance with guidance provided by the SEC or its staff (or after obtaining an order from the SEC, if required). If in the future we make two or more Investment Options available under the Annuity, we reserve the right to substitute underlying portfolios, as allowed by applicable law. If we make a fund substitution or change, we may change the Annuity to reflect the substitution or change. We do not control the underlying mutual funds, so we cannot guarantee that any of those funds will always be available. While we can limit your ability to make any additional Purchase Payments to your Annuity, as discussed above in this Prospectus, should we offer more than one Investment Options we may limit your right to make additional Purchase Payments to any one or more of such Investment Options. SERVICE FEES PAYABLE TO PRUCO LIFE OF NEW JERSEY Pruco Life of New Jersey and/or our affiliates may receive substantial and varying administrative service payments and "revenue sharing" payments from the Portfolio or related parties. Administrative services payments compensate us for providing administrative services with respect to Annuity Owners invested indirectly in the Portfolio, which include duties such as recordkeeping shareholder services, and the mailing of periodic reports. The administrative services fees we receive from affiliates originate from the assets of the Portfolio itself and/or the assets of the Portfolio's investment advisor. In recognition of the administrative services provided by the relevant affiliated insurance companies, the investment advisor to the Portfolio also may make "revenue sharing" payments to such affiliated insurance companies. In any case, the existence of these payments tends to increase the overall cost of investing in the Portfolio. These payments benefit us financially. We collect these payments and fees under agreements between us and the Portfolio's principal underwriter, transfer agent, investment advisor and/or other entities related to the Portfolio. With respect to administrative services fees, the fee (as of the date of this prospectus) that we expect to receive is equal to 0.40 of the average assets allocated to the Portfolio under the Annuity. We expect to make a profit on these fees. In addition, the investment advisor, sub-advisor or distributor of the Portfolio may also compensate us by providing reimbursement, defraying the costs of, or paying directly for, among other things, marketing and/or administrative services and/or other services they provide in connection with the Annuity. These services may include, but are not limited to: sponsoring or co-sponsoring various promotional, educational or marketing meetings and seminars attended by distributors, wholesalers, and/or broker dealer firms' registered representatives, and creating marketing material discussing the contract, available options, and the Portfolio. The amounts paid depend on the nature of the meetings, the number of meetings attended by the advisor, sub-advisor, or distributor, the number of participants and attendees at the meetings, the costs expected to be incurred, and the level of the advisor's, sub-advisor's or distributor's participation. These payments or reimbursements may not be offered by all advisors, sub-advisors, or distributors, and the amounts of such payments may vary between and among each advisor, sub-advisor, and distributor depending on their respective participation. LEGAL STRUCTURE OF THE UNDERLYING FUND The underlying mutual fund is registered as an open-end management investment company under the Investment Company Act of 1940. Shares of the underlying mutual fund Portfolio are sold to Separate Accounts of life insurance companies offering variable annuity and variable life insurance products. The shares may also be sold directly to qualified pension and retirement plans. VOTING RIGHTS We are the legal owner of the shares of the underlying mutual fund in which the Sub-account invests. However, under current SEC rules, you have voting rights in relation to Account Value maintained in the Sub-account. If an underlying mutual fund portfolio requests a vote of shareholders, we will vote our shares based on instructions received from Owners with Account Value allocated to the Sub-account. Owners have the right to vote an amount equal to the number of shares attributable to their contracts. If we do not receive voting instructions in relation to certain shares, we will vote those shares in the same manner and proportion as the shares for which we have received instructions. This voting procedure is sometimes referred to as "mirror voting" because, as indicated in the immediately preceding sentence, we mirror the votes that are actually cast, rather than decide on our own how to vote. We will also "mirror vote" shares that are owned directly by us or an affiliate (excluding shares held in the separate account of an affiliated insurer). In addition, because all the shares of a given mutual fund held within our Separate Account are legally owned by us, we intend to vote all of such shares when that underlying fund seeks a vote of its shareholders. As such, all such shares will be counted towards whether there is a quorum at the underlying fund's shareholder meeting and towards the ultimate outcome of the vote. Thus, under "mirror voting", it is possible that the votes of a small percentage of contract holders who actually vote will determine the ultimate outcome. We will furnish those Owners who have Account Value allocated to the Sub-account 43 whose underlying mutual fund portfolio has requested a "proxy" vote with proxy materials and the necessary forms to provide us with their voting instructions. Generally, you will be asked to provide instructions for us to vote on matters such as changes in a fundamental investment strategy, adoption of a new investment advisory agreement, or matters relating to the structure of the underlying mutual fund that require a vote of shareholders. We reserve the right to change the voting procedures described above if applicable SEC rules change. Advanced Series Trust (the "Trust") has obtained an exemption from the Securities and Exchange Commission that permits its co-investment advisers, AST Investment Services, Inc. and Prudential Investments LLC, subject to approval by the Board of Trustees of the Trust, to change sub-advisors for the Portfolio and to enter into new sub-advisory agreements, without obtaining shareholder approval of the changes. This exemption (which is similar to exemptions granted to other investment companies that are organized in a similar manner as the Trust) is intended to facilitate the efficient supervision and management of the sub-advisors by AST Investment Services, Inc., Prudential Investments LLC and the Trustees. The Trust is required, under the terms of the exemption, to provide certain information to shareholders following these types of changes. We may add new Sub-accounts that invest in a series of underlying funds other than the Trust. Such series of funds may have a similar order from the SEC. MATERIAL CONFLICTS It is possible that differences may occur between companies that offer shares of an underlying mutual fund portfolio to their respective Separate Accounts issuing variable annuities and/or variable life insurance products. Differences may also occur surrounding the offering of an underlying mutual fund portfolio to variable life insurance policies and variable annuity contracts that we offer. Under certain circumstances, these differences could be considered "material conflicts", in which case we would take necessary action to protect persons with voting rights under our variable annuity contracts and variable life insurance policies against persons with voting rights under other insurance companies' variable insurance products. If a "material conflict" were to arise between Owners of variable annuity contracts and variable life insurance policies issued by us we would take necessary action to treat such persons equitably in resolving the conflict. "Material conflicts" could arise due to differences in voting instructions between Owners of variable life insurance and variable annuity contracts of the same or different companies. We monitor any potential conflicts that may exist. CONFIRMATIONS, STATEMENTS, AND REPORTS We send any statements and reports required by applicable law or regulation to you at your last known address of record. You should therefore give us prompt notice of any address change. We reserve the right, to the extent permitted by law and subject to your prior consent, to provide any prospectus, prospectus supplements, confirmations, statements and reports required by applicable law or regulation to you through our Internet Website at www.prudentialannuities.com or any other electronic means, including diskettes or CD ROMs. We generally send a confirmation statement to you each time a financial transaction is made affecting Account Value, such as making additional Purchase Payments, exchanges or withdrawals. We also send quarterly statements detailing the activity affecting your Annuity during the calendar quarter, if there have been transactions during the quarter. We may confirm regularly scheduled transactions, including, but not limited to the Annual Maintenance Fee, and systematic withdrawals (including 72(t)/72(q) payments and Required Minimum Distributions), in quarterly statements instead of confirming them immediately. You should review the information in these statements carefully. You may request additional reports or copies of reports previously sent. We reserve the right to charge $50 for each such additional or previously sent report, but may waive that charge in the future. We will also send an annual report and a semi-annual report containing applicable financial statements for the Portfolio to Owners or, with your prior consent, make such documents available electronically through our Internet Website or other electronic means. DISTRIBUTION OF ANNUITIES OFFERED BY PRUCO LIFE OF NEW JERSEY Prudential Annuities Distributors, Inc. (PAD), a wholly-owned subsidiary of Prudential Annuities, Inc., is the distributor and principal underwriter of the annuities offered through this prospectus. PAD acts as the distributor of a number of annuity and life insurance products. PAD's principal business address is One Corporate Drive, Shelton, Connecticut 06484. PAD is registered as a broker-dealer under the Securities Exchange Act of 1934 (Exchange Act), and is a member of the Financial Industry Regulatory Authority (FINRA). The Annuity is offered on a continuous basis. PAD enters into distribution agreements with broker/dealers who are registered under the Exchange Act and with entities that may offer the Annuity but are exempt from registration (firms). Applications for the Annuity are solicited by registered representatives of those firms. Under the selling agreements, commissions are paid to firms on sales of the Annuity according to one or more schedules. The registered representative will receive all or a portion of the compensation, depending on the practice of his or her firm. Commissions are generally based on a percentage of Purchase Payments made, up to a maximum of 5%. Alternative compensation schedules are available that generally provide a lower initial commission plus ongoing quarterly compensation based on all or a portion of Account Value. We may also provide compensation to the distributing firm for providing ongoing service to you in relation to the Annuity. Commissions and other compensation paid in relation to the Annuity do not result in any additional charge to you or to the Separate Account. Compensation varies by Annuity product, and such differing compensation could be a factor in which Annuity a Financial Professional recommends to you. 44 In addition, in an effort to promote the sale of our products (which may include the placement of Pruco Life of New Jersey and/or the Annuity on a preferred or recommended company or product list and/or access to the firm's registered representatives), we or PAD may enter into compensation arrangements with certain broker/dealers firms with respect to certain or all registered representatives of such firms under which such firms may receive separate compensation or reimbursement for, among other things, training of sales personnel and/or marketing and/or administrative services and/or other services they provide to us or our affiliates. These services may include, but are not limited to: educating customers of the firm on the Annuity's features; conducting due diligence and analysis; providing office access, operations and systems support; holding seminars intended to educate registered representatives and make them more knowledgeable about the Annuity; providing a dedicated marketing coordinator; providing priority sales desk support; and providing expedited marketing compliance approval and preferred programs to PAD. We, or PAD, also may compensate third-party vendors, for services that such vendors render to broker-dealer firms. To the extent permitted by the FINRA rules and other applicable laws and regulations, PAD may pay or allow other promotional incentives or payments in the forms of cash or non-cash compensation (e.g., gifts, occasional meals and entertainment, sponsorship of training and due diligence events). These arrangements may not be offered to all firms and the terms of such arrangements may differ between firms. In addition, we or our affiliates may provide such compensation, payments and/or incentives to firms arising out of the marketing, sale and/or servicing of variable annuities or life insurance offered by different Prudential business units. The list below identifies three general types of payments that PAD pays which are broadly defined as follows: . Percentage Payments based upon "Assets under Management" or "AUM": This type of payment is a percentage payment that is based upon the total assets, subject to certain criteria in certain Pruco Life of New Jersey products. . Percentage Payments based upon sales: This type of payment is a percentage payment that is based upon the total amount of money received as Purchase Payments under Pruco Life of New Jersey annuity products sold through the firm. . Fixed Payments: These types of payments are made directly to or in sponsorship of the firm. Examples of arrangements under which such payments may be made currently include, but are not limited to: sponsorships, conferences (national, regional and top producer), speaker fees, promotional items and reimbursements to firms for marketing activities or services paid by the firms and/or their registered representatives. The amount of these payments varies widely because some payments may encompass only a single event, such as a conference, and others have a much broader scope. In addition, we may make payments periodically during the relationship for systems, operational and other support. The list below includes the names of the firms (or their affiliated broker/dealers) that we are aware (as of December 31, 2011) received payment with respect to our annuity business generally during 2011 (or as to which a payment amount was accrued during 2011). The firms listed below include those receiving payments in connection with marketing of products issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey. Your registered representative can provide you with more information about the compensation arrangements that apply upon request. During 2011, the least amount paid, and greatest amount paid, were $19.35 and $6,443,077.91, respectively. NAME OF FIRM: 1/st/ Global Capital Corp. 1934 Group Aaron Industries Advantage Fire Sprinkler Co. Aegon Transamerica A.G. Edwards & Sons, Inc. Afore ING AIG Financial Advisors Inc Allen & Company of Florida, Inc. Alliance Bernstein L.P. Allstate Financial Srvcs, LLC American Century American Independent Marketing AMERICAN PORTFOLIO FIN SVCS INC Ameriprise Financial, Inc. Total Ameritas Investment Corp. ANCHOR BAY SECURITIES, LLC ARETE WEALTH MANAGEMENT Arlington Securities, Inc. Arque Capital, Ltd. ARVEST ASSET MANAGEMENT ASKAR CORPORATION AUSDAL FINANCIAL PARTNERS, INC. AXA Advisors, LLC BancorpSouth Investment Services, Inc. Banc of America Invest.Svs(SO) BBVA Compass Investment Solutions, Inc. Ballew Investments Bank of the West Battery Ventures BB&T Investment Services, Inc. BCG Companies BCG Securities, Inc. Beaconsfield Financial Services Berthel Fisher & Company BlackRock Financial Management Inc. Broker Dealer Financial Services Brookstone Financial Services Brown Builders Cadaret, Grant & Co., Inc. Calton & Associates, Inc. Cambridge Investment Research, Inc. Cambridge Legacy Securities, LLC Cantella & Co., Inc. CAPE SECURITIES, INC. Capital Advisors Capital Analysts Capital Financial Services, Inc. CAPITAL GROWTH RESOURCES Capital Guardian Capital Investment Group, Inc. Capital One Investment Services, LLC Capital Securities Management Castner Josephs Retirement Group CBIZ CCF Investments, Inc. Centaurus Financial, Inc. CFD Investments, Inc. Charter One Bank (Cleveland) Chase Investment Services Citigroup Global Markets Inc. Citizens Bank and Trust Company Clairmont Oaks CLS Investments COMERICA SECURITIES, INC. Commonwealth Financial Network Compak Securities 45 Compass Bank Wealth Management Group Crescent Securities Group Crown Capital Securities, L.P. CUNA Brokerage Svcs, Inc. CUSO Financial Services, L.P. D.A. Davidson David A. Noyes & Company Delta Equity Dempsey Lord Smith, LLC Deutsche Bank DeWaay Financial Network, LLC Eaton Vance EDI Financial Edward Jones & Co. ELLIOTT DAVIS BROKERAGE SERVICES, LLC Equitrust Equity Services, Inc. ESSEX FINANCIAL SERVICES, INC. Evergreen Consulting Federated Investors Fidelity Investments Fifth Third Securities, Inc. FINANCIAL ADVISERS OF AMERICA LLC Financial Network Investment Financial Planning Consultants Financial Security Management, Inc. Financial Telesis Inc. Financial West Group Fintegra, LLC First Allied Securities Inc First American Insurance Underwriters (FAIU) First Brokerage America, LLC FIRST CITIZENS INVESTOR SERVICES INC First Financial Equity Corp. First Heartland Capital, Inc. First Merit Investments First Southeast Investor Services First State Financial Management First Tennessee Brokerage, Inc First Trust Portfolios L.P. First Western Advisors Florida Investment Advisers Foothill Securities, Inc. Forrester Research Fortune Financial Services, Inc. Franklin Templeton FROST BROKERAGE SERVICES FSC Securities Corp. G.A. Repple & Company GATX Southern Star Agency Garden State Securities, Inc. Gary Goldberg & Co., Inc. Geneos Wealth Management, Inc. Genworth Financial Securities Corporation Girard Securities, Inc. Golden Years Advisors Goldman Sachs & Co. Great American Advisors, Inc. Great American Investors, Inc. GWN Securities, Inc. H. Beck, Inc. HBW SECURITIES LLC HD Associates H.D. Vest Investment Hantz Financial Services,Inc. HARBOR FINANCIAL SERVICES LLC Harbour Investments, Inc. Harmon Dennis Bradshaw Hartford Life Insurance Company Harvest Capital, LLC Hazard & Siegel, Inc. Heim, Young & Associates, Inc. Horizon Investments Hornor, Townsend & Kent, Inc. HSBC Huntleigh Securities ICC IMS Securities Independent Financial Grp, LLC IFS (Industry Fund Services) Impact Speakers Infinex Investments, Inc. ING Financial Partners, LLC Institutional Securities Corp. INTERCAROLINA FINANCIAL SERVICES, INC. Intersecurities, Inc Intervest International Equities Corp. Invest Financial Corporation Investacorp Investment Centers of America Investment Professionals Investors Capital Corporation Investors Security Co, Inc. ISG Equity Sales JHS Capital J.J.B. Hilliard Lyons, Inc. J.P. Morgan J.P. Turner & Company, LLC J.W. Cole Financial, Inc. Jack Cramer & Associates Janney Montgomery Scott, LLC. Jennison Associates, LLC John Hancock Key Bank KEY INVESTMENT SERVICES LLC Klosterman Baking KMS Financial Services, Inc. Kovack Securities, Inc. LaSalle St. Securities, LLC Leaders Group Inc. Legend Equities Corporation Legg Mason Leigh Baldwin & Company, LLC Lincoln Financial Advisors Lincoln Financial Securities Corporation Lincoln Investment Planning Lord Abbett LPL Financial Corporation LSG Financial Services M3 Insurance Solutions, Inc. M Holdings Securities, Inc Main Street Securities, LLC Mason Wells Merrill Lynch, P,F,S Merritt Wealth Strategies MetLife MFS Michigan Securities, Inc. Mid-Atlantic Capital Corp. Milkie Ferguson Investments MML Investors Services, Inc. Money Concepts Capital Corp. Montgomery Agency Morgan Keegan & Company Morgan Stanley Smith Barney MTL Equity Products, Inc. Multi Financial Securities Crp National Planning Corporation National Securities Corp. Nationwide Securities, LLC Navigator Financial Neuberger Berman New Alliance Bank New England Securities Corp. New York Life Newbridge Securities Corp. Newport Coast Securities Next Financial Group, Inc. NFP Securities, Inc. North Ridge Securities Corp. NPB Financial Group, LLC OneAmerica Securities, Inc. One Resource Group OPPENHEIMER & CO, INC. Pacific West Securities, Inc. Packerland Brokerage Services, Inc. Park Avenue Securities, LLC Paulson Investment Co., Inc. PIMCO PlanMember Securities Corp. PNC Investments, LLC Presidential Brokerage, Inc. Prime Capital Services, Inc. PRIMEVEST FINANCIAL SERVICES Principal Financial Group Princor Financial Services Corp. Private Client Services, LLC ProEquities Prospera Financial Services, Inc. Pruco Securities, LLC Purshe Kaplan Sterling Investments QA3 Financial Corp. Quest Financial Services Questar Capital Corporation Raymond James & Associates 46 Raymond James Financial Svcs RBC CAPITAL MARKETS CORPORATION Resource Horizons Group Ridgeway & Conger, Inc. RNR Securities, LLC Robert W. Baird & Co., Inc. Royal Alliance Associates Royal Bank of Scotland Sagemark Consulting SAGEPOINT FINANCIAL, INC. Sage Rutty & Co., Inc. Sammons Securities Co., LLC Sanders Morris Harris Inc. SAUNDERS RETIREMENT ADVISORS INC SCF Securities, Inc. Schroders Investment Management Scott & Stringfellow, Inc. Seacoast Capital Securian Financial Svcs, Inc. Securities America, Inc. Securities Service Network Sigma Financial Corporation Signator Investors, Inc. SII Investments, Inc. Silver Oaks Securities SMH Capital, Inc. Southwest Securities, Inc. SPIRE SECURITIES LLC STERLING MONROE SECURITIES LLC Sterne Agee Financial Services, Inc. Stifel Nicolaus & Co. STRATEGIC FIN ALLIANCE INC Summit Brokerage Services, Inc Summit Equities, Inc. Summit Financial Sunset Financial Services, Inc SunTrust Investment Services, Inc. SWBC Investment Services SWS Financial Services, Inc SYMETRA INVESTMENT SERVICES INC Syndicated T. Rowe Price Group, Inc. TFS Securities, Inc. The Capital Group Securities, Inc. The Investment Center The O.N. Equity Sales Co. The Prudential Insurance Company of America The Wharton School Tower Square Securities, Inc. TransAmerica Financial Advisors, Inc. Triad Advisors, Inc. Trustmont Financial Group, Inc. UBS Financial Services, Inc. UNIONBANC INVESTMENT SERV, LLC United Planners Fin. Serv. USA Financial Securities Corp. US Bank UVEST Fin'l Srvcs Group, Inc. VALIC Financial Advisors, Inc Valmark Securities, Inc. Veritrust Financial LLC VFinance Investments VSR Financial Services, Inc. WADDELL & REED INC. Wall Street Financial Group Walnut Street Securities, Inc. WAYNE HUMMER INVESTMENTS LLC Wedbush Morgan Securities Wells Fargo Advisors LLC WELLS FARGO ADVISORS LLC - WEALTH WFG Investments, Inc. Wilbanks Securities, Inc. Williams Financial Group Woodbury Financial Services Woodstock Financial Workman Securities Corporation World Equity Group, Inc. World Group Securities, Inc. WRP Investments, Inc You should note that firms and individual registered representatives and branch managers with some firms participating in one of these compensation arrangements might receive greater compensation for selling the Annuity than for selling a different annuity that is not eligible for these compensation arrangements. While compensation is generally taken into account as an expense in considering the charges applicable to a contract product, any such compensation will be paid by us or PAD and will not result in any additional charge to you. Your registered representative can provide you with more information about the compensation arrangements that apply upon request. This Annuity is sold through firms that are unaffiliated with us, and also is sold through an affiliated firm called Pruco Securities, LLC. Pruco Securities, LLC is an indirect wholly-owned subsidiary of Prudential Financial that sells variable annuities and variable life insurance (among other products) through its registered representatives. Pruco Securities, LLC also serves as principal underwriter of certain variable life insurance contracts issued by subsidiary insurers of Prudential Financial. FINANCIAL STATEMENTS The financial statements of the Separate Account and Pruco Life of New Jersey are included in the Statement of Additional Information. INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. LEGAL PROCEEDINGS We are subject to legal and regulatory actions in the ordinary course of our business. Our pending legal and regulatory actions include proceedings specific to us and proceedings generally applicable to business practices in the industry in which we operate. We are subject to class action lawsuits and other litigation involving a variety of issues and allegations involving sales practices, claims payment and procedures, premium charges, policy servicing and breach of fiduciary duty to customers. We are also subject to litigation arising out of our general business activities, such as our investments, contracts, leases and labor and employment relationships, including claims of discrimination and harassment, and could be exposed to claims or litigation concerning certain business or process patents. In some of our pending legal and regulatory actions, plaintiffs are seeking large and/or indeterminate 47 amounts, including punitive or exemplary damages. In addition, we, along with other participants in the businesses in which we engage, may be subject from time to time to investigations, examinations and inquiries, in some cases industry-wide, concerning issues or matters upon which such regulators have determined to focus. In some of our pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain. Pruco Life of New Jersey establishes accruals for litigation and regulatory matters when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but the matter, if material, is disclosed, including matters discussed below. As of September 30, 2012, the aggregate range of reasonably possible losses in excess of accruals established is not currently estimable. Pruco Life of New Jersey reviews relevant information with respect to its litigation and regulatory matters on a quarterly and annual basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews. In July 2010, Pruco Life of New Jersey, along with other life insurance industry participants, received a formal request for information from the State of New York Attorney General's Office in connection with its investigation into industry practices relating to the use of retained asset accounts. In August 2010, Pruco Life of New Jersey received a similar request for information from the State of Connecticut Attorney General's Office. Pruco Life of New Jersey is cooperating with these investigations. Pruco Life of New Jersey has also been contacted by state insurance regulators and other governmental entities, including the U.S. Department of Veterans Affairs and Congressional committees regarding retained asset accounts. These matters may result in additional investigations, information requests, claims, hearings, litigation, adverse publicity and potential changes to business practices. In January 2012, a qui tam action on behalf of the State of Illinois, Total Asset Recovery Services v. Met Life Inc, et al., Prudential Financial, Inc., The Prudential Insurance Company of America, and Prudential Holdings, LLC , filed in the Circuit Court of Cook County, Illinois, was served on Pruco Life of New Jersey. The complaint alleges that Pruco Life of New Jersey failed to escheat life insurance proceeds to the State of Illinois in violation of the Illinois False Claims Whistleblower Reward and Protection Act and seeks injunctive relief, compensatory damages, civil penalties, treble damages, prejudgment interest, attorneys' fees and costs. In April, 2012, Pruco Life filed a motion to dismiss the complaint. In September 2012, the complaint was withdrawn without prejudice. In March 2012, a qui tam action on behalf of the State of Minnesota, Total Asset Recovery v. MetLife Inc., et al., Prudential Financial Inc., The Prudential Insurance Company of America and Prudential Holdings, Inc., filed in the Fourth Judicial District, Hennepin County, in the State of Minnesota was served on Pruco Life of New Jersey. The complaint alleges that Pruco Life of New Jersey failed to escheat life insurance proceeds to the State of Minnesota in violation of the Minnesota False Claims Act and seeks injunctive relief, compensatory damages, civil penalties, treble damages, prejudgment interest, attorneys' fees and costs. In June 2012, the company filed a motion to dismiss the complaint. In January 2012, a Global Resolution Agreement entered into by Pruco Life of New Jersey and a third party auditor became effective upon its acceptance by the unclaimed property departments of 20 states and jurisdictions. Under the terms of the Global Resolution Agreement, the third party auditor acting on behalf of the signatory states will compare expanded matching criteria to the Social Security Master Death File ("SSMDF") to identify deceased insureds and contract holders where a valid claim has not been made. In February 2012, a Regulatory Settlement Agreement entered into by Pruco Life of New Jersey to resolve a multi-state market conduct examination regarding its adherence to state claim settlement practices became effective upon its acceptance by the insurance departments of 20 states and jurisdictions. The Regulatory Settlement Agreement applies prospectively and requires Pruco Life of New Jersey to adopt and implement additional procedures comparing its records to the SSMDF to identify unclaimed death benefits and prescribes procedures for identifying and locating beneficiaries once deaths are identified. Other jurisdictions that are not signatories to the Regulatory Settlement Agreement are considering proposals that would apply prospectively and require life insurance companies to take additional steps to identify unreported deceased policy and contract holders. These prospective changes and any escheatable property identified as a result of the audits and inquiries could result in: (1) additional payments of previously unclaimed death benefits; (2) the payment of abandoned funds to U.S. jurisdictions; and (3) changes in Pruco Life of New Jersey's practices and procedures for the identification of escheatable funds and beneficiaries, which would impact claim payments and reserves, among other consequences. Pruco Life of New Jersey is one of several companies subpoenaed by the New York Attorney General regarding its unclaimed property procedures. Additionally, the New York Department of Financial Services ("NYDFS") has requested that 172 life insurers (including Pruco Life of New Jersey) provide data to the NYDFS regarding use of the SSMDF. The New York Office of Unclaimed Funds recently notified Pruco Life of New Jersey that it intends to conduct an audit of Pruco Life of New Jersey's compliance with New York's unclaimed property laws. The Minnesota Attorney General has also requested information regarding Pruco Life of New Jersey's use of the SSMDF and its claim handling procedures and Pruco Life of New Jersey is one of several companies subpoenaed by the Minnesota Department of Commerce, Insurance Division. In February 2012, the Massachusetts Office of the Attorney General requested information regarding Pruco Life of New Jersey's unclaimed property procedures. 48 Pruco Life of New Jersey's litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that Pruco Life of New Jersey's results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of Pruco Life of New Jersey's litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on Pruco Life of New Jersey's financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on Pruco Life of New Jersey's financial position. CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION The following are the contents of the Statement of Additional Information: . Company . Experts . Principal Underwriter . Payments Made to Promote Sale of Our Products . Determination of Accumulation Unit Values . Financial Statements HOW TO CONTACT US You can contact us by: . calling our Customer Service Team at 1-888-PRU-2888 during our normal business hours, . writing to us via regular mail at Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176. NOTE: Failure to send mail to the proper address may result in a delay in our receiving and processing your request. . writing to us via overnight mail, certified, or registered mail delivery at the Prudential Annuity Service Center, 2101 Welsh Road, Dresher, PA 19025. . accessing information about your Annuity through our Internet Website at www.prudentialannuities.com. You can obtain account information by calling our automated response system and at www.prudentialannuities.com, our Internet Website. Our Customer Service representatives are also available during business hours to provide you with information about your account. You can request certain transactions through our telephone voice response system, our Internet Website or through a customer service representative. You can provide authorization for a third party, including your attorney-in-fact acting pursuant to a power of attorney, to access your account information and perform certain transactions on your account. You will need to complete a form provided by us which identifies those transactions that you wish to authorize via telephonic and electronic means and whether you wish to authorize a third party to perform any such transactions. Please note that unless you tell us otherwise, we deem that all transactions that are directed by your Financial Professional with respect to your Annuity have been authorized by you. We require that you or your representative provide proper identification before performing transactions over the telephone or through our Internet Website. This may include a Personal Identification Number (PIN) that will be provided to you upon issue of your Annuity or you may establish or change your PIN by calling our automated response system and at www.prudentialannuities.com, our Internet Website. Any third party that you authorize to perform financial transactions on your account will be assigned a PIN for your account. Transactions requested via telephone are recorded. To the extent permitted by law, we will not be responsible for any claims, loss, liability or expense in connection with a transaction requested by telephone or other electronic means if we acted on such transaction instructions after following reasonable procedures to identify those persons authorized to perform transactions on your Annuity using verification methods which may include a request for your Social Security number, PIN or other form of electronic identification. We may be liable for losses due to unauthorized or fraudulent instructions if we did not follow such procedures. Pruco Life of New Jersey does not guarantee access to telephonic, facsimile, Internet or any other electronic information or that we will be able to accept transaction instructions via such means at all times. Nor, due to circumstances beyond our control, can we provide any assurances as to the delivery of transaction instructions submitted to us by regular and/or express mail. Regular and/or express mail (if operational) will be the only means by which we will accept transaction instructions when telephonic, facsimile, Internet or any other electronic means are unavailable or delayed. Pruco Life of New Jersey reserves the right to limit, restrict or terminate telephonic, facsimile, Internet or any other electronic transaction privileges at any time. 49 APPENDIX A - ACCUMULATION UNIT VALUES Because the Annuity is new, no historical Unit Values are depicted here. However, such historical Unit Values will be included in subsequent amendments to this prospectus. A-1 APPENDIX B - DEFINED INCOME BENEFIT SAMPLE CALCULATIONS The initial Guaranteed Income Amount (GIA) is determined on the Issue Date. It is determined by applying the applicable Income Percentage to the Account Value on the Issue Date. Additional Purchase Payments will increase the GIA by applying the amount of the Purchase Payment to the Income Percentage (based on the attained age of the youngest Designated Life) on the date the Purchase Payment is allocated to your Annuity. For the applicable Income Percentage rates associated with any additional Purchase Payments made after the Issue Date, please see the rates disclosed in the prospectus, or applicable Rate Sheet Prospectus Supplement after February 24, 2013, or contact us or your Financial Professional. You may make additional Purchase Payments to your Annuity at any time within the first Annuity Year, however at any time during this year, with prior notice to you, we may limit your right to add additional Purchase Payments. The following examples are purely hypothetical and are for illustrative purposes only. They are intended to provide examples of how we would calculate the Guaranteed Income Amount based on the Income Percentages and Income Growth Rate provided in the prospectus or a Rate Sheet Prospectus Supplement. They also assume that the application was signed, received, and funded within the parameters disclosed in the prospectus or on the Rate Sheet Prospectus Supplement. The hypothetical examples are also designed to show how the Rate Sheet Prospectus Supplement may change from month to month for newly issued Annuities. Please note that once your Annuity is issued, the assigned rates will not change. Please also note, your GIA would be different than the examples shown below depending on the Income Percentage and Income Growth Rate effective at the time you sign your application, your age at the time of the initial Purchase Payment is applied, the amount of your initial Purchase Payment, and whether you have elected the single or spousal version. HYPOTHETICAL RATE SHEET PROSPECTUS SUPPLEMENT EXAMPLES: Rate Sheet Prospectus Supplement effective between June 1, and June 30
ATTAINED AGE INCOME PERCENTAGE INCOME GROWTH RATE -------------- ------------------- -------------------- 60 4.5% 5.0% (for all ages) 61 4.6% 62 4.7% 63 4.8% 64 4.9% 65 5.0%
SCENARIO 1, CALCULATING THE GIA BASED ON A SINGLE PURCHASE PAYMENT: Application Signed Date: June 24 Issue Date: July 5 of the same calendar year in which the application was signed Purchase Payment Received: $100,000 Age: 62 The Income Percentages and Income Growth Rate are both set based on the rates effective between June 1 and June 30. As a result, the initial Income Percentage will be 4.7% based on the attained age of 62 as of the Issue Date July 5, and the Income Growth Rate assigned to the Annuity will be 5.0%. The initial Guaranteed Income Amount is $4,700, which is determined by multiplying the Account Value on the Issue Date ($100,000) by the applicable Income Percentage (4.7%). Rate Sheet Prospectus Supplement effective between July 1 and July 31
ATTAINED AGE INCOME PERCENTAGE INCOME GROWTH RATE -------------- ------------------- -------------------- 60 4.7% 5.5% (for all ages) 61 4.8% 62 4.9% 63 5.0% 64 5.1% 65 5.2%
SCENARIO 2, CALCULATING THE GIA BASED ON A SINGLE PURCHASE PAYMENT, AND ONE ADDITIONAL PURCHASE PAYMENT: Application Signed Date: July 15 Issue Date: July 17 of the same calendar year in which the application was signed Purchase Payments Received: . $100,000 on the Issue Date . Additional Purchase Payment of $10,000 on November 17 of the same calendar year B-1 Age on the Issue Date: 62 The Income Percentages and Income Growth Rate are both set based on the rates effective between July 1 and July 31. As a result, the initial Income Percentage will be 4.9% based on the attained age of 62 as of the Issue Date, and the Income Growth Rate assigned to the annuity will be 5.5%. The initial Guaranteed Income Amount will be $4,900, which is determined by multiplying Account Value on the Issue Date ($100,000) by the Income Percentage (4.9%). When the additional Purchase Payment of $10,000 is deposited exactly four months later, the Designated Life is now age 63. The increase to the GIA will continue to be based on the Rate Sheet Prospectus Supplement effective between July 1 and July 31. In this scenario, the current GIA would be increased by $500 since the Income Percentage assigned to the $10,000 additional Purchase Payment was 5% based on the attained age of 63. To calculate the new GIA for the Annuity after the additional Purchase Payment, we would first take the current GIA of $4,989.21 (the initial $4,900 GIA that has increased by 5.5% Income Growth Rate for four months). We would then add the $500 GIA increase that was applicable to the additional Purchase Payment, resulting in a new total GIA of $5,489.21. SCENARIO 3, CALCULATING THE GIA BASED ON A SINGLE PURCHASE PAYMENT, WHERE THE DESIGNATED LIFE HAS ATTAINED A NEW AGE BETWEEN THE DATE THE APPLICATION WAS SIGNED AND SUBSEQUENTLY ISSUED: Application Signed Date: July 1 Issue Date: July 12 of the same calendar year in which the application was signed Purchase Payment(s) Received: $100,000 Age: 64 on the application signed date, turning age 65 prior to the Issue Date The Income Percentage and Income Growth Rate are both set based on the rates effective between July 1 and July 31. As a result, the initial Income Percentage will be 5.2% based on the newly attained age of 65 as of the issue date of July 12, and the Income Growth Rate assigned to the annuity will be 5.5%. The initial Guaranteed Income Amount will be $5,200, which is determined by multiplying the Account Value on the Issue Date ($100,000) by the Income Percentage (5.2%). SCENARIO 4, YOUR APPLICATION WAS EITHER RECEIVED OR FUNDED BEYOND THE TIME FRAMES DISCLOSED ON YOUR RATE SHEET PROSPECTUS SUPPLEMENT: The Annuity would not be issued as the application was either not received in Good Order or the Annuity was not funded within the time frames disclosed on your Rate Sheet Prospectus Supplement. As a result, you would need to submit additional paperwork if you still wish to purchase the Annuity. Your Annuity would be eligible to receive the then current rates that are being offered on the Rate Sheet Prospectus Supplement (as of the date you signed the form), which could be higher or lower than the rates on the date you had first signed the Annuity application. B-2 PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER DETAILS ABOUT THE PRUCO LIFE OF NEW JERSEY PRUDENTIAL DEFINED INCOME (PDI) VARIABLE ANNUITY DESCRIBED IN PROSPECTUS (02/14/2013) -------------------------------------- (print your name) -------------------------------------- (address) -------------------------------------- (city/state/zip code)
Please see the section of this prospectus entitled "How To Contact Us" for where to send your request for a Statement of Additional Information. PART B STATEMENT OF ADDITIONAL INFORMATION February 14, 2013 PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT VARIABLE ANNUITY CONTRACTS The Prudential Defined Income Variable Annuity contracts (the "Annuities" or the "Annuity") are individual variable annuity contracts issued by Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), a stock life insurance company that is an indirect wholly-owned subsidiary of The Prudential Insurance Company of America ("Prudential") and is funded through the Pruco Life of New Jersey Flexible Premium Variable Annuity Account (the "Account"). The Annuity is purchased by making an initial purchase payment of $25,000 or more. Subject to certain restrictions, you can make additional purchase payments of not less than $100 at any time during the accumulation phase. This Statement of Additional Information is not a prospectus and should be read in conjunction with the Prudential Defined Income Variable Annuity prospectus dated February 14, 2013. To obtain a copy of the prospectus, without charge, you can write to the Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, Pennsylvania 19176, or contact us by telephone at (888) PRU-2888. TABLE OF CONTENTS Page ---- Company 2 Experts 2 Principal Underwriter 2 Payments Made to Promote Sale of Our Products 2 Determination of Accumulation Unit Values 3 Separate Account Financial Information A1 Company Financial Information B1 Prudential Annuity Service Center Pruco Life Insurance Company of New Jersey P.O. Box 7960 213 Washington Street Philadelphia, PA 19176 Newark, NJ 07102-2992 Telephone: (888) PRU 2888 COMPANY Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey") is a stock life insurance company organized in 1982 under the laws of the State of New Jersey. Pruco Life of New Jersey is licensed to sell life insurance and annuities in the states of New Jersey and New York. Pruco Life of New Jersey is a wholly-owned subsidiary of Pruco Life Insurance Company, which is a wholly-owned subsidiary of The Prudential Insurance Company of America ("Prudential"), a stock life insurance company founded in 1875 under the laws of the State of New Jersey. Prudential is an indirect wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential Financial"), a New Jersey insurance holding company. EXPERTS The financial statements of Pruco Life Insurance Company of New Jersey as of December 31, 2011 and 2010 and for each of the three years in the period ended December 31, 2011 and the financial statements of Pruco Life of New Jersey Flexible Premium Variable Annuity Account as of December 31, 2011 and for each of the two years in the period ended December 31, 2011, included in this Statement of Additional Information have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. PRINCIPAL UNDERWRITER Prudential Annuities Distributors, Inc. ("PAD"), an indirect wholly-owned subsidiary of Prudential Financial, offers each Annuity on a continuous basis in those states in which annuities may be lawfully sold. It may offer the Annuities through licensed insurance producers, or through appropriately registered affiliates of Prudential, provided clearances to do so are obtained in any jurisdiction where such clearances may be necessary. With respect to all individual annuities issued by Pruco Life of New Jersey, PAD received commissions of $106,497,788, $97,819,083, and $73,455,927, and $22,773,368, in 2012, 2011, and 2010, respectively. PAD retained none of those commissions. As discussed in the prospectus, Pruco Life of New Jersey pays commissions to broker/dealers that sell the Annuities according to one or more schedules, and also may pay non-cash compensation. In addition, Pruco Life of New Jersey may pay trail commissions to selling firms to pay its registered representatives who maintain an ongoing relationship with an annuity owner. Typically, a trail commission is compensation that is paid periodically, the amount of which is linked to the value of the Annuities and the amount of time that the Annuity has been in effect. PAYMENTS MADE TO PROMOTE SALE OF OUR PRODUCTS In an effort to promote the sale of our products (which may include the placement of Pruco Life of New Jersey and/or each Annuity on a preferred or recommended company or product list and/or access to the firm's registered representatives), we and/or PAD may enter into marketing service agreements with certain broker/dealer firms with respect to certain or all registered representatives of such firms under which such firms may receive separate compensation or reimbursement for, among other things, training of sales personnel and/or marketing, administrative services and/or other services they provide. These services may include, but are not limited to: educating customers of the firm on each Annuity's features; conducting due diligence and analysis, providing office access, operations and systems support; holding seminars intended to educate the firm's registered representatives and make them more knowledgeable about the annuity; providing a dedicated marketing coordinator; providing priority sales desk support; and providing expedited marketing compliance approval. We and/or PAD also may compensate third-party vendors, for services that such vendors render to broker-dealer firms. To the extent permitted by FINRA rules and other applicable laws and regulations, PAD may pay or allow other promotional incentives or payments in the form of cash or non-cash compensation. These arrangements may not be offered to all firms and the terms of such arrangements may differ between firms. The list below identifies three general types of payments that PAD pays which are broadly defined as follows: . Percentage Payments based upon "Assets under Management" or "AUM": This type of payment is a percentage payment that is based upon the total amount held in all Pruco Life of New Jersey products that were sold through the firm. . Percentage Payments based upon sales: This type of payment is a percentage payment that is based upon the total amount of money received as purchase payments under Pruco Life of New Jersey annuity products sold through the firm. Examples of arrangements under which such payments may be made currently include, but are not limited to: sponsorships, conferences (national, regional and top producer), speaker fees, promotional items, and reimbursements to firms for marketing activities or services paid by the firms and/or their individual representatives. The amount of these payments varies widely because some payments may encompass only a single event, such as a conference, and others have a much broader scope. In addition, we may make payments upon the initiation of a relationship for systems, operational and other support. The list in the prospectus includes the names of the firms (or their affiliated broker/dealers) that we are aware (as of December 31, 2011) received payment with respect to annuity business during 2011 (or as to which a payment amount was accrued during 2011). The firms listed include payments in connection with products issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey. Your registered representative can provide you with more information about the compensation arrangements that apply upon the sale of the contract. During 2011, the least amount paid, and greatest amount paid, were $19.35 and $6,443,077.91 respectively. DETERMINATION OF ACCUMULATION UNIT VALUES The value for each accumulation unit (which we refer to as the "Unit Price") is computed as of the end of each Valuation Day applicable. On any given Valuation Day, the value of a Unit in each Sub-account will be determined by multiplying the value of a Unit of that Sub-account for the preceding Valuation Day by the net investment factor for the Sub-account for the current Valuation Day. The Unit Price for a Valuation Period applies to each day in the period. The net investment factor is an index that measures the investment performance of, and charges assessed against, a Sub-account from one Valuation Period to the next. The net investment factor for a Valuation Period is: (a) divided by (b), less (c) where: (a)is the net result of: (1)the net asset value per share of the underlying Portfolio shares held by that Sub-account at the end of the current Valuation Period plus the per share amount of any dividend or capital gain distribution declared and unpaid (accrued) by the Portfolio at the end of the current Valuation Period; plus or minus (2)any per share charge or credit during the current Valuation Period as a provision for taxes attributable to the operation or maintenance of that Sub-account. (b)is the net result of: (1)the net asset value per share of the underlying Portfolio shares held by that Sub-account at the end of the preceding Valuation Period plus the per share amount of any dividend or capital gain distribution declared and unpaid (accrued) by the underlying Portfolio at the end of the preceding Valuation Period; plus or minus (2)any per share charge or credit during the preceding Valuation Period as a provision for taxes attributable to the operation or maintenance of that Sub-account. (c)is the Insurance Charge and any applicable charge assessed against a Sub-account for any Rider attached to this Annuity corresponding to the portion of the 365 day year (366 for a leap year) that is in the current Valuation Period. We value the assets in each Sub-account at their fair market value in accordance with accepted accounting practices and applicable laws and regulations. The net investment factor may be greater than, equal to, or less than one. Because this Annuity is new, we include no historical unit values here. FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011 SUBACCOUNTS ------------------------------------------------------------ PRUDENTIAL PRUDENTIAL PRUDENTIAL MONEY DIVERSIFIED PRUDENTIAL PRUDENTIAL HIGH MARKET BOND EQUITY VALUE YIELD PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------- ----------- ---------- ----------- ----------- ASSETS Investment in the portfolios, at fair value....... $18,882,658 $26,478,792 $20,353,150 $28,787,014 $21,605,149 ----------- ----------- ----------- ----------- ----------- Net Assets....... $18,882,658 $26,478,792 $20,353,150 $28,787,014 $21,605,149 =========== =========== =========== =========== =========== NET ASSETS, representing: Accumulation units............ $18,882,658 $26,478,792 $20,353,150 $28,787,014 $21,605,149 ----------- ----------- ----------- ----------- ----------- $18,882,658 $26,478,792 $20,353,150 $28,787,014 $21,605,149 =========== =========== =========== =========== =========== Units outstanding...... 15,081,905 11,804,540 11,025,380 14,821,037 6,482,108 =========== =========== =========== =========== =========== Portfolio shares held...... 1,888,266 2,255,434 857,697 1,807,094 4,382,383 Portfolio net asset value per share........ $ 10.00 $ 11.74 $ 23.73 $ 15.93 $ 4.93 Investment in portfolio shares, at cost.......... $18,882,658 $24,935,182 $23,041,855 $34,713,487 $23,264,934 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ------------------------------------------------------------ PRUDENTIAL PRUDENTIAL PRUDENTIAL MONEY DIVERSIFIED PRUDENTIAL PRUDENTIAL HIGH MARKET BOND EQUITY VALUE YIELD PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------- ----------- ---------- ----------- ----------- INVESTMENT INCOME Dividend income...$ 4,398 $ 1,168,083 $ 154,937 $ 332,914 $ 1,710,984 ----------- ----------- ----------- ----------- ----------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration.. 284,517 379,494 322,731 479,654 337,475 ----------- ----------- ----------- ----------- ----------- NET INVESTMENT INCOME (LOSS)..... (280,119) 788,589 (167,794) (146,740) 1,373,509 ----------- ----------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received......... 0 626,795 0 0 0 Realized gain (loss) on shares redeemed........ 0 251,851 (211,841) (472,832) (136,950) Net change in unrealized gain (loss) on investments..... 0 (53,592) (625,359) (1,512,573) (415,432) ----------- ----------- ----------- ----------- ----------- NET GAIN (LOSS) ON INVESTMENTS.... 0 825,054 (837,200) (1,985,405) (552,382) ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...... $ (280,119) $ 1,613,643 $(1,004,994) $(2,132,145)$ 821,127 =========== =========== =========== =========== ========= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A1
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------------- PRUDENTIAL PRUDENTIAL PRUDENTIAL SMALL T. ROWE PRICE T. ROWE PRICE JANUS ASPEN JANUS PRUDENTIAL STOCK GLOBAL JENNISON CAPITALIZATION INTERNATIONAL EQUITY INCOME INVESCO V.I. CORE PORTFOLIO - INDEX PORTFOLIO PORTFOLIO PORTFOLIO STOCK PORTFOLIO STOCK PORTFOLIO PORTFOLIO EQUITY FUND INSTITUTIONAL SHARES ---------------- ---------- ----------- --------------- --------------- ------------- ----------------- -------------------- $24,117,584 $5,367,968 $23,575,711 $4,475,517 $1,654,713 $6,386,979 $9,075,105 $4,977,112 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $24,117,584 $5,367,968 $23,575,711 $4,475,517 $1,654,713 $6,386,979 $9,075,105 $4,977,112 =========== ========== =========== ========== ========== ========== ========== ========== $24,117,584 $5,367,968 $23,575,711 $4,475,517 $1,654,713 $6,386,979 $9,075,105 $4,977,112 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $24,117,584 $5,367,968 $23,575,711 $4,475,517 $1,654,713 $6,386,979 $9,075,105 $4,977,112 =========== ========== =========== ========== ========== ========== ========== ========== 14,344,274 3,495,084 13,278,906 1,671,770 1,305,399 3,092,160 5,089,195 3,289,365 =========== ========== =========== ========== ========== ========== ========== ========== 766,367 316,881 1,013,573 263,266 139,286 328,887 339,637 217,912 $ 31.47 $ 16.94 $ 23.26 $ 17.00 $ 11.88 $ 19.42 $ 26.72 $ 22.84 $24,869,591 $6,079,825 $23,087,248 $4,308,158 $1,874,195 $6,477,360 $8,283,399 $5,650,447 SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------------- PRUDENTIAL PRUDENTIAL PRUDENTIAL SMALL T. ROWE PRICE T. ROWE PRICE JANUS ASPEN JANUS PRUDENTIAL STOCK GLOBAL JENNISON CAPITALIZATION INTERNATIONAL EQUITY INCOME INVESCO V.I. CORE PORTFOLIO - INDEX PORTFOLIO PORTFOLIO PORTFOLIO STOCK PORTFOLIO STOCK PORTFOLIO PORTFOLIO EQUITY FUND INSTITUTIONAL SHARES ---------------- ---------- ----------- --------------- --------------- ------------- ----------------- -------------------- $ 421,148 $ 95,292 $ 78,129 $ 38,253 $ 28,887 $ 118,417 $ 94,094 $ 32,724 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 378,050 87,143 373,822 65,877 28,006 94,959 137,931 77,918 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 43,098 8,149 (295,693) (27,624) 881 23,458 (43,837) (45,194) ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 0 0 0 63,415 0 0 0 0 (34,971) (38,730) 406,976 43,769 (308) 18,572 171,309 (64,806) 193,315 (452,439) (270,329) (122,408) (276,997) (169,511) (229,269) (249,040) ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 158,344 (491,169) 136,647 (15,224) (277,305) (150,939) (57,960) (313,846) ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $ 201,442 $ (483,020) $ (159,046) $ (42,848) $ (276,424) $ (127,481) $ (101,797) $ (359,040) =========== ========== =========== ========== ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A2 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS ---------------------------------------------------------------------- JANUS ASPEN FTVIP FRANKLIN OVERSEAS MFS(R) MFS(R) SMALL-MID CAP PORTFOLIO - RESEARCH GROWTH AMERICAN GROWTH INSTITUTIONAL SERIES - SERIES - CENTURY VP SECURITIES FUND - SHARES INITIAL CLASS INITIAL CLASS VALUE FUND CLASS 2 ------------- ------------- ------------- ---------- ----------------- ASSETS Investment in the portfolios, at fair value. $ 8,735,377 $1,609,260 $5,790,361 $2,407,512 $2,657,379 ----------- ---------- ---------- ---------- ---------- Net Assets.................................. $ 8,735,377 $1,609,260 $5,790,361 $2,407,512 $2,657,379 =========== ========== ========== ========== ========== NET ASSETS, representing: Accumulation units.......................... $ 8,735,377 $1,609,260 $5,790,361 $2,407,512 $2,657,379 ----------- ---------- ---------- ---------- ---------- $ 8,735,377 $1,609,260 $5,790,361 $2,407,512 $2,657,379 =========== ========== ========== ========== ========== Units outstanding........................... 2,903,952 990,180 3,507,477 1,221,358 1,511,453 =========== ========== ========== ========== ========== Portfolio shares held....................... 228,974 85,690 235,764 415,088 129,692 Portfolio net asset value per share......... $ 38.15 $ 18.78 $ 24.56 $ 5.80 $ 20.49 Investment in portfolio shares, at cost..... $ 7,494,045 $1,497,147 $5,533,040 $2,723,339 $2,693,025 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ---------------------------------------------------------------------- JANUS ASPEN FTVIP FRANKLIN OVERSEAS MFS(R) MFS(R) SMALL-MID CAP PORTFOLIO - RESEARCH GROWTH AMERICAN GROWTH INSTITUTIONAL SERIES - SERIES - CENTURY VP SECURITIES FUND - SHARES INITIAL CLASS INITIAL CLASS VALUE FUND CLASS 2 ------------- ------------- ------------- ---------- ----------------- INVESTMENT INCOME Dividend income............................. $ 55,021 $ 15,368 $ 11,999 $ 49,550 $ 0 ----------- ---------- ---------- ---------- ---------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 165,363 24,775 87,970 34,077 40,894 ----------- ---------- ---------- ---------- ---------- NET INVESTMENT INCOME (LOSS).................. (110,342) (9,407) (75,971) 15,473 (40,894) ----------- ---------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 114,744 0 0 0 0 Realized gain (loss) on shares redeemed................................... 799,976 24,336 60,900 (41,939) 29,089 Net change in unrealized gain (loss) on investments................................ (5,251,141) (45,278) (74,274) 22,732 (162,699) ----------- ---------- ---------- ---------- ---------- NET GAIN (LOSS) ON INVESTMENTS................ (4,336,421) (20,942) (13,374) (19,207) (133,610) ----------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $(4,446,763) $ (30,349) $ (89,345) $ (3,734) $ (174,504) =========== ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A3
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------- PRUDENTIAL SP ALLIANCEBERNSTEIN PRUDENTIAL PRUDENTIAL PRUDENTIAL SP PRUDENTIAL SP PRUDENTIAL VPS LARGE CAP SP SMALL JANUS ASPEN JANUS U.S. EMERGING GROWTH ASSET INTERNATIONAL JENNISON 20/20 DAVIS VALUE GROWTH PORTFOLIO CAP VALUE PORTFOLIO - SERVICE GROWTH ALLOCATION GROWTH FOCUS PORTFOLIO PORTFOLIO CLASS B PORTFOLIO SHARES PORTFOLIO PORTFOLIO* PORTFOLIO --------------- ----------- ----------------- ----------- ------------------- ------------- ------------- ------------- $4,027,325 $2,181,362 $466,570 $ 9,693,716 $422,958 $9,167,959 $ 0 $2,649,644 ---------- ---------- -------- ----------- -------- ---------- ---------- ---------- $4,027,325 $2,181,362 $466,570 $ 9,693,716 $422,958 $9,167,959 $ 0 $2,649,644 ========== ========== ======== =========== ======== ========== ========== ========== $4,027,325 $2,181,362 $466,570 $ 9,693,716 $422,958 $9,167,959 $ 0 $2,649,644 ---------- ---------- -------- ----------- -------- ---------- ---------- ---------- $4,027,325 $2,181,362 $466,570 $ 9,693,716 $422,958 $9,167,959 $ 0 $2,649,644 ========== ========== ======== =========== ======== ========== ========== ========== 2,433,178 2,104,144 785,087 5,635,542 428,077 4,764,169 0 2,217,408 ========== ========== ======== =========== ======== ========== ========== ========== 270,472 208,344 17,828 817,345 18,715 1,175,379 0 607,717 $ 14.89 $ 10.47 $ 26.17 $ 11.86 $ 22.60 $ 7.80 $ 0.00 $ 4.36 $3,643,079 $2,307,493 $510,796 $10,134,128 $376,110 $8,393,618 $ 0 $3,799,070 SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------- PRUDENTIAL SP ALLIANCEBERNSTEIN PRUDENTIAL PRUDENTIAL PRUDENTIAL SP PRUDENTIAL SP PRUDENTIAL VPS LARGE CAP SP SMALL JANUS ASPEN JANUS U.S. EMERGING GROWTH ASSET INTERNATIONAL JENNISON 20/20 DAVIS VALUE GROWTH PORTFOLIO CAP VALUE PORTFOLIO - SERVICE GROWTH ALLOCATION GROWTH FOCUS PORTFOLIO PORTFOLIO CLASS B PORTFOLIO SHARES PORTFOLIO PORTFOLIO* PORTFOLIO --------------- ----------- ----------------- ----------- ------------------- ------------- ------------- ------------- $ 3,710 $ 19,615 $ 468 $ 72,675 $ 2,139 $ 59,989 $ 0 $ 41,704 ---------- ---------- -------- ----------- -------- ---------- ---------- ---------- 62,733 33,580 7,243 170,616 8,386 158,609 178,702 50,004 ---------- ---------- -------- ----------- -------- ---------- ---------- ---------- (59,023) (13,965) (6,775) (97,941) (6,247) (98,620) (178,702) (8,300) ---------- ---------- -------- ----------- -------- ---------- ---------- ---------- 0 170,802 0 0 0 86,893 0 0 135,768 20,762 (4,784) (91,016) 45,906 290,994 469,001 (191,568) (291,919) (319,761) (16,901) (192,952) (64,047) (175,094) 1,574,550 (329,966) ---------- ---------- -------- ----------- -------- ---------- ---------- ---------- (156,151) (128,197) (21,685) (283,968) (18,141) 202,793 2,043,551 (521,534) ---------- ---------- -------- ----------- -------- ---------- ---------- ---------- $ (215,174) $ (142,162) $(28,460) $ (381,909) $(24,388) $ 104,173 $1,864,849 $ (529,834) ========== ========== ======== =========== ======== ========== ========== ==========
* The subaccount is no longer available for investment as of December 31, 2011. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A4 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS ------------------------------------------------------------------------------- AST AST SCHRODERS PRUDENTIAL SP GOLDMAN SACHS AST AMERICAN MULTI-ASSET WORLD AST COHEN & INTERNATIONAL LARGE-CAP CENTURY INCOME & STRATEGIES STEERS REALTY VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO PORTFOLIO --------------- --------------- ---------------- ----------------- ------------- ASSETS Investment in the portfolios, at fair value. $2,637,567 $ 8,530,502 $11,175,911 $105,293,592 $9,555,425 ---------- ----------- ----------- ------------ ---------- Net Assets.................................. $2,637,567 $ 8,530,502 $11,175,911 $105,293,592 $9,555,425 ========== =========== =========== ============ ========== NET ASSETS, representing: Accumulation units.......................... $2,637,567 $ 8,530,502 $11,175,911 $105,293,592 $9,555,425 ---------- ----------- ----------- ------------ ---------- $2,637,567 $ 8,530,502 $11,175,911 $105,293,592 $9,555,425 ========== =========== =========== ============ ========== Units outstanding........................... 1,944,492 906,605 1,060,852 10,204,353 780,293 ========== =========== =========== ============ ========== Portfolio shares held....................... 452,413 572,133 857,048 8,264,803 1,479,168 Portfolio net asset value per share......... $ 5.83 $ 14.91 $ 13.04 $ 12.74 $ 6.46 Investment in portfolio shares, at cost..... $3,744,426 $ 8,553,228 $10,571,076 $106,709,999 $9,178,877 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ------------------------------------------------------------------------------- AST AST SCHRODERS PRUDENTIAL SP GOLDMAN SACHS AST AMERICAN MULTI-ASSET WORLD AST COHEN & INTERNATIONAL LARGE-CAP CENTURY INCOME & STRATEGIES STEERS REALTY VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO PORTFOLIO --------------- --------------- ---------------- ----------------- ------------- INVESTMENT INCOME Dividend income............................. $ 77,022 $ 94,893 $ 108,995 $ 1,692,405 $ 66,331 ---------- ----------- ----------- ------------ ---------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 50,315 144,394 170,638 1,793,952 152,016 ---------- ----------- ----------- ------------ ---------- NET INVESTMENT INCOME (LOSS).................. 26,707 (49,501) (61,643) (101,547) (85,685) ---------- ----------- ----------- ------------ ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 0 0 0 979,487 0 Realized gain (loss) on shares redeemed................................... (136,178) (653,090) (269,379) (2,016,922) (235,309) Net change in unrealized gain (loss) on investments................................ (326,788) (554,749) (139,033) (7,873,818) 79,302 ---------- ----------- ----------- ------------ ---------- NET GAIN (LOSS) ON INVESTMENTS................ (462,966) (1,207,839) (408,412) (8,911,253) (156,007) ---------- ----------- ----------- ------------ ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $ (436,259) $(1,257,340) $ (470,055) $ (9,012,800) $ (241,692) ========== =========== =========== ============ ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A5
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------------- AST J.P. MORGAN AST NEUBERGER AST GOLDMAN STRATEGIC BERMAN SMALL- AST FEDERATED SACHS OPPORTUNITIES AST BLACKROCK CAP GROWTH AST HIGH YIELD AGGRESSIVE AST MID-CAP AST SMALL-CAP CONCENTRATED PORTFOLIO VALUE PORTFOLIO PORTFOLIO* PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO --------------- --------------- ------------- -------------- ---------------- --------------- --------------- ---------------- $85,179,205 $6,050,008 $ 0 $11,409,719 $ 8,661,558 $5,953,093 $5,461,308 $ 8,999,026 ----------- ---------- ---------- ----------- ----------- ---------- ---------- ----------- $85,179,205 $6,050,008 $ 0 $11,409,719 $ 8,661,558 $5,953,093 $5,461,308 $ 8,999,026 =========== ========== ========== =========== =========== ========== ========== =========== $85,179,205 $6,050,008 $ 0 $11,409,719 $ 8,661,558 $5,953,093 $5,461,308 $ 8,999,026 ----------- ---------- ---------- ----------- ----------- ---------- ---------- ----------- $85,179,205 $6,050,008 $ 0 $11,409,719 $ 8,661,558 $5,953,093 $5,461,308 $ 8,999,026 =========== ========== ========== =========== =========== ========== ========== =========== 8,024,460 595,589 0 1,019,827 859,377 549,671 521,742 872,417 =========== ========== ========== =========== =========== ========== ========== =========== 6,603,039 710,929 0 1,582,485 1,079,995 519,921 430,363 342,951 $ 12.90 $ 8.51 $ 0.00 $ 7.21 $ 8.02 $ 11.45 $ 12.69 $ 26.24 $82,670,302 $6,067,507 $ 0 $11,298,170 $ 9,256,267 $5,811,175 $5,324,580 $ 8,804,510 SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------------- AST J.P. MORGAN AST NEUBERGER AST GOLDMAN STRATEGIC BERMAN SMALL- AST FEDERATED SACHS OPPORTUNITIES AST BLACKROCK CAP GROWTH AST HIGH YIELD AGGRESSIVE AST MID-CAP AST SMALL-CAP CONCENTRATED PORTFOLIO VALUE PORTFOLIO PORTFOLIO* PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO --------------- --------------- ------------- -------------- ---------------- --------------- --------------- ---------------- $ 721,105 $ 42,917 $ 0 $ 703,670 $ 44,514 $ 46,774 $ 38,298 $ 17,138 ----------- ---------- ---------- ----------- ----------- ---------- ---------- ----------- 1,344,708 100,350 30,873 183,041 164,625 116,895 108,450 167,000 ----------- ---------- ---------- ----------- ----------- ---------- ---------- ----------- (623,603) (57,433) (30,873) 520,629 (120,111) (70,121) (70,152) (149,862) ----------- ---------- ---------- ----------- ----------- ---------- ---------- ----------- 0 0 0 0 0 0 0 0 417,664 (427,702) 1,450,641 (156,595) (1,802,400) (275,890) (361,914) (116,211) (2,330,731) (196,127) (720,624) (336,919) (1,242,562) (586,466) (565,184) (915,576) ----------- ---------- ---------- ----------- ----------- ---------- ---------- ----------- (1,913,067) (623,829) 730,017 (493,514) (3,044,962) (862,356) (927,098) (1,031,787) ----------- ---------- ---------- ----------- ----------- ---------- ---------- ----------- $(2,536,670) $ (681,262) $ 699,144 $ 27,115 $(3,165,073) $ (932,477) $ (997,250) $(1,181,649) =========== ========== ========== =========== =========== ========== ========== ===========
* The subaccount is no longer available for investment as of December 31, 2011. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A6 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS ------------------------------------------------------------------------------ AST GOLDMAN AST LORD ABBETT AST MARSICO SACHS MID-CAP AST LARGE-CAP CORE FIXED CAPITAL GROWTH AST MFS GROWTH GROWTH PORTFOLIO VALUE PORTFOLIO INCOME PORTFOLIO PORTFOLIO PORTFOLIO ---------------- --------------- ---------------- -------------- -------------- ASSETS Investment in the portfolios, at fair value. $11,358,598 $7,376,737 $18,984,628 $18,293,433 $4,779,596 ----------- ---------- ----------- ----------- ---------- Net Assets.................................. $11,358,598 $7,376,737 $18,984,628 $18,293,433 $4,779,596 =========== ========== =========== =========== ========== NET ASSETS, representing: Accumulation units.......................... $11,358,598 $7,376,737 $18,984,628 $18,293,433 $4,779,596 ----------- ---------- ----------- ----------- ---------- $11,358,598 $7,376,737 $18,984,628 $18,293,433 $4,779,596 =========== ========== =========== =========== ========== Units outstanding........................... 1,007,755 840,825 1,575,997 1,718,281 455,535 =========== ========== =========== =========== ========== Portfolio shares held....................... 2,267,185 585,455 1,680,056 957,270 501,006 Portfolio net asset value per share......... $ 5.01 $ 12.60 $ 11.30 $ 19.11 $ 9.54 Investment in portfolio shares, at cost..... $11,112,276 $8,317,463 $18,114,125 $17,793,469 $4,640,577 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ------------------------------------------------------------------------------ AST GOLDMAN AST LORD ABBETT AST MARSICO SACHS MID-CAP AST LARGE-CAP CORE FIXED CAPITAL GROWTH AST MFS GROWTH GROWTH PORTFOLIO VALUE PORTFOLIO INCOME PORTFOLIO PORTFOLIO PORTFOLIO ---------------- --------------- ---------------- -------------- -------------- INVESTMENT INCOME Dividend income............................. $ 0 $ 90,433 $ 169,543 $ 65,663 $ 17,942 ----------- ---------- ----------- ----------- ---------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 207,851 112,554 180,826 349,846 78,168 ----------- ---------- ----------- ----------- ---------- NET INVESTMENT INCOME (LOSS).................. (207,851) (22,121) (11,283) (284,183) (60,226) ----------- ---------- ----------- ----------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 741,248 0 0 0 0 Realized gain (loss) on shares redeemed................................... (824,237) (450,623) 311,717 (313,211) (2,894) Net change in unrealized gain (loss) on investments................................ (1,344,424) (100,386) 534,735 (1,384,872) (277,215) ----------- ---------- ----------- ----------- ---------- NET GAIN (LOSS) ON INVESTMENTS................ (1,427,413) (551,009) 846,452 (1,698,083) (280,109) ----------- ---------- ----------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $(1,635,264) $ (573,130) $ 835,169 $(1,982,266) $ (340,335) =========== ========== =========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A7
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------------------------- AST NEUBERGER AST T. ROWE AST T. ROWE AST T. ROWE AST NEUBERGER BERMAN / LSV AST PIMCO PRICE EQUITY AST QMA US PRICE NATURAL PRICE ASSET BERMAN MID-CAP MID-CAP VALUE LIMITED MATURITY INCOME EQUITY ALPHA RESOURCES ALLOCATION AST MFS GLOBAL GROWTH PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO EQUITY PORTFOLIO ---------------- ------------- ---------------- ------------ ------------ ------------- ------------ ---------------- $10,192,969 $ 8,617,159 $15,100,283 $7,093,624 $3,025,276 $20,366,272 $264,164,701 $7,785,786 ----------- ----------- ----------- ---------- ---------- ----------- ------------ ---------- $10,192,969 $ 8,617,159 $15,100,283 $7,093,624 $3,025,276 $20,366,272 $264,164,701 $7,785,786 =========== =========== =========== ========== ========== =========== ============ ========== $10,192,969 $ 8,617,159 $15,100,283 $7,093,624 $3,025,276 $20,366,272 $264,164,701 $7,785,786 ----------- ----------- ----------- ---------- ---------- ----------- ------------ ---------- $10,192,969 $ 8,617,159 $15,100,283 $7,093,624 $3,025,276 $20,366,272 $264,164,701 $7,785,786 =========== =========== =========== ========== ========== =========== ============ ========== 862,295 816,821 1,418,816 750,360 293,943 2,023,534 24,391,241 738,448 =========== =========== =========== ========== ========== =========== ============ ========== 469,290 588,604 1,431,306 873,599 261,929 1,065,739 15,349,489 796,907 $ 21.72 $ 14.64 $ 10.55 $ 8.12 $ 11.55 $ 19.11 $ 17.21 $ 9.77 $ 9,786,072 $ 8,426,218 $15,170,884 $6,893,776 $2,979,664 $22,039,022 $253,692,488 $7,759,861 SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------------------------- AST NEUBERGER AST T. ROWE AST T. ROWE AST T. ROWE AST NEUBERGER BERMAN / LSV AST PIMCO PRICE EQUITY AST QMA US PRICE NATURAL PRICE ASSET BERMAN MID-CAP MID-CAP VALUE LIMITED MATURITY INCOME EQUITY ALPHA RESOURCES ALLOCATION AST MFS GLOBAL GROWTH PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO EQUITY PORTFOLIO ---------------- ------------- ---------------- ------------ ------------ ------------- ------------ ---------------- $ 0 $ 87,886 $ 131,650 $ 87,051 $ 22,594 $ 150,253 $ 2,630,093 $ 42,503 ----------- ----------- ----------- ---------- ---------- ----------- ------------ ---------- 177,994 154,456 231,147 131,549 49,257 406,689 3,952,440 139,096 ----------- ----------- ----------- ---------- ---------- ----------- ------------ ---------- (177,994) (66,570) (99,497) (44,498) (26,663) (256,436) (1,322,347) (96,593) ----------- ----------- ----------- ---------- ---------- ----------- ------------ ---------- 0 0 241,403 0 0 0 0 0 (47,566) (531,932) (37,787) (527,438) (89,648) (1,798,291) (1,970,220) (202,245) (609,919) (584,289) (23,378) (281,119) (41,070) (4,185,345) (5,886,549) (669,993) ----------- ----------- ----------- ---------- ---------- ----------- ------------ ---------- (657,485) (1,116,221) 180,238 (808,557) (130,718) (5,983,636) (7,856,769) (872,238) ----------- ----------- ----------- ---------- ---------- ----------- ------------ ---------- $ (835,479) $(1,182,791) $ 80,741 $ (853,055) $ (157,381) $(6,240,072) $ (9,179,116) $ (968,831) =========== =========== =========== ========== ========== =========== ============ ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A8 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS --------------------------------------------------------------------------- AST ACADEMIC AST WELLINGTON AST CAPITAL STRATEGIES AST JPMORGAN AST T. ROWE MANAGEMENT GROWTH ASSET ASSET INTERNATIONAL PRICE GLOBAL HEDGED ALLOCATION ALLOCATION EQUITY PORTFOLIO BOND PORTFOLIO EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ---------------- -------------- ---------------- ------------ ------------ ASSETS Investment in the portfolios, at fair value. $12,053,672 $11,416,125 $16,414,783 $216,804,339 $249,345,914 ----------- ----------- ----------- ------------ ------------ Net Assets.................................. $12,053,672 $11,416,125 $16,414,783 $216,804,339 $249,345,914 =========== =========== =========== ============ ============ NET ASSETS, representing: Accumulation units.......................... $12,053,672 $11,416,125 $16,414,783 $216,804,339 $249,345,914 ----------- ----------- ----------- ------------ ------------ $12,053,672 $11,416,125 $16,414,783 $216,804,339 $249,345,914 =========== =========== =========== ============ ============ Units outstanding........................... 1,313,564 1,035,375 1,819,065 21,420,963 24,615,273 =========== =========== =========== ============ ============ Portfolio shares held....................... 647,699 1,027,554 1,825,894 21,381,098 24,279,057 Portfolio net asset value per share......... $ 18.61 $ 11.11 $ 8.99 $ 10.14 $ 10.27 Investment in portfolio shares, at cost..... $12,511,776 $11,383,586 $16,211,278 $215,826,369 $248,697,052 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS --------------------------------------------------------------------------- AST ACADEMIC AST WELLINGTON AST CAPITAL STRATEGIES AST JPMORGAN AST T. ROWE MANAGEMENT GROWTH ASSET ASSET INTERNATIONAL PRICE GLOBAL HEDGED ALLOCATION ALLOCATION EQUITY PORTFOLIO BOND PORTFOLIO EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ---------------- -------------- ---------------- ------------ ------------ INVESTMENT INCOME Dividend income............................. $ 196,438 $ 307,550 $ 30,708 $ 1,224,542 $ 1,620,054 ----------- ----------- ----------- ------------ ------------ EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 229,809 185,353 183,279 4,225,479 4,749,114 ----------- ----------- ----------- ------------ ------------ NET INVESTMENT INCOME (LOSS).................. (33,371) 122,197 (152,571) (3,000,937) (3,129,060) ----------- ----------- ----------- ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 0 85,984 0 0 0 Realized gain (loss) on shares redeemed................................... (989,607) 132,783 26,689 (2,357,253) (1,423,314) Net change in unrealized gain (loss) on investments................................ (1,560,593) (58,783) (630,011) (14,290,332) (13,767,759) ----------- ----------- ----------- ------------ ------------ NET GAIN (LOSS) ON INVESTMENTS................ (2,550,200) 159,984 (603,322) (16,647,585) (15,191,073) ----------- ----------- ----------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $(2,583,571) $ 282,181 $ (755,893) $(19,648,522) $(18,320,133) =========== =========== =========== ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A9
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------------------- AST AST FIRST AST FIRST AST T. ROWE AST BALANCED PRESERVATION TRUST TRUST CAPITAL AST PRICE AST ASSET ASSET BALANCED APPRECIATION ADVANCED LARGE-CAP AST MONEY SMALL-CAP ALLOCATION ALLOCATION TARGET TARGET STRATEGIES GROWTH MARKET GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------ ------------ ------------ ------------- ------------ ----------- ----------- ---------- $352,781,945 $266,300,550 $138,312,744 $113,082,406 $182,811,037 $16,199,304 $21,882,063 $7,766,322 ------------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- $352,781,945 $266,300,550 $138,312,744 $113,082,406 $182,811,037 $16,199,304 $21,882,063 $7,766,322 ============ ============ ============ ============ ============ =========== =========== ========== $352,781,945 $266,300,550 $138,312,744 $113,082,406 $182,811,037 $16,199,304 $21,882,063 $7,766,322 ------------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- $352,781,945 $266,300,550 $138,312,744 $113,082,406 $182,811,037 $16,199,304 $21,882,063 $7,766,322 ============ ============ ============ ============ ============ =========== =========== ========== 33,653,172 24,615,353 13,265,213 11,105,442 17,018,736 1,502,529 2,221,281 646,526 ============ ============ ============ ============ ============ =========== =========== ========== 32,335,650 22,644,605 14,620,797 12,291,566 16,864,487 1,331,085 21,882,063 384,471 $ 10.91 $ 11.76 $ 9.46 $ 9.20 $ 10.84 $ 12.17 $ 1.00 $ 20.20 $338,373,019 $253,505,288 $135,959,569 $113,785,184 $177,927,881 $15,695,473 $21,882,063 $7,183,580 SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------------------- AST AST FIRST AST FIRST AST T. ROWE AST BALANCED PRESERVATION TRUST TRUST CAPITAL AST PRICE AST ASSET ASSET BALANCED APPRECIATION ADVANCED LARGE-CAP AST MONEY SMALL-CAP ALLOCATION ALLOCATION TARGET TARGET STRATEGIES GROWTH MARKET GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------ ------------ ------------ ------------- ------------ ----------- ----------- ---------- $ 2,321,987 $ 2,113,347 $ 2,263,490 $ 1,475,558 $ 1,781,357 $ 0 $ 3,485 $ 0 ------------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- 6,171,933 3,984,644 2,209,615 2,101,204 2,890,425 277,130 287,897 124,005 ------------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- (3,849,946) (1,871,297) 53,875 (625,646) (1,109,068) (277,130) (284,412) (124,005) ------------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- 0 0 0 0 0 0 0 0 2,153,974 2,465,464 (3,011,507) (5,279,801) (2,073,998) (119,297) 0 43,373 (17,882,809) (3,977,122) (6,154,694) (11,932,967) (6,404,600) (1,259,418) 0 (609,710) ------------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- (15,728,835) (1,511,658) (9,166,201) (17,212,768) (8,478,598) (1,378,715) 0 (566,337) ------------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- $(19,578,781) $ (3,382,955) $ (9,112,326) $(17,838,414) $ (9,587,666) $(1,655,845) $ (284,412) $ (690,342) ============ ============ ============ ============ ============ =========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A10 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS ---------------------------------------------------------------------------- AST AST PIMCO INTERNATIONAL AST INVESTMENT TOTAL RETURN VALUE AST INTERNATIONAL NVIT DEVELOPING GRADE BOND BOND PORTFOLIO PORTFOLIO GROWTH PORTFOLIO MARKETS FUND PORTFOLIO -------------- ------------- ----------------- --------------- -------------- ASSETS Investment in the portfolios, at fair value. $154,437,971 $ 4,480,177 $ 7,164,025 $ 670,330 $688,204,214 ------------ ----------- ----------- ---------- ------------ Net Assets.................................. $154,437,971 $ 4,480,177 $ 7,164,025 $ 670,330 $688,204,214 ============ =========== =========== ========== ============ NET ASSETS, representing: Accumulation units.......................... $154,437,971 $ 4,480,177 $ 7,164,025 $ 670,330 $688,204,214 ------------ ----------- ----------- ---------- ------------ $154,437,971 $ 4,480,177 $ 7,164,025 $ 670,330 $688,204,214 ============ =========== =========== ========== ============ Units outstanding........................... 14,092,072 494,113 784,260 51,346 56,740,197 ============ =========== =========== ========== ============ Portfolio shares held....................... 12,967,084 330,885 717,838 124,135 112,451,669 Portfolio net asset value per share......... $ 11.91 $ 13.54 $ 9.98 $ 5.40 $ 6.12 Investment in portfolio shares, at cost..... $154,665,301 $ 4,843,262 $ 7,546,335 $1,068,392 $673,627,043 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ---------------------------------------------------------------------------- AST AST PIMCO INTERNATIONAL AST INVESTMENT TOTAL RETURN VALUE AST INTERNATIONAL NVIT DEVELOPING GRADE BOND BOND PORTFOLIO PORTFOLIO GROWTH PORTFOLIO MARKETS FUND PORTFOLIO -------------- ------------- ----------------- --------------- -------------- INVESTMENT INCOME Dividend income............................. $ 2,889,631 $ 79,639 $ 56,203 $ 2,474 $ 540,386 ------------ ----------- ----------- ---------- ------------ EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 2,539,011 89,688 137,264 15,673 4,389,811 ------------ ----------- ----------- ---------- ------------ NET INVESTMENT INCOME (LOSS).................. 350,620 (10,049) (81,061) (13,199) (3,849,425) ------------ ----------- ----------- ---------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 5,614,561 0 0 0 2,420,829 Realized gain (loss) on shares redeemed................................... (984,745) (507,100) (773,683) (855,034) 1,521,101 Net change in unrealized gain (loss) on investments................................ (2,390,884) (628,081) (972,097) 622,061 14,626,636 ------------ ----------- ----------- ---------- ------------ NET GAIN (LOSS) ON INVESTMENTS................ 2,238,932 (1,135,181) (1,745,780) (232,973) 18,568,566 ------------ ----------- ----------- ---------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $ 2,589,552 $(1,145,230) $(1,826,841) $ (246,172) $ 14,719,141 ============ =========== =========== ========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A11
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------------- FRANKLIN AST WESTERN AST PARAMETRIC TEMPLETON VIP AST GOLDMAN AST CLS GROWTH ASSET CORE PLUS AST BOND AST BOND AST GLOBAL REAL EMERGING MARKETS FOUNDING FUNDS SACHS SMALL-CAP ASSET ALLOCATION BOND PORTFOLIO PORTFOLIO 2018 PORTFOLIO 2019 ESTATE PORTFOLIO EQUITY PORTFOLIO ALLOCATION FUND VALUE PORTFOLIO PORTFOLIO --------------- -------------- -------------- ---------------- ---------------- --------------- --------------- ---------------- $28,879,973 $21,048,746 $ 1 $3,471,548 $14,498,653 $119,692,672 $11,039,742 $81,483,863 ----------- ----------- ------ ---------- ----------- ------------ ----------- ----------- $28,879,973 $21,048,746 $ 1 $3,471,548 $14,498,653 $119,692,672 $11,039,742 $81,483,863 =========== =========== ====== ========== =========== ============ =========== =========== $28,879,973 $21,048,746 $ 1 $3,471,548 $14,498,653 $119,692,672 $11,039,742 $81,483,863 ----------- ----------- ------ ---------- ----------- ------------ ----------- ----------- $28,879,973 $21,048,746 $ 1 $3,471,548 $14,498,653 $119,692,672 $11,039,742 $81,483,863 =========== =========== ====== ========== =========== ============ =========== =========== 2,627,749 1,787,276 0 333,835 1,592,487 11,945,693 959,394 7,911,117 =========== =========== ====== ========== =========== ============ =========== =========== 2,699,063 1,776,266 0 458,593 1,846,962 15,769,786 1,048,409 7,880,451 $ 10.70 $ 11.85 $11.08 $ 7.57 $ 7.85 $ 7.59 $ 10.53 $ 10.34 $28,242,242 $20,434,816 $ 1 $3,490,901 $15,923,102 $117,595,241 $10,344,164 $80,612,471 SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------------- FRANKLIN AST WESTERN AST PARAMETRIC TEMPLETON VIP AST GOLDMAN AST CLS GROWTH ASSET CORE PLUS AST BOND AST BOND AST GLOBAL REAL EMERGING MARKETS FOUNDING FUNDS SACHS SMALL-CAP ASSET ALLOCATION BOND PORTFOLIO PORTFOLIO 2018 PORTFOLIO 2019 ESTATE PORTFOLIO EQUITY PORTFOLIO ALLOCATION FUND VALUE PORTFOLIO PORTFOLIO --------------- -------------- -------------- ---------------- ---------------- --------------- --------------- ---------------- $ 831,014 $ 13,501 $ 100 $ 89,849 $ 185,848 $ 22,729 $ 59,120 $ 240,197 ----------- ----------- ------ ---------- ----------- ------------ ----------- ----------- 496,850 191,016 212 65,259 328,683 2,167,265 199,939 1,398,720 ----------- ----------- ------ ---------- ----------- ------------ ----------- ----------- 334,164 (177,515) (112) 24,590 (142,835) (2,144,536) (140,819) (1,158,523) ----------- ----------- ------ ---------- ----------- ------------ ----------- ----------- 462,908 307,854 2,092 0 0 0 0 832,012 364,517 50,058 (610) (179,409) (1,900,072) (4,030,882) (340,918) (3,191,974) 187,065 612,200 (579) (375,870) (3,298,453) (5,447,041) (608,211) (5,453,108) ----------- ----------- ------ ---------- ----------- ------------ ----------- ----------- 1,014,490 970,112 903 (555,279) (5,198,525) (9,477,923) (949,129) (7,813,070) ----------- ----------- ------ ---------- ----------- ------------ ----------- ----------- $ 1,348,654 $ 792,597 $ 791 $ (530,689) $(5,341,360) $(11,622,459) $(1,089,948) $(8,971,593) =========== =========== ====== ========== =========== ============ =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A12 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS ------------------------------------------------------------------------ AST HORIZON AST HORIZON AST CLS MODERATE GROWTH ASSET MODERATE ASSET AST FI PYRAMIS(R) PROFUND VP ASSET ALLOCATION ALLOCATION ALLOCATION ASSET ALLOCATION CONSUMER PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SERVICES ---------------- ------------ -------------- ----------------- ---------- ASSETS Investment in the portfolios, at fair value. $114,175,261 $52,173,792 $86,340,779 $53,096,580 $318,360 ------------ ----------- ----------- ----------- -------- Net Assets.................................. $114,175,261 $52,173,792 $86,340,779 $53,096,580 $318,360 ============ =========== =========== =========== ======== NET ASSETS, representing: Accumulation units.......................... $114,175,261 $52,173,792 $86,340,779 $53,096,580 $318,360 ------------ ----------- ----------- ----------- -------- $114,175,261 $52,173,792 $86,340,779 $53,096,580 $318,360 ============ =========== =========== =========== ======== Units outstanding........................... 11,121,340 4,964,168 8,325,112 5,117,071 28,187 ============ =========== =========== =========== ======== Portfolio shares held....................... 11,893,256 5,412,219 8,668,753 5,678,779 9,427 Portfolio net asset value per share......... $ 9.60 $ 9.64 $ 9.96 $ 9.35 $ 33.77 Investment in portfolio shares, at cost..... $112,679,125 $51,893,842 $85,278,162 $53,176,112 $267,207 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ------------------------------------------------------------------------ AST HORIZON AST HORIZON AST CLS MODERATE GROWTH ASSET MODERATE ASSET AST FI PYRAMIS(R) PROFUND VP ASSET ALLOCATION ALLOCATION ALLOCATION ASSET ALLOCATION CONSUMER PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SERVICES ---------------- ------------ -------------- ----------------- ---------- INVESTMENT INCOME Dividend income............................. $ 425,143 $ 171,630 $ 378,042 $ 115,053 $ 0 ------------ ----------- ----------- ----------- -------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 1,746,490 836,358 1,311,828 884,300 4,782 ------------ ----------- ----------- ----------- -------- NET INVESTMENT INCOME (LOSS).................. (1,321,347) (664,728) (933,786) (769,247) (4,782) ------------ ----------- ----------- ----------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 1,704,048 2,205,561 3,870,248 1,983,750 0 Realized gain (loss) on shares redeemed................................... (2,260,018) (2,206,377) (1,431,415) (3,104,763) 28,940 Net change in unrealized gain (loss) on investments................................ (5,736,625) (3,293,153) (5,382,931) (3,444,372) (23,814) ------------ ----------- ----------- ----------- -------- NET GAIN (LOSS) ON INVESTMENTS................ (6,292,595) (3,293,969) (2,944,098) (4,565,385) 5,126 ------------ ----------- ----------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $ (7,613,942) $(3,958,697) $(3,877,884) $(5,334,632) $ 344 ============ =========== =========== =========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A13
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP CONSUMER GOODS PROFUND VP PROFUND VP PROFUND VP MID-CAP MID-CAP PROFUND VP PORTFOLIO FINANCIALS HEALTH CARE INDUSTRIALS GROWTH VALUE REAL ESTATE -------------- ---------- ----------- ----------- ---------- ---------- ----------- $309,464 $ 460,756 $367,076 $289,434 $ 87,030 $80,928 $109,609 -------- --------- -------- -------- -------- ------- -------- $309,464 $ 460,756 $367,076 $289,434 $ 87,030 $80,928 $109,609 ======== ========= ======== ======== ======== ======= ======== $309,464 $ 460,756 $367,076 $289,434 $ 87,030 $80,928 $109,609 -------- --------- -------- -------- -------- ------- -------- $309,464 $ 460,756 $367,076 $289,434 $ 87,030 $80,928 $109,609 ======== ========= ======== ======== ======== ======= ======== 27,614 83,052 33,986 32,874 8,510 8,634 12,429 ======== ========= ======== ======== ======== ======= ======== 8,474 26,992 11,565 8,024 2,620 3,244 2,424 $ 36.52 $ 17.07 $ 31.74 $ 36.07 $ 33.22 $ 24.95 $ 45.22 $261,878 $ 456,661 $317,006 $253,921 $ 82,270 $73,276 $ 90,597 SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP CONSUMER GOODS PROFUND VP PROFUND VP PROFUND VP MID-CAP MID-CAP PROFUND VP PORTFOLIO FINANCIALS HEALTH CARE INDUSTRIALS GROWTH VALUE REAL ESTATE -------------- ---------- ----------- ----------- ---------- ---------- ----------- $ 4,038 $ 0 $ 1,182 $ 947 $ 0 $ 113 $ 0 -------- --------- -------- -------- -------- ------- -------- 4,688 7,239 5,777 4,995 1,427 1,097 1,951 -------- --------- -------- -------- -------- ------- -------- (650) (7,239) (4,595) (4,048) (1,427) (984) (1,951) -------- --------- -------- -------- -------- ------- -------- 0 0 0 0 0 0 0 24,821 (18,867) 25,471 22,262 5,612 1,664 20,887 (17,033) (78,387) (2,293) (48,784) (15,105) (9,053) (21,958) -------- --------- -------- -------- -------- ------- -------- 7,788 (97,254) 23,178 (26,522) (9,493) (7,389) (1,071) -------- --------- -------- -------- -------- ------- -------- $ 7,138 $(104,493) $ 18,583 $(30,570) $(10,920) $(8,373) $ (3,022) ======== ========= ======== ======== ======== ======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A14 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS ------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP SMALL-CAP SMALL-CAP PROFUND VP PROFUND VP LARGE-CAP GROWTH VALUE TELECOMMUNICATIONS UTILITIES GROWTH ---------- ---------- ------------------ ---------- ---------- ASSETS Investment in the portfolios, at fair value. $26,096 $19,259 $254,740 $258,742 $36,943 ------- ------- -------- -------- ------- Net Assets.................................. $26,096 $19,259 $254,740 $258,742 $36,943 ======= ======= ======== ======== ======= NET ASSETS, representing: Accumulation units.......................... $26,096 $19,259 $254,740 $258,742 $36,943 ------- ------- -------- -------- ------- $26,096 $19,259 $254,740 $258,742 $36,943 ======= ======= ======== ======== ======= Units outstanding........................... 2,491 1,988 28,944 27,191 3,831 ======= ======= ======== ======== ======= Portfolio shares held....................... 900 736 34,102 7,969 1,068 Portfolio net asset value per share......... $ 29.00 $ 26.17 $ 7.47 $ 32.47 $ 34.60 Investment in portfolio shares, at cost..... $23,340 $16,900 $237,502 $224,280 $33,464 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP SMALL-CAP SMALL-CAP PROFUND VP PROFUND VP LARGE-CAP GROWTH VALUE TELECOMMUNICATIONS UTILITIES GROWTH ---------- ---------- ------------------ ---------- ---------- INVESTMENT INCOME Dividend income............................. $ 0 $ 0 $ 7,704 $ 6,639 $ 0 ------- ------- -------- -------- ------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 383 342 3,871 3,986 824 ------- ------- -------- -------- ------- NET INVESTMENT INCOME (LOSS).................. (383) (342) 3,833 2,653 (824) ------- ------- -------- -------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 43 0 0 0 0 Realized gain (loss) on shares redeemed................................... 3,513 2,484 1,355 14,234 5,278 Net change in unrealized gain (loss) on investments................................ (4,807) (4,269) (17,520) 14,867 (6,626) ------- ------- -------- -------- ------- NET GAIN (LOSS) ON INVESTMENTS................ (1,251) (1,785) (16,165) 29,101 (1,348) ------- ------- -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $(1,634) $(2,127) $(12,332) $ 31,754 $(2,172) ======= ======= ======== ======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A15
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WELLS FARGO TRUST ADVANTAGE VT PROFUND VP AST BOND AST JENNISON AST JENNISON INTERNATIONAL CORE EQUITY LARGE-CAP PORTFOLIO LARGE-CAP LARGE-CAP EQUITY FLEX III AST BOND AST BOND PORTFOLIO VALUE 2020 VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO* PORTFOLIO 2017 PORTFOLIO 2021 SHARE CLASS 1* ---------- --------- --------------- ---------------- --------------- -------------- -------------- -------------- $140,580 $745,887 $3,336,250 $4,657,450 $ 0 $21,132,370 $33,532,170 $ 0 -------- -------- ---------- ---------- --------- ----------- ----------- -------- $140,580 $745,887 $3,336,250 $4,657,450 $ 0 $21,132,370 $33,532,170 $ 0 ======== ======== ========== ========== ========= =========== =========== ======== $140,580 $745,887 $3,336,250 $4,657,450 $ 0 $21,132,370 $33,532,170 $ 0 -------- -------- ---------- ---------- --------- ----------- ----------- -------- $140,580 $745,887 $3,336,250 $4,657,450 $ 0 $21,132,370 $33,532,170 $ 0 ======== ======== ========== ========== ========= =========== =========== ======== 17,584 65,882 338,692 435,071 0 1,835,904 2,641,568 0 ======== ======== ========== ========== ========= =========== =========== ======== 5,902 72,699 298,146 382,385 0 1,820,187 2,489,396 0 $ 23.82 $ 10.26 $ 11.19 $ 12.18 $ 0.00 $ 11.61 $ 13.47 $ 0.00 $130,730 $716,660 $3,370,552 $4,635,012 $ 0 $20,729,162 $31,534,227 $ 0 SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WELLS FARGO TRUST ADVANTAGE VT PROFUND VP AST BOND AST JENNISON AST JENNISON INTERNATIONAL CORE EQUITY LARGE-CAP PORTFOLIO LARGE-CAP LARGE-CAP EQUITY FLEX III AST BOND AST BOND PORTFOLIO VALUE 2020 VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO* PORTFOLIO 2017 PORTFOLIO 2021 SHARE CLASS 1* ---------- --------- --------------- ---------------- --------------- -------------- -------------- -------------- $ 1,069 $ 25,512 $ 12,531 $ 0 $ 26,038 $ 3,243 $ 10,985 $ 3,426 -------- -------- ---------- ---------- --------- ----------- ----------- -------- 2,097 40,704 62,972 67,085 9,848 165,580 361,836 3,510 -------- -------- ---------- ---------- --------- ----------- ----------- -------- (1,028) (15,192) (50,441) (67,085) 16,190 (162,337) (350,851) (84) -------- -------- ---------- ---------- --------- ----------- ----------- -------- 0 317,874 14,020 0 0 23,155 0 74,422 856 (10,202) (334,662) (137,141) (57,016) 83,003 1,239,362 (49,779) (8,180) 32,756 (267,112) (158,484) (99,917) 403,543 2,052,415 (59,595) -------- -------- ---------- ---------- --------- ----------- ----------- -------- (7,324) 340,428 (587,754) (295,625) (156,933) 509,701 3,291,777 (34,952) -------- -------- ---------- ---------- --------- ----------- ----------- -------- $ (8,352) $325,236 $ (638,195) $ (362,710) $(140,743) $ 347,364 $ 2,940,926 $(35,036) ======== ======== ========== ========== ========= =========== =========== ========
* The subaccount is no longer available for investment as of December 31, 2011. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A16 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2011
SUBACCOUNTS ------------------------------------------------------------------------------- WELLS FARGO WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT VT INTERNATIONAL OMEGA GROWTH SMALL CAP GROWTH SMALL CAP VALUE EQUITY PORTFOLIO PORTFOLIO SHARE PORTFOLIO SHARE PORTFOLIO SHARE AST BOND SHARE CLASS 1 CLASS 1 CLASS 1 CLASS 1 PORTFOLIO 2022 ---------------- --------------- ---------------- --------------- -------------- ASSETS Investment in the portfolios, at fair value. $205,566 $325,918 $ 0 $60,792 $15,603,787 -------- -------- ----- ------- ----------- Net Assets.................................. $205,566 $325,918 $ 0 $60,792 $15,603,787 ======== ======== ===== ======= =========== NET ASSETS, representing: Accumulation units.......................... $205,566 $325,918 $ 0 $60,792 $15,603,787 -------- -------- ----- ------- ----------- $205,566 $325,918 $ 0 $60,792 $15,603,787 ======== ======== ===== ======= =========== Units outstanding........................... 16,691 178,914 0 5,634 1,301,756 ======== ======== ===== ======= =========== Portfolio shares held....................... 43,096 14,307 0 7,298 1,274,819 Portfolio net asset value per share......... $ 4.77 $ 22.78 $7.71 $ 8.33 $ 12.24 Investment in portfolio shares, at cost..... $205,668 $274,887 $ 0 $53,818 $15,006,067 STATEMENT OF OPERATIONS For the year ended December 31, 2011 SUBACCOUNTS ------------------------------------------------------------------------------- WELLS FARGO WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT VT INTERNATIONAL OMEGA GROWTH SMALL CAP GROWTH SMALL CAP VALUE EQUITY PORTFOLIO PORTFOLIO SHARE PORTFOLIO SHARE PORTFOLIO SHARE AST BOND SHARE CLASS 1 CLASS 1 CLASS 1 CLASS 1 PORTFOLIO 2022 ---------------- --------------- ---------------- --------------- -------------- INVESTMENT INCOME Dividend income............................. $ 1,434 $ 0 $ 0 $ 585 $ 0 -------- -------- ----- ------- ----------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............................. 3,961 6,228 0 1,097 94,888 -------- -------- ----- ------- ----------- NET INVESTMENT INCOME (LOSS).................. (2,527) (6,228) 0 (512) (94,888) -------- -------- ----- ------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received........ 10,094 3,129 0 0 0 Realized gain (loss) on shares redeemed................................... 1,817 5,466 1 888 133,351 Net change in unrealized gain (loss) on investments................................ (43,492) (27,460) (1) (6,272) 597,720 -------- -------- ----- ------- ----------- NET GAIN (LOSS) ON INVESTMENTS................ (31,581) (18,865) 0 (5,384) 731,071 -------- -------- ----- ------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $(34,108) $(25,093) $ 0 $(5,896) $ 636,183 ======== ======== ===== ======= ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A17
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------- WELLS FARGO AST BLACKROCK ADVANTAGE VT AST PRUDENTIAL AST NEUBERGER GLOBAL STRATEGIES OPPORTUNITY CORE BOND BERMAN CORE PORTFOLIO FUND - CLASS 1 PORTFOLIO BOND PORTFOLIO ----------------- -------------- -------------- -------------- $44,313,773 $268,073 $360,304 $444,289 ----------- -------- -------- -------- $44,313,773 $268,073 $360,304 $444,289 =========== ======== ======== ======== $44,313,773 $268,073 $360,304 $444,289 ----------- -------- -------- -------- $44,313,773 $268,073 $360,304 $444,289 =========== ======== ======== ======== 4,834,702 25,046 35,775 44,118 =========== ======== ======== ======== 4,780,342 15,407 35,533 43,859 $ 9.27 $ 17.40 $ 10.14 $ 10.13 $46,506,773 $254,502 $357,389 $441,183 SUBACCOUNTS (CONTINUED) ------------------------------------------------------------- WELLS FARGO AST BLACKROCK ADVANTAGE VT AST PRUDENTIAL AST NEUBERGER GLOBAL STRATEGIES OPPORTUNITY CORE BOND BERMAN CORE PORTFOLIO FUND - CLASS 1 PORTFOLIO BOND PORTFOLIO ----------------- -------------- -------------- -------------- $ 0 $ 0 $ 0 $ 0 ----------- -------- -------- -------- 412,731 1,571 370 518 ----------- -------- -------- -------- (412,731) (1,571) (370) (518) ----------- -------- -------- -------- 0 0 0 0 (384,884) 80 18 2 (2,193,000) 13,571 2,915 3,106 ----------- -------- -------- -------- (2,577,884) 13,651 2,933 3,108 ----------- -------- -------- -------- $(2,990,615) $ 12,080 $ 2,563 $ 2,590 =========== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A18 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ------------------------------------------------------------------------------- PRUDENTIAL MONEY MARKET PRUDENTIAL DIVERSIFIED BOND PRUDENTIAL EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ------------------------- -------------------------- ------------------------ 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ------------ ----------- ----------- ----------- ----------- OPERATIONS Net investment income (loss)......................... $ (280,119) $ (329,602) $ 788,589 $ 816,500 $ (167,794) $ (147,077) Capital gains distributions received....................... 0 0 626,795 380,617 0 0 Realized gain (loss) on shares redeemed....................... 0 0 251,851 293,552 (211,841) (717,892) Net change in unrealized gain (loss) on investments.......... 0 0 (53,592) 1,075,759 (625,359) 3,097,674 ----------- ------------ ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (280,119) (329,602) 1,613,643 2,566,428 (1,004,994) 2,232,705 ----------- ------------ ----------- ----------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 246,545 97,581 125,726 52,609 103,894 55,127 Annuity Payments................ (43,772) (113,370) (39,049) (112,208) (205,140) (107,515) Surrenders, withdrawals and death benefits................. (4,593,592) (4,563,747) (3,209,635) (4,822,137) (2,190,802) (2,134,134) Net transfers between other subaccounts or fixed rate option......................... 654,286 8,990,751 263,660 574,766 (501,118) (711,122) Withdrawal and other charges........................ (14,037) (17,768) (11,153) (12,280) (18,660) (19,636) ----------- ------------ ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (3,750,570) 4,393,447 (2,870,451) (4,319,250) (2,811,826) (2,917,280) ----------- ------------ ----------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (4,030,689) 4,063,845 (1,256,808) (1,752,822) (3,816,820) (684,575) NET ASSETS Beginning of period............. 22,913,347 18,849,502 27,735,600 29,488,422 24,169,970 24,854,545 ----------- ------------ ----------- ----------- ----------- ----------- End of period................... $18,882,658 $ 22,913,347 $26,478,792 $27,735,600 $20,353,150 $24,169,970 =========== ============ =========== =========== =========== =========== Beginning units................. 18,414,358 15,430,381 13,115,233 15,202,406 12,475,419 14,144,035 ----------- ------------ ----------- ----------- ----------- ----------- Units issued.................... 3,837,949 13,202,419 483,619 943,367 141,157 243,744 Units redeemed.................. (7,170,402) (10,218,442) (1,794,312) (3,030,540) (1,591,196) (1,912,360) ----------- ------------ ----------- ----------- ----------- ----------- Ending units.................... 15,081,905 18,414,358 11,804,540 13,115,233 11,025,380 12,475,419 =========== ============ =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A19
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------- PRUDENTIAL VALUE PRUDENTIAL HIGH YIELD BOND PRUDENTIAL STOCK INDEX PRUDENTIAL GLOBAL PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ------------------------ ------------------------ ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- $ (146,740) $ (151,949) $ 1,373,509 $ 1,680,340 $ 43,098 $ 84,006 $ 8,149 $ 9,214 0 0 0 0 0 0 0 0 (472,832) (1,161,913) (136,950) (346,877) (34,971) (714,371) (38,730) (112,720) (1,512,573) 4,506,279 (415,432) 1,509,860 193,315 3,864,660 (452,439) 779,526 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- (2,132,145) 3,192,417 821,127 2,843,323 201,442 3,234,295 (483,020) 676,020 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- 38,416 81,964 44,014 54,674 103,001 91,812 17,713 19,690 (27,555) (135,822) (41,041) (66,492) (133,194) (71,084) (37,081) (2,227) (3,546,889) (2,981,018) (3,020,998) (3,357,112) (2,908,177) (2,609,435) (651,159) (529,983) (491,024) 9,782,661 (566,559) (158,785) (1,100,751) (909,617) (156,477) (150,571) (42,623) (38,892) (27,624) (30,992) (27,972) (28,237) (7,007) (7,182) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- (4,069,675) 6,708,893 (3,612,208) (3,558,707) (4,067,093) (3,526,561) (834,011) (670,273) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- (6,201,820) 9,901,310 (2,791,081) (715,384) (3,865,651) (292,266) (1,317,031) 5,747 34,988,834 25,087,524 24,396,230 25,111,614 27,983,235 28,275,501 6,684,999 6,679,252 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- $28,787,014 $34,988,834 $21,605,149 $24,396,230 $24,117,584 $27,983,235 $ 5,367,968 $6,684,999 =========== =========== =========== =========== =========== =========== =========== ========== 16,908,321 11,984,256 7,412,235 8,609,604 16,877,441 19,203,436 4,001,680 4,460,369 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- 277,200 7,197,972 172,243 380,325 535,922 882,431 78,774 142,021 (2,364,484) (2,273,907) (1,102,370) (1,577,694) (3,069,089) (3,208,426) (585,370) (600,710) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- 14,821,037 16,908,321 6,482,108 7,412,235 14,344,274 16,877,441 3,495,084 4,001,680 =========== =========== =========== =========== =========== =========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A20 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS --------------------------------------------------------------------------- PRUDENTIAL T. ROWE PRICE PRUDENTIAL JENNISON SMALL CAPITALIZATION STOCK INTERNATIONAL STOCK PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ------------------------- ---------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss)......................... $ (295,693) $ (256,206) $ (27,624) $ (25,682) $ 881 $ (10,444) Capital gains distributions received....................... 0 0 63,415 0 0 6,438 Realized gain (loss) on shares redeemed....................... 406,976 (287,615) 43,769 (90,510) (308) (39,718) Net change in unrealized gain (loss) on investments.......... (270,329) 3,061,588 (122,408) 1,124,583 (276,997) 296,097 ----------- ----------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (159,046) 2,517,767 (42,848) 1,008,391 (276,424) 252,373 ----------- ----------- ---------- ---------- ---------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 122,286 92,706 5,188 7,738 1,487 1,797 Annuity Payments................ (80,628) (70,679) (18,663) (2,669) (13,833) 0 Surrenders, withdrawals and death benefits................. (3,012,651) (2,354,929) (549,818) (597,463) (286,228) (269,286) Net transfers between other subaccounts or fixed rate option......................... (781,997) 942,595 134,343 (74,497) (23,792) 37,889 Withdrawal and other charges........................ (24,422) (24,175) (2,253) (2,454) (783) (890) ----------- ----------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (3,777,412) (1,414,482) (431,203) (669,345) (323,149) (230,490) ----------- ----------- ---------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (3,936,458) 1,103,285 (474,051) 339,046 (599,573) 21,883 NET ASSETS Beginning of period............. 27,512,169 26,408,884 4,949,568 4,610,522 2,254,286 2,232,403 ----------- ----------- ---------- ---------- ---------- ---------- End of period................... $23,575,711 $27,512,169 $4,475,517 $4,949,568 $1,654,713 $2,254,286 =========== =========== ========== ========== ========== ========== Beginning units................. 15,574,177 16,183,229 1,832,332 2,117,993 1,531,675 1,706,365 ----------- ----------- ---------- ---------- ---------- ---------- Units issued.................... 364,774 1,777,641 137,917 134,489 66,946 209,207 Units redeemed.................. (2,660,045) (2,386,693) (298,479) (420,150) (293,222) (383,897) ----------- ----------- ---------- ---------- ---------- ---------- Ending units.................... 13,278,906 15,574,177 1,671,770 1,832,332 1,305,399 1,531,675 =========== =========== ========== ========== ========== ==========
** Date subaccount was no longer available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A21
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------- JANUS ASPEN JANUS JANUS ASPEN OVERSEAS T. ROWE PRICE EQUITY INVESCO V.I. CORE EQUITY PORTFOLIO - INSTITUTIONAL PORTFOLIO - INSTITUTIONAL INCOME PORTFOLIO FUND SHARES SHARES ---------------------- ------------------------ ----------------------- ------------------------ 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- $ 23,458 $ 35,141 $ (43,837) $ (44,096) $ (45,194) $ (18,073) $ (110,342) $ (101,412) 0 0 0 0 0 0 114,744 0 18,572 (100,702) 171,309 51,243 (64,806) (178,498) 799,976 989,607 (169,511) 945,058 (229,269) 778,876 (249,040) 909,856 (5,251,141) 2,156,148 ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- (127,481) 879,497 (101,797) 786,023 (359,040) 713,285 (4,446,763) 3,044,343 ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- 6,398 5,329 8,200 12,678 1,696 11,170 14,222 16,414 0 (991) (7,426) (79,722) (28,139) (24,597) (98,634) (118,261) (644,061) (929,062) (1,004,438) (1,101,506) (702,937) (829,305) (1,673,328) (1,966,420) (145,301) 75,936 (236,795) (42,956) (3,890) (58,508) 5,912 (362,383) (2,986) (3,436) (5,288) (6,011) (3,302) (3,947) (5,081) (6,439) ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- (785,950) (852,224) (1,245,747) (1,217,517) (736,572) (905,187) (1,756,909) (2,437,089) ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- (913,431) 27,273 (1,347,544) (431,494) (1,095,612) (191,902) (6,203,672) 607,254 7,300,410 7,273,137 10,422,649 10,854,143 6,072,724 6,264,626 14,939,049 14,331,795 ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- $6,386,979 $7,300,410 $ 9,075,105 $10,422,649 $ 4,977,112 $6,072,724 $ 8,735,377 $14,939,049 ========== ========== =========== =========== =========== ========== =========== =========== 3,462,271 3,900,813 5,770,912 6,507,705 3,767,484 4,392,746 3,325,293 3,936,738 ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- 51,035 190,930 43,731 198,443 116,004 137,281 128,634 73,108 (421,146) (629,472) (725,448) (935,236) (594,123) (762,543) (549,975) (684,553) ---------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- 3,092,160 3,462,271 5,089,195 5,770,912 3,289,365 3,767,484 2,903,952 3,325,293 ========== ========== =========== =========== =========== ========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A22 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ---------------------------------------------------------------------- MFS(R) RESEARCH SERIES - MFS(R) GROWTH SERIES - AMERICAN CENTURY VP INITIAL CLASS INITIAL CLASS VALUE FUND ---------------------- ---------------------- ---------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ---------- ---------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss)......................... $ (9,407) $ (8,217) $ (75,971) $ (80,750) $ 15,473 $ 20,525 Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... 24,336 (7,198) 60,900 (61,626) (41,939) (90,087) Net change in unrealized gain (loss) on investments.......... (45,278) 255,918 (74,274) 959,610 22,732 351,220 ---------- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (30,349) 240,503 (89,345) 817,234 (3,734) 281,658 ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 3,791 3,160 10,683 36,687 3,623 3,275 Annuity Payments................ 0 (14,522) (16,581) (32,450) 0 (1,338) Surrenders, withdrawals and death benefits................. (197,731) (122,235) (616,480) (666,831) (203,523) (336,208) Net transfers between other subaccounts or fixed rate option......................... (67,083) (11,996) (171,257) (25,246) (36,850) 82,146 Withdrawal and other charges........................ (940) (1,043) (3,438) (3,892) (978) (1,085) ---------- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (261,963) (146,636) (797,073) (691,732) (237,728) (253,210) ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (292,312) 93,867 (886,418) 125,502 (241,462) 28,448 NET ASSETS Beginning of period............. 1,901,572 1,807,705 6,676,779 6,551,277 2,648,974 2,620,526 ---------- ---------- ---------- ---------- ---------- ---------- End of period................... $1,609,260 $1,901,572 $5,790,361 $6,676,779 $2,407,512 $2,648,974 ========== ========== ========== ========== ========== ========== Beginning units................. 1,148,688 1,248,044 3,974,850 4,434,949 1,337,254 1,480,875 ---------- ---------- ---------- ---------- ---------- ---------- Units issued.................... 8,059 38,831 44,551 188,316 55,148 70,642 Units redeemed.................. (166,567) (138,187) (511,924) (648,415) (171,044) (214,263) ---------- ---------- ---------- ---------- ---------- ---------- Ending units.................... 990,180 1,148,688 3,507,477 3,974,850 1,221,358 1,337,254 ========== ========== ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A23
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------- FTVIP FRANKLIN SMALL-MID CAP ALLIANCEBERNSTEIN VPS GROWTH SECURITIES PRUDENTIAL JENNISON 20/20 DAVIS VALUE LARGE CAP GROWTH FUND - CLASS 2 FOCUS PORTFOLIO PORTFOLIO PORTFOLIO CLASS B --------------------------- ------------------------ ---------------------- -------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ (40,894) $ (37,025) $ (59,023) $ (63,853) $ (13,965) $ (2,068) $ (6,775) $ (5,274) 0 0 0 0 170,802 0 0 0 29,089 (57,392) 135,768 47,158 20,762 (9,119) (4,784) (9,734) (162,699) 718,960 (291,919) 302,015 (319,761) 265,010 (16,901) 51,602 ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- (174,504) 624,543 (215,174) 285,320 (142,162) 253,823 (28,460) 36,594 ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 2,986 5,341 3,248 1,523 4,657 4,039 2,336 0 0 (444) (53,940) 0 0 0 0 0 (298,676) (229,792) (602,712) (535,989) (237,379) (313,858) (50,417) (65,415) 129,317 78,028 90,954 123,751 58,067 27,859 48,194 34,049 (1,384) (1,450) (1,718) (1,928) (823) (938) (187) (138) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- (167,757) (148,317) (564,168) (412,643) (175,478) (282,898) (74) (31,504) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- (342,261) 476,226 (779,342) (127,323) (317,640) (29,075) (28,534) 5,090 2,999,640 2,523,414 4,806,667 4,933,990 2,499,002 2,528,077 495,104 490,014 ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- $2,657,379 $2,999,640 $4,027,325 $4,806,667 $2,181,362 $2,499,002 $ 466,570 $ 495,104 ========== ========== ========== ========== ========== ========== ========= ========= 1,608,281 1,701,914 2,744,426 2,995,359 2,277,948 2,562,604 794,616 851,577 ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 142,782 194,419 133,797 304,421 159,264 149,656 137,262 108,752 (239,610) (288,052) (445,045) (555,354) (333,068) (434,312) (146,791) (165,713) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 1,511,453 1,608,281 2,433,178 2,744,426 2,104,144 2,277,948 785,087 794,616 ========== ========== ========== ========== ========== ========== ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A24 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ------------------------------------------------------------------------------------ PRUDENTIAL SP SMALL CAP JANUS ASPEN JANUS PORTFOLIO - PRUDENTIAL SP PRUDENTIAL U.S. VALUE PORTFOLIO SERVICE SHARES EMERGING GROWTH PORTFOLIO ------------------------ ---------------------------- ---------------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ---------- ---------- ----------- ----------- OPERATIONS Net investment income (loss)......................... $ (97,941) $ (113,974) $ (6,247) $ (6,804) $ (98,620) $ (101,127) Capital gains distributions received....................... 0 0 0 0 86,893 0 Realized gain (loss) on shares redeemed....................... (91,016) (264,898) 45,906 6,761 290,994 (29,799) Net change in unrealized gain (loss) on investments.......... (192,952) 3,213,846 (64,047) 74,767 (175,094) 1,578,096 ----------- ----------- --------- -------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (381,909) 2,834,974 (24,388) 74,724 104,173 1,447,170 ----------- ----------- --------- -------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 11,683 15,834 431 488 15,909 39,446 Annuity Payments................ (16,710) 0 0 0 0 (41,408) Surrenders, withdrawals and death benefits................. (1,407,904) (792,416) (124,939) (29,565) (1,585,027) (673,790) Net transfers between other subaccounts or fixed rate option......................... (2,553,192) (449,529) (95,065) 89,544 (202,395) 3,946,156 Withdrawal and other charges........................ (28,141) (40,630) (814) (822) (23,760) (18,984) ----------- ----------- --------- -------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (3,994,264) (1,266,741) (220,387) 59,645 (1,795,273) 3,251,420 ----------- ----------- --------- -------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (4,376,173) 1,568,233 (244,775) 134,369 (1,691,100) 4,698,590 NET ASSETS Beginning of period............. 14,069,889 12,501,656 667,733 533,364 10,859,059 6,160,469 ----------- ----------- --------- -------- ----------- ----------- End of period................... $ 9,693,716 $14,069,889 $ 422,958 $667,733 $ 9,167,959 $10,859,059 =========== =========== ========= ======== =========== =========== Beginning units................. 7,783,323 8,610,683 679,019 566,315 5,711,766 3,804,774 ----------- ----------- --------- -------- ----------- ----------- Units issued.................... 218,571 190,447 21,611 170,316 441,164 2,631,571 Units redeemed.................. (2,366,352) (1,017,807) (272,553) (57,612) (1,388,761) (724,579) ----------- ----------- --------- -------- ----------- ----------- Ending units.................... 5,635,542 7,783,323 428,077 679,019 4,764,169 5,711,766 =========== =========== ========= ======== =========== ===========
** Date subaccount was no longer available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A25
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------------------- PRUDENTIAL SP GROWTH ASSET PRUDENTIAL SP INTERNATIONAL PRUDENTIAL SP INTERNATIONAL AST GOLDMAN SACHS ALLOCATION PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO LARGE-CAP VALUE PORTFOLIO ------------------------- -------------------------- -------------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 04/29/2011** 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- $ (178,702) $ 76,822 $ (8,300) $ (605) $ 26,707 $ 20,375 $ (49,501) $ (11,542) 0 0 0 0 0 0 0 0 469,001 (696,384) (191,568) (190,972) (136,178) (182,395) (653,090) (33,995) 1,574,550 4,069,674 (329,966) 584,283 (326,788) 451,092 (554,749) 613,067 ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- 1,864,849 3,450,112 (529,834) 392,706 (436,259) 289,072 (1,257,340) 567,530 ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- 80,272 83,186 4,968 16,114 24,408 4,581 5,343,435 4,403,584 0 0 0 (545) 0 0 0 0 (699,231) (1,788,342) (539,931) (240,459) (588,596) (265,592) (98,151) (36,910) (32,688,465) (1,781,424) (151,614) 144,218 35,069 (70,302) (2,583,179) 236,838 (28,543) (96,575) (6,878) (7,296) (6,217) (6,630) (57,870) (19,977) ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- (33,335,967) (3,583,155) (693,455) (87,968) (535,336) (337,943) 2,604,235 4,583,535 ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- (31,471,118) (133,043) (1,223,289) 304,738 (971,595) (48,871) 1,346,895 5,151,065 31,471,118 31,604,161 3,872,933 3,568,195 3,609,162 3,658,033 7,183,607 2,032,542 ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- $ 0 $31,471,118 $ 2,649,644 $3,872,933 $2,637,567 $3,609,162 $ 8,530,502 $7,183,607 ============ =========== =========== ========== ========== ========== =========== ========== 17,273,536 19,040,642 2,752,691 2,842,174 2,287,701 2,566,672 721,811 254,383 ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- 150,306 78,296 107,559 347,161 117,961 184,521 1,199,167 622,105 (17,423,842) (1,845,402) (642,842) (436,644) (461,170) (463,492) (1,014,373) (154,677) ------------ ----------- ----------- ---------- ---------- ---------- ----------- ---------- 0 17,273,536 2,217,408 2,752,691 1,944,492 2,287,701 906,605 721,811 ============ =========== =========== ========== ========== ========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A26 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS --------------------------------------------------------------------------- AST AMERICAN CENTURY AST SCHRODERS MULTI-ASSET AST COHEN & STEERS INCOME & GROWTH PORTFOLIO WORLD STRATEGIES PORTFOLIO REALTY PORTFOLIO ----------------------- ------------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ---------- ------------ ----------- ----------- ---------- OPERATIONS Net investment income (loss)......................... $ (61,643) $ (19,948) $ (101,547) $ (410,425) $ (85,685) $ (12,448) Capital gains distributions received....................... 0 0 979,487 0 0 0 Realized gain (loss) on shares redeemed....................... (269,379) 13,139 (2,016,922) 92,579 (235,309) 5,975 Net change in unrealized gain (loss) on investments.......... (139,033) 711,292 (7,873,818) 5,575,513 79,302 684,278 ----------- ---------- ------------ ----------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (470,055) 704,483 (9,012,800) 5,257,667 (241,692) 677,805 ----------- ---------- ------------ ----------- ----------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 6,263,169 4,451,679 60,348,216 54,692,805 5,729,775 3,738,801 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (391,179) (31,255) (1,052,475) (182,481) (197,722) (31,068) Net transfers between other subaccounts or fixed rate option......................... (1,914,870) 161,787 (20,658,177) 3,006,385 (1,936,649) 600,037 Withdrawal and other charges........................ (74,321) (28,084) (761,692) (237,559) (52,078) (13,167) ----------- ---------- ------------ ----------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 3,882,799 4,554,127 37,875,872 57,279,150 3,543,326 4,294,603 ----------- ---------- ------------ ----------- ----------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 3,412,744 5,258,610 28,863,072 62,536,817 3,301,634 4,972,408 NET ASSETS Beginning of period............. 7,763,167 2,504,557 76,430,520 13,893,703 6,253,791 1,281,383 ----------- ---------- ------------ ----------- ----------- ---------- End of period................... $11,175,911 $7,763,167 $105,293,592 $76,430,520 $ 9,555,425 $6,253,791 =========== ========== ============ =========== =========== ========== Beginning units................. 767,043 300,949 7,044,852 1,392,262 542,367 148,592 ----------- ---------- ------------ ----------- ----------- ---------- Units issued.................... 1,307,129 612,727 11,330,820 6,763,098 1,038,140 482,571 Units redeemed.................. (1,013,320) (146,633) (8,171,319) (1,110,508) (800,214) (88,796) ----------- ---------- ------------ ----------- ----------- ---------- Ending units.................... 1,060,852 767,043 10,204,353 7,044,852 780,293 542,367 =========== ========== ============ =========== =========== ==========
** Date subaccount was no longer available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A27
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------- AST J.P. MORGAN STRATEGIC AST BLACKROCK VALUE AST NEUBERGER BERMAN AST HIGH YIELD OPPORTUNITIES PORTFOLIO PORTFOLIO SMALL-CAP GROWTH PORTFOLIO PORTFOLIO ------------------------- ---------------------- ------------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 04/29/2011** 12/31/2010 12/31/2011 12/31/2010 ------------ ----------- ---------- ---------- ------------ ---------- ----------- ---------- $ (623,603) $ (531,515) $ (57,433) $ (13,979) $ (30,873) $ (37,729) $ 520,629 $ 89,930 0 0 0 0 0 0 0 0 417,664 412,964 (427,702) (55,566) 1,450,641 42,075 (156,595) 63,971 (2,330,731) 3,114,485 (196,127) 423,938 (720,624) 611,722 (336,919) 366,330 ------------ ----------- ---------- ---------- ----------- ---------- ----------- ---------- (2,536,670) 2,995,934 (681,262) 354,393 699,144 616,068 27,115 520,231 ------------ ----------- ---------- ---------- ----------- ---------- ----------- ---------- 36,420,477 37,093,187 3,275,428 663,089 1,465,102 2,431,197 5,235,872 5,421,422 0 0 0 0 0 0 0 0 (1,759,666) (665,302) (82,293) (70,126) (137,007) (45,628) (387,782) (173,832) (14,711,557) (500,738) (217,672) 1,907,191 (6,844,259) 482,965 (2,447,600) 203,876 (509,960) (216,106) (30,120) (7,585) (13,406) (15,557) (61,966) (22,369) ------------ ----------- ---------- ---------- ----------- ---------- ----------- ---------- 19,439,294 35,711,041 2,945,343 2,492,569 (5,529,570) 2,852,977 2,338,524 5,429,097 ------------ ----------- ---------- ---------- ----------- ---------- ----------- ---------- 16,902,624 38,706,975 2,264,081 2,846,962 (4,830,426) 3,469,045 2,365,639 5,949,328 68,276,581 29,569,606 3,785,927 938,965 4,830,426 1,361,381 9,044,080 3,094,752 ------------ ----------- ---------- ---------- ----------- ---------- ----------- ---------- $ 85,179,205 $68,276,581 $6,050,008 $3,785,927 $ 0 $4,830,426 $11,409,719 $9,044,080 ============ =========== ========== ========== =========== ========== =========== ========== 6,294,008 2,802,454 369,225 112,504 469,168 174,488 811,608 295,249 ------------ ----------- ---------- ---------- ----------- ---------- ----------- ---------- 6,101,049 4,626,686 980,364 315,120 160,330 459,794 953,794 668,121 (4,370,597) (1,135,132) (754,000) (58,399) (629,498) (165,114) (745,575) (151,762) ------------ ----------- ---------- ---------- ----------- ---------- ----------- ---------- 8,024,460 6,294,008 595,589 369,225 0 469,168 1,019,827 811,608 ============ =========== ========== ========== =========== ========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A28 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ------------------------------------------------------------------------ AST FEDERATED AGGRESSIVE GROWTH AST MID-CAP VALUE AST SMALL-CAP VALUE PORTFOLIO PORTFOLIO PORTFOLIO ----------------------- ----------------------- ---------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ---------- ----------- ---------- ---------- ---------- OPERATIONS Net investment income (loss)......................... $ (120,111) $ (36,199) $ (70,121) $ (32,176) $ (70,152) $ (36,929) Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... (1,802,400) (6,211) (275,890) 35,081 (361,914) (4,658) Net change in unrealized gain (loss) on investments.......... (1,242,562) 819,811 (586,466) 693,597 (565,184) 824,587 ----------- ---------- ----------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (3,165,073) 777,401 (932,477) 696,502 (997,250) 783,000 ----------- ---------- ----------- ---------- ---------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 3,475,193 2,035,852 2,723,023 2,463,379 1,942,517 1,621,878 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (224,026) (175,949) (108,091) (58,197) (200,487) (106,151) Net transfers between other subaccounts or fixed rate option......................... 3,649,330 1,199,745 (1,146,512) 1,145,543 (487,086) 1,341,017 Withdrawal and other charges........................ (63,894) (10,614) (42,808) (12,500) (35,081) (10,602) ----------- ---------- ----------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 6,836,603 3,049,034 1,425,612 3,538,225 1,219,863 2,846,142 ----------- ---------- ----------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 3,671,530 3,826,435 493,135 4,234,727 222,613 3,629,142 NET ASSETS Beginning of period............. 4,990,028 1,163,593 5,459,958 1,225,231 5,238,695 1,609,553 ----------- ---------- ----------- ---------- ---------- ---------- End of period................... $ 8,661,558 $4,990,028 $ 5,953,093 $5,459,958 $5,461,308 $5,238,695 =========== ========== =========== ========== ========== ========== Beginning units................. 423,446 139,628 480,961 135,221 463,947 180,339 ----------- ---------- ----------- ---------- ---------- ---------- Units issued.................... 1,783,808 380,196 786,129 428,264 742,343 381,229 Units redeemed.................. (1,347,877) (96,378) (717,419) (82,524) (684,548) (97,621) ----------- ---------- ----------- ---------- ---------- ---------- Ending units.................... 859,377 423,446 549,671 480,961 521,742 463,947 =========== ========== =========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A29
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------- AST GOLDMAN SACHS AST LORD ABBETT CONCENTRATED GROWTH AST GOLDMAN SACHS AST LARGE-CAP VALUE CORE FIXED INCOME PORTFOLIO MID-CAP GROWTH PORTFOLIO PORTFOLIO PORTFOLIO ----------------------- ------------------------ ----------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- $ (149,862) $ (82,018) $ (207,851) $ (97,611) $ (22,121) $ (33,228) $ (11,283) $ 239,435 0 0 741,248 0 0 0 0 0 (116,211) 36,933 (824,237) 137,179 (450,623) (220,120) 311,717 46,780 (915,576) 750,424 (1,344,424) 1,210,777 (100,386) 907,934 534,735 310,818 ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- (1,181,649) 705,339 (1,635,264) 1,250,345 (573,130) 654,586 835,169 597,033 ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- 5,288,197 4,628,674 6,626,317 6,180,170 3,021,721 1,721,975 10,038,354 3,091,863 0 0 0 0 0 0 0 0 (727,377) (355,690) (514,525) (337,537) (668,652) (401,392) (825,159) (118,343) (3,382,134) 248,070 (4,211,860) 325,056 (1,100,770) (71,360) 1,764,030 (174,515) (66,657) (29,598) (82,650) (34,285) (29,588) (17,730) (60,975) (27,389) ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- 1,112,029 4,491,456 1,817,282 6,133,404 1,222,711 1,231,493 10,916,250 2,771,616 ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- (69,620) 5,196,795 182,018 7,383,749 649,581 1,886,079 11,751,419 3,368,649 9,068,646 3,871,851 11,176,580 3,792,831 6,727,156 4,841,077 7,233,209 3,864,560 ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- $ 8,999,026 $9,068,646 $11,358,598 $11,176,580 $ 7,376,737 $6,727,156 $18,984,628 $7,233,209 =========== ========== =========== =========== =========== ========== =========== ========== 824,975 375,796 933,653 351,558 748,300 629,267 612,139 347,653 ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- 1,136,403 664,062 1,397,818 851,263 598,324 262,206 1,562,949 394,512 (1,088,961) (214,883) (1,323,716) (269,168) (505,799) (143,173) (599,091) (130,026) ----------- ---------- ----------- ----------- ----------- ---------- ----------- ---------- 872,417 824,975 1,007,755 933,653 840,825 748,300 1,575,997 612,139 =========== ========== =========== =========== =========== ========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A30 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS -------------------------------------------------------------------------- AST MARSICO CAPITAL GROWTH AST MFS GROWTH AST NEUBERGER BERMAN PORTFOLIO PORTFOLIO MID-CAP GROWTH PORTFOLIO ------------------------ ----------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ----------- ---------- ----------- ---------- OPERATIONS Net investment income (loss)......................... $ (284,183) $ (90,132) $ (60,226) $ (31,453) $ (177,994) $ (53,423) Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... (313,211) 24,433 (2,894) 6,395 (47,566) 43,546 Net change in unrealized gain (loss) on investments.......... (1,384,872) 1,991,501 (277,215) 372,130 (609,919) 1,039,263 ----------- ----------- ----------- ---------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (1,982,266) 1,925,802 (340,335) 347,072 (835,479) 1,029,386 ----------- ----------- ----------- ---------- ----------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 10,131,331 7,277,834 2,714,326 2,375,209 7,444,595 5,033,401 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (306,361) (182,732) (86,834) (56,412) (249,444) (90,600) Net transfers between other subaccounts or fixed rate option......................... (5,973,079) 2,272,019 (1,554,871) 130,099 (4,334,035) 594,676 Withdrawal and other charges........................ (133,581) (48,231) (33,371) (12,635) (67,889) (16,234) ----------- ----------- ----------- ---------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 3,718,310 9,318,890 1,039,250 2,436,261 2,793,227 5,521,243 ----------- ----------- ----------- ---------- ----------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 1,736,044 11,244,692 698,915 2,783,333 1,957,748 6,550,629 NET ASSETS Beginning of period............. 16,557,389 5,312,697 4,080,681 1,297,348 8,235,221 1,684,592 ----------- ----------- ----------- ---------- ----------- ---------- End of period................... $18,293,433 $16,557,389 $ 4,779,596 $4,080,681 $10,192,969 $8,235,221 =========== =========== =========== ========== =========== ========== Beginning units................. 1,533,930 614,394 382,342 138,438 693,749 180,950 ----------- ----------- ----------- ---------- ----------- ---------- Units issued.................... 2,296,032 1,239,880 518,096 322,295 1,308,598 647,766 Units redeemed.................. (2,111,681) (320,344) (444,903) (78,391) (1,140,052) (134,967) ----------- ----------- ----------- ---------- ----------- ---------- Ending units.................... 1,718,281 1,533,930 455,535 382,342 862,295 693,749 =========== =========== =========== ========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A31
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------------- AST NEUBERGER BERMAN / LSV AST PIMCO LIMITED MATURITY AST T. ROWE PRICE EQUITY AST QMA US EQUITY ALPHA MID-CAP VALUE PORTFOLIO BOND PORTFOLIO INCOME PORTFOLIO PORTFOLIO ------------------------- ------------------------ ----------------------- ---------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- $ (66,570) $ (26,448) $ (99,497) $ 24,757 $ (44,498) $ (20,399) $ (26,663) $ (15,107) 0 0 241,403 8,404 0 0 0 0 (531,932) (22,151) (37,787) (56,780) (527,438) (65,972) (89,648) (16,311) (584,289) 949,823 (23,378) 123,022 (281,119) 648,472 (41,070) 265,859 ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- (1,182,791) 901,224 80,741 99,403 (853,055) 562,101 (157,381) 234,441 ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- 6,071,614 4,014,233 5,251,205 8,255,297 4,032,977 3,818,597 1,840,607 935,908 0 0 0 0 0 0 0 0 (182,710) (129,966) (421,133) (574,763) (337,801) (15,189) (44,525) (38,445) (3,165,526) 212,008 (1,772,728) (554,616) (2,541,219) 271,674 (840,694) 134,485 (60,982) (20,343) (92,132) (37,276) (50,937) (22,190) (15,761) (5,102) ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- 2,662,396 4,075,932 2,965,212 7,088,642 1,103,020 4,052,892 939,627 1,026,846 ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- 1,479,605 4,977,156 3,045,953 7,188,045 249,965 4,614,993 782,246 1,261,287 7,137,554 2,160,398 12,054,330 4,866,285 6,843,659 2,228,666 2,243,030 981,743 ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- $ 8,617,159 $7,137,554 $15,100,283 $12,054,330 $ 7,093,624 $6,843,659 $3,025,276 $2,243,030 =========== ========== =========== =========== =========== ========== ========== ========== 658,507 252,375 1,124,091 418,909 718,108 290,682 231,238 125,005 ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- 1,207,025 593,122 1,062,393 1,069,438 931,581 606,354 348,921 150,205 (1,048,711) (186,990) (767,668) (364,256) (899,329) (178,928) (286,216) (43,972) ----------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- 816,821 658,507 1,418,816 1,124,091 750,360 718,108 293,943 231,238 =========== ========== =========== =========== =========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A32 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ----------------------------------------------------------------------------- AST T. ROWE PRICE NATURAL AST T. ROWE PRICE ASSET AST MFS GLOBAL EQUITY RESOURCES PORTFOLIO ALLOCATION PORTFOLIO PORTFOLIO ------------------------ -------------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ------------ ------------ ----------- ---------- OPERATIONS Net investment income (loss)......................... $ (256,436) $ (139,947) $ (1,322,347) $ (800,744) $ (96,593) $ (45,437) Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... (1,798,291) (473,728) (1,970,220) 748,855 (202,245) (15,299) Net change in unrealized gain (loss) on investments.......... (4,185,345) 3,614,613 (5,886,549) 11,913,688 (669,993) 654,148 ----------- ----------- ------------ ------------ ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (6,240,072) 3,000,938 (9,179,116) 11,861,799 (968,831) 593,412 ----------- ----------- ------------ ------------ ----------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 11,103,654 9,614,861 155,649,906 114,348,631 4,493,172 4,474,430 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (1,006,363) (326,194) (3,334,779) (1,067,204) (160,572) (43,410) Net transfers between other subaccounts or fixed rate option......................... (4,234,588) 871,701 (56,199,920) 4,070,672 (2,253,663) 108,739 Withdrawal and other charges........................ (155,135) (59,563) (1,551,070) (569,918) (61,181) (21,665) ----------- ----------- ------------ ------------ ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 5,707,568 10,100,805 94,564,137 116,782,181 2,017,756 4,518,094 ----------- ----------- ------------ ------------ ----------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (532,504) 13,101,743 85,385,021 128,643,980 1,048,925 5,111,506 NET ASSETS Beginning of period............. 20,898,776 7,797,033 178,779,680 50,135,700 6,736,861 1,625,355 ----------- ----------- ------------ ------------ ----------- ---------- End of period................... $20,366,272 $20,898,776 $264,164,701 $178,779,680 $ 7,785,786 $6,736,861 =========== =========== ============ ============ =========== ========== Beginning units................. 1,711,435 704,043 16,475,879 4,961,664 600,071 157,475 ----------- ----------- ------------ ------------ ----------- ---------- Units issued.................... 2,914,961 1,499,252 25,775,367 14,482,880 1,010,799 608,804 Units redeemed.................. (2,602,862) (491,860) (17,860,005) (2,968,665) (872,422) (166,208) ----------- ----------- ------------ ------------ ----------- ---------- Ending units.................... 2,023,534 1,711,435 24,391,241 16,475,879 738,448 600,071 =========== =========== ============ ============ =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A33
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------ AST JPMORGAN INTERNATIONAL AST T. ROWE PRICE GLOBAL AST WELLINGTON MANAGEMENT AST CAPITAL GROWTH ASSET EQUITY PORTFOLIO BOND PORTFOLIO HEDGED EQUITY PORTFOLIO ALLOCATION PORTFOLIO ------------------------ ----------------------- ----------------------- -------------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ $ (33,371) $ (46,683) $ 122,197 $ 33,674 $ (152,571) $ (101,951) $ (3,000,937) $ (1,180,656) 0 0 85,984 21,249 0 0 0 0 (989,607) (96,340) 132,783 (48,342) 26,689 28,127 (2,357,253) (382,839) (1,560,593) 951,358 (58,783) 190,247 (630,011) 1,085,637 (14,290,332) 19,668,288 ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ (2,583,571) 808,335 282,181 196,828 (755,893) 1,011,813 (19,648,522) 18,104,793 ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ 6,305,033 7,341,683 4,731,334 5,288,199 8,089,423 800,761 93,007,685 84,295,086 0 0 0 0 0 (17,729) 0 0 (201,509) (104,951) (457,696) (381,228) (627,606) (341,339) (4,423,529) (2,360,291) (4,053,547) 549,180 (2,150,494) 1,155,383 (35,642) (933,538) (67,834,244) 5,249,836 (102,857) (45,787) (71,963) (23,996) (34,483) (31,654) (1,306,210) (642,798) ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ 1,947,120 7,740,125 2,051,181 6,038,358 7,391,692 (523,499) 19,443,702 86,541,833 ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ (636,451) 8,548,460 2,333,362 6,235,186 6,635,799 488,314 (204,820) 104,646,626 12,690,123 4,141,663 9,082,763 2,847,577 9,778,984 9,290,670 217,009,159 112,362,533 ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ $12,053,672 $12,690,123 $11,416,125 $9,082,763 $16,414,783 $9,778,984 $216,804,339 $217,009,159 =========== =========== =========== ========== =========== ========== ============ ============ 1,247,253 446,442 830,176 245,299 1,007,356 1,080,179 20,678,461 12,118,110 ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ 1,623,775 1,146,606 1,096,729 733,635 1,506,674 397,052 19,760,641 15,143,940 (1,557,464) (345,795) (891,530) (148,758) (694,965) (469,875) (19,018,139) (6,583,589) ----------- ----------- ----------- ---------- ----------- ---------- ------------ ------------ 1,313,564 1,247,253 1,035,375 830,176 1,819,065 1,007,356 21,420,963 20,678,461 =========== =========== =========== ========== =========== ========== ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A34 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ---------------------------------------------------------------------------------- AST ACADEMIC STRATEGIES AST BALANCED ASSET AST PRESERVATION ASSET ASSET ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO -------------------------- -------------------------- -------------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ------------ ------------ ------------ ------------ ------------ ------------ OPERATIONS Net investment income (loss)......................... $ (3,129,060) $ (1,683,613) $ (3,849,946) $ (2,145,385) $ (1,871,297) $ (612,720) Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... (1,423,314) 218,541 2,153,974 1,401,364 2,465,464 1,236,910 Net change in unrealized gain (loss) on investments.......... (13,767,759) 18,926,028 (17,882,809) 26,966,548 (3,977,122) 11,258,218 ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (18,320,133) 17,460,956 (19,578,781) 26,222,527 (3,382,955) 11,882,408 ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 84,558,699 79,761,804 135,261,534 135,186,978 116,740,663 114,648,727 Annuity Payments................ 0 0 0 0 0 (42,336) Surrenders, withdrawals and death benefits................. (4,974,573) (4,248,551) (11,305,561) (8,520,003) (7,602,615) (4,886,825) Net transfers between other subaccounts or fixed rate option......................... (42,666,476) 5,024,510 (79,705,786) 5,410,510 (42,561,992) (3,833,018) Withdrawal and other charges........................ (1,340,353) (597,809) (2,095,358) (1,118,999) (1,391,361) (623,179) ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 35,577,297 79,939,954 42,154,829 130,958,486 65,184,695 105,263,369 ------------ ------------ ------------ ------------ ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 17,257,164 97,400,910 22,576,048 157,181,013 61,801,740 117,145,777 NET ASSETS Beginning of period............. 232,088,750 134,687,840 330,205,897 173,024,884 204,498,810 87,353,033 ------------ ------------ ------------ ------------ ------------ ------------ End of period................... $249,345,914 $232,088,750 $352,781,945 $330,205,897 $266,300,550 $204,498,810 ============ ============ ============ ============ ============ ============ Beginning units................. 22,015,759 14,229,160 30,549,180 17,628,479 18,568,295 8,320,766 ------------ ------------ ------------ ------------ ------------ ------------ Units issued.................... 17,796,492 12,864,464 25,446,956 18,385,509 16,496,730 12,992,855 Units redeemed.................. (15,196,978) (5,077,865) (22,342,964) (5,464,808) (10,449,672) (2,745,326) ------------ ------------ ------------ ------------ ------------ ------------ Ending units.................... 24,615,273 22,015,759 33,653,172 30,549,180 24,615,353 18,568,295 ============ ============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A35
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------------------- AST FIRST TRUST BALANCED AST FIRST TRUST CAPITAL AST ADVANCED AST T. ROWE PRICE LARGE-CAP TARGET PORTFOLIO APPRECIATION TARGET PORTFOLIO STRATEGIES PORTFOLIO GROWTH PORTFOLIO ------------------------- ---------------------------- -------------------------- -------------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- $ 53,875 $ (206,475) $ (625,646) $ (438,498) $ (1,109,068) $ (552,795) $ (277,130) $ (120,280) 0 0 0 0 0 0 0 0 (3,011,507) 301,494 (5,279,801) 49,919 (2,073,998) 380,200 (119,297) 61,379 (6,154,694) 7,780,519 (11,932,967) 10,939,834 (6,404,600) 9,712,980 (1,259,418) 1,546,174 ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- (9,112,326) 7,875,538 (17,838,414) 10,551,255 (9,587,666) 9,540,385 (1,655,845) 1,487,273 ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- 81,273,329 62,963,188 84,854,477 54,402,836 114,822,906 81,374,321 9,316,934 7,742,986 0 0 0 0 0 0 0 0 (1,935,981) (852,668) (1,236,721) (477,646) (2,259,599) (869,337) (385,324) (219,282) (30,458,071) 1,490,387 (49,562,091) 4,473,531 (48,268,209) 2,429,126 (4,702,726) 120,651 (812,420) (271,823) (814,608) (293,771) (1,068,296) (336,538) (107,883) (41,062) ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- 48,066,857 63,329,084 33,241,057 58,104,950 63,226,802 82,597,572 4,121,001 7,603,293 ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- 38,954,531 71,204,622 15,402,643 68,656,205 53,639,136 92,137,957 2,465,156 9,090,566 99,358,213 28,153,591 97,679,763 29,023,558 129,171,901 37,033,944 13,734,148 4,643,582 ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- $138,312,744 $99,358,213 $113,082,406 $97,679,763 $182,811,037 $129,171,901 $16,199,304 $13,734,148 ============ =========== ============ =========== ============ ============ =========== =========== 9,356,812 3,170,882 9,120,677 3,464,597 11,836,902 3,810,098 1,232,550 478,406 ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- 13,675,653 7,919,563 15,611,746 8,270,966 19,064,231 9,731,997 1,850,572 1,020,244 (9,767,252) (1,733,633) (13,626,981) (2,614,886) (13,882,397) (1,705,193) (1,580,593) (266,100) ------------ ----------- ------------ ----------- ------------ ------------ ----------- ----------- 13,265,213 9,356,812 11,105,442 9,120,677 17,018,736 11,836,902 1,502,529 1,232,550 ============ =========== ============ =========== ============ ============ =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A36 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ------------------------------------------------------------------------------ AST MONEY MARKET AST SMALL-CAP GROWTH AST PIMCO TOTAL RETURN PORTFOLIO PORTFOLIO BOND PORTFOLIO ------------------------- ----------------------- -------------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ------------ ----------- ----------- ---------- ------------ ------------ OPERATIONS Net investment income (loss)......................... $ (284,412) $ (129,016) $ (124,005) $ (50,102) $ 350,620 $ (65,681) Capital gains distributions received....................... 0 0 0 0 5,614,561 1,275,814 Realized gain (loss) on shares redeemed....................... 0 0 43,373 81,293 (984,745) 662,948 Net change in unrealized gain (loss) on investments.......... 0 0 (609,710) 1,223,231 (2,390,884) 1,779,690 ------------ ----------- ----------- ---------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (284,412) (129,016) (690,342) 1,254,422 2,589,552 3,652,771 ------------ ----------- ----------- ---------- ------------ ------------ CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 23,134,838 20,348,068 4,035,279 2,187,876 68,227,812 78,475,227 Annuity Payments................ 0 0 0 0 (36,580) (3,046) Surrenders, withdrawals and death benefits................. (11,068,116) (6,769,866) (269,956) (202,015) (7,624,810) (6,203,093) Net transfers between other subaccounts or fixed rate option......................... (2,642,568) (6,216,130) (1,452,427) 174,048 (42,240,369) (252,420) Withdrawal and other charges........................ (99,847) (40,903) (38,817) (14,754) (944,155) (387,372) ------------ ----------- ----------- ---------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 9,324,307 7,321,169 2,274,079 2,145,155 17,381,898 71,629,296 ------------ ----------- ----------- ---------- ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 9,039,895 7,192,153 1,583,737 3,399,577 19,971,450 75,282,067 NET ASSETS Beginning of period............. 12,842,168 5,650,015 6,182,585 2,783,008 134,466,521 59,184,454 ------------ ----------- ----------- ---------- ------------ ------------ End of period................... $ 21,882,063 $12,842,168 $ 7,766,322 $6,182,585 $154,437,971 $134,466,521 ============ =========== =========== ========== ============ ============ Beginning units................. 1,273,760 539,892 507,079 313,058 12,278,400 5,518,742 ------------ ----------- ----------- ---------- ------------ ------------ Units issued.................... 5,570,243 3,536,967 770,237 333,526 12,896,311 9,535,884 Units redeemed.................. (4,622,722) (2,803,099) (630,790) (139,505) (11,082,639) (2,776,226) ------------ ----------- ----------- ---------- ------------ ------------ Ending units.................... 2,221,281 1,273,760 646,526 507,079 14,092,072 12,278,400 ============ =========== =========== ========== ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A37
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------- AST INTERNATIONAL VALUE AST INTERNATIONAL GROWTH NVIT DEVELOPING MARKETS AST INVESTMENT GRADE BOND PORTFOLIO PORTFOLIO FUND PORTFOLIO ----------------------- ----------------------- ----------------------- -------------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ $ (10,049) $ (22,329) $ (81,061) $ (43,480) $ (13,199) $ (36,623) $ (3,849,425) $ 1,638,754 0 0 0 0 0 0 2,420,829 5,399,891 (507,100) (45,153) (773,683) (36,296) (855,034) (144,914) 1,521,101 (2,514,047) (628,081) 369,708 (972,097) 717,816 622,061 505,689 14,626,636 (1,341,073) ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ (1,145,230) 302,226 (1,826,841) 638,040 (246,172) 324,152 14,719,141 3,183,525 ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ 3,175,404 2,557,442 4,376,264 3,114,318 22,594 10,141 0 0 0 0 0 0 0 0 0 0 (67,398) (61,342) (92,634) (25,350) (79,141) (113,005) (3,531,108) (431,641) (1,727,225) 23,227 (1,576,773) 1,310,725 (1,611,156) (38,094) 673,290,519 (9,679,595) (31,704) (11,500) (46,956) (14,359) (1,890) (11,846) (2,276,880) (220,444) ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ 1,349,077 2,507,827 2,659,901 4,385,334 (1,669,593) (152,804) 667,482,531 (10,331,680) ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ 203,847 2,810,053 833,060 5,023,374 (1,915,765) 171,348 682,201,672 (7,148,155) 4,276,330 1,466,277 6,330,965 1,307,591 2,586,095 2,414,747 6,002,542 13,150,697 ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ $ 4,480,177 $4,276,330 $ 7,164,025 $6,330,965 $ 670,330 $2,586,095 $688,204,214 $ 6,002,542 =========== ========== =========== ========== =========== ========== ============ ============ 408,114 164,007 592,727 160,403 150,777 161,060 468,830 1,116,615 ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ 677,919 349,184 1,177,939 562,932 10,159 8,024 152,585,942 15,050,881 (591,920) (105,077) (986,406) (130,608) (109,590) (18,307) (96,314,575) (15,698,666) ----------- ---------- ----------- ---------- ----------- ---------- ------------ ------------ 494,113 408,114 784,260 592,727 51,346 150,777 56,740,197 468,830 =========== ========== =========== ========== =========== ========== ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A38 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS -------------------------------------------------------------------------- AST WESTERN ASSET CORE PLUS BOND PORTFOLIO AST BOND PORTFOLIO 2018 AST BOND PORTFOLIO 2019 -------------------------- ---------------------- ---------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ----------- ---------- ---------- ---------- OPERATIONS Net investment income (loss)......................... $ 334,164 $ (46,800) $ (177,515) $ (2,877) $ (112) $ (2,579) Capital gains distributions received....................... 462,908 58,022 307,854 9,067 2,092 13,902 Realized gain (loss) on shares redeemed....................... 364,517 126,907 50,058 17,235 (610) 25,059 Net change in unrealized gain (loss) on investments.......... 187,065 293,483 612,200 11,122 (579) 3,590 ----------- ----------- ----------- --------- -------- --------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... 1,348,654 431,612 792,597 34,547 791 39,972 ----------- ----------- ----------- --------- -------- --------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 12,310,969 13,819,331 27 2 4 0 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (495,273) (115,021) (294,102) 0 (34,272) (33,766) Net transfers between other subaccounts or fixed rate option......................... (7,292,557) 3,453,235 20,339,006 (154,759) 0 (128,258) Withdrawal and other charges........................ (204,784) (79,875) (127) (18) 0 (100) ----------- ----------- ----------- --------- -------- --------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 4,318,355 17,077,670 20,044,804 (154,775) (34,268) (162,124) ----------- ----------- ----------- --------- -------- --------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 5,667,009 17,509,282 20,837,401 (120,228) (33,477) (122,152) NET ASSETS Beginning of period............. 23,212,964 5,703,682 211,345 331,573 33,478 155,630 ----------- ----------- ----------- --------- -------- --------- End of period................... $28,879,973 $23,212,964 $21,048,746 $ 211,345 $ 1 $ 33,478 =========== =========== =========== ========= ======== ========= Beginning units................. 2,191,615 555,275 17,593 29,978 2,796 14,188 ----------- ----------- ----------- --------- -------- --------- Units issued.................... 3,084,733 2,058,720 2,632,927 31,841 0 43,279 Units redeemed.................. (2,648,599) (422,380) (863,244) (44,226) (2,796) (54,671) ----------- ----------- ----------- --------- -------- --------- Ending units.................... 2,627,749 2,191,615 1,787,276 17,593 0 2,796 =========== =========== =========== ========= ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A39
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------------------- AST GLOBAL REAL ESTATE AST PARAMETRIC EMERGING FRANKLIN TEMPLETON VIP FOUNDING AST GOLDMAN SACHS PORTFOLIO MARKETS EQUITY PORTFOLIO FUNDS ALLOCATION FUND SMALL-CAP VALUE PORTFOLIO ----------------------- ------------------------ ------------------------------ ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- $ 24,590 $ (6,229) $ (142,835) $ (98,534) $ (2,144,536) $ 1,154,989 $ (140,819) $ (50,495) 0 0 0 0 0 7,657 0 0 (179,409) 33,140 (1,900,072) 184,283 (4,030,882) 369,952 (340,918) 126,418 (375,870) 264,616 (3,298,453) 1,557,435 (5,447,041) 5,016,256 (608,211) 1,102,368 ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- (530,689) 291,527 (5,341,360) 1,643,184 (11,622,459) 6,548,854 (1,089,948) 1,178,291 ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- 2,284,934 2,054,823 11,227,397 11,615,268 78,999,146 74,873,151 7,710,555 6,250,119 0 0 0 0 0 0 0 0 (60,381) (7,616) (194,829) (22,377) (1,461,462) (282,548) (419,088) (297,463) (1,360,284) 185,424 (8,133,173) 1,104,990 (51,674,178) 1,938,305 (4,276,518) 281,339 (28,356) (9,026) (145,512) (46,859) (891,924) (339,182) (81,803) (23,898) ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- 835,913 2,223,605 2,753,883 12,651,022 24,971,582 76,189,726 2,933,146 6,210,097 ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- 305,224 2,515,132 (2,587,477) 14,294,206 13,349,123 82,738,580 1,843,198 7,388,388 3,166,324 651,192 17,086,130 2,791,924 106,343,549 23,604,969 9,196,544 1,808,156 ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- $ 3,471,548 $3,166,324 $14,498,653 $17,086,130 $119,692,672 $106,343,549 $11,039,742 $9,196,544 =========== ========== =========== =========== ============ ============ =========== ========== 289,148 79,139 1,468,373 302,876 10,403,163 2,728,568 790,640 188,198 ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- 487,444 279,512 2,635,611 1,554,103 15,190,291 9,800,476 1,506,789 806,213 (442,757) (69,503) (2,511,497) (388,606) (13,647,761) (2,125,881) (1,338,035) (203,771) ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- 333,835 289,148 1,592,487 1,468,373 11,945,693 10,403,163 959,394 790,640 =========== ========== =========== =========== ============ ============ =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A40 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ------------------------------------------------------------------------------- AST CLS GROWTH ASSET AST CLS MODERATE ASSET AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ------------------------- ------------------------- ------------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ------------ ----------- ------------ ----------- ------------ ----------- OPERATIONS Net investment income (loss)......................... $ (1,158,523) $ (385,662) $ (1,321,347) $ (463,742) $ (664,728) $ (247,098) Capital gains distributions received....................... 832,012 0 1,704,048 0 2,205,561 0 Realized gain (loss) on shares redeemed....................... (3,191,974) 360,147 (2,260,018) 217,271 (2,206,377) 64,959 Net change in unrealized gain (loss) on investments.......... (5,453,108) 4,930,148 (5,736,625) 5,686,578 (3,293,153) 2,979,252 ------------ ----------- ------------ ----------- ------------ ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (8,971,593) 4,904,633 (7,613,942) 5,440,107 (3,958,697) 2,797,113 ------------ ----------- ------------ ----------- ------------ ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 63,448,734 44,975,293 70,249,625 59,534,397 36,999,463 24,070,235 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (710,074) (148,453) (1,596,833) (308,606) (535,161) (38,134) Net transfers between other subaccounts or fixed rate option......................... (34,037,183) 1,243,181 (28,090,529) 1,844,656 (15,405,961) 1,321,896 Withdrawal and other charges........................ (593,984) (186,562) (733,121) (260,134) (361,713) (125,483) ------------ ----------- ------------ ----------- ------------ ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 28,107,493 45,883,459 39,829,142 60,810,313 20,696,628 25,228,514 ------------ ----------- ------------ ----------- ------------ ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 19,135,900 50,788,092 32,215,200 66,250,420 16,737,931 28,025,627 NET ASSETS Beginning of period............. 62,347,963 11,559,871 81,960,061 15,709,641 35,435,861 7,410,234 ------------ ----------- ------------ ----------- ------------ ----------- End of period................... $ 81,483,863 $62,347,963 $114,175,261 $81,960,061 $ 52,173,792 $35,435,861 ============ =========== ============ =========== ============ =========== Beginning units................. 5,917,097 1,375,311 7,792,325 1,752,810 3,330,108 810,091 ------------ ----------- ------------ ----------- ------------ ----------- Units issued.................... 11,456,791 5,923,091 11,864,728 6,767,546 6,509,643 3,204,677 Units redeemed.................. (9,462,771) (1,381,305) (8,535,713) (728,031) (4,875,583) (684,660) ------------ ----------- ------------ ----------- ------------ ----------- Ending units.................... 7,911,117 5,917,097 11,121,340 7,792,325 4,964,168 3,330,108 ============ =========== ============ =========== ============ ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A41
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------ AST HORIZON MODERATE ASSET AST FI PYRAMIS(R) ASSET PROFUND VP PROFUND VP CONSUMER ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO CONSUMER SERVICES GOODS PORTFOLIO ------------------------- ------------------------- -------------------- -------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ------------ ----------- ------------ ----------- ---------- ---------- ---------- ---------- $ (933,786) $ (446,777) $ (769,247) $ (198,091) $ (4,782) $ (4,044) $ (650) $ (2,601) 3,870,248 0 1,983,750 0 0 0 0 0 (1,431,415) 245,040 (3,104,763) 128,640 28,940 13,726 24,821 6,592 (5,382,931) 4,713,234 (3,444,372) 2,853,051 (23,814) 41,963 (17,033) 35,992 ------------ ----------- ------------ ----------- -------- -------- -------- -------- (3,877,884) 4,511,497 (5,334,632) 2,783,600 344 51,645 7,138 39,983 ------------ ----------- ------------ ----------- -------- -------- -------- -------- 41,333,962 41,965,964 43,253,820 27,775,445 49,505 37,035 45,585 40,715 0 0 0 0 0 0 0 0 (916,157) (234,373) (493,695) (74,948) (876) (606) (933) (623) (16,290,239) 1,549,699 (19,482,671) 526,653 (49,456) (2,306) (53,434) (6,477) (586,636) (259,950) (355,134) (86,600) (2,686) (2,195) (2,629) (2,217) ------------ ----------- ------------ ----------- -------- -------- -------- -------- 23,540,930 43,021,340 22,922,320 28,140,550 (3,513) 31,928 (11,411) 31,398 ------------ ----------- ------------ ----------- -------- -------- -------- -------- 19,663,046 47,532,837 17,587,688 30,924,150 (3,169) 83,573 (4,273) 71,381 66,677,733 19,144,896 35,508,892 4,584,742 321,529 237,956 313,737 242,356 ------------ ----------- ------------ ----------- -------- -------- -------- -------- $ 86,340,779 $66,677,733 $ 53,096,580 $35,508,892 $318,360 $321,529 $309,464 $313,737 ============ =========== ============ =========== ======== ======== ======== ======== 6,330,222 2,050,165 3,298,104 503,844 29,590 26,190 29,498 26,348 ------------ ----------- ------------ ----------- -------- -------- -------- -------- 7,441,727 4,917,530 7,313,785 3,287,113 19,609 13,710 17,058 10,943 (5,446,837) (637,473) (5,494,818) (492,853) (21,012) (10,310) (18,942) (7,793) ------------ ----------- ------------ ----------- -------- -------- -------- -------- 8,325,112 6,330,222 5,117,071 3,298,104 28,187 29,590 27,614 29,498 ============ =========== ============ =========== ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A42 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ---------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP FINANCIALS HEALTH CARE INDUSTRIALS -------------------- -------------------- -------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ---------- ---------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss)......................... $ (7,239) $ (5,082) $ (4,595) $ (4,023) $ (4,048) $ (3,968) Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... (18,867) 7,829 25,471 6,403 22,262 15,855 Net change in unrealized gain (loss) on investments.......... (78,387) 36,511 (2,293) 1,685 (48,784) 49,261 --------- -------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (104,493) 39,258 18,583 4,065 (30,570) 61,148 --------- -------- -------- -------- -------- -------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 65,530 51,655 50,988 36,610 40,222 26,226 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (889) (592) (849) (572) (281) (581) Net transfers between other subaccounts or fixed rate option......................... 1,062 43,884 (71,762) 22,346 (80,591) (24,629) Withdrawal and other charges........................ (3,528) (2,940) (3,128) (2,598) (2,868) (2,646) --------- -------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 62,175 92,007 (24,751) 55,786 (43,518) (1,630) --------- -------- -------- -------- -------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (42,318) 131,265 (6,168) 59,851 (74,088) 59,518 NET ASSETS Beginning of period............. 503,074 371,809 373,244 313,393 363,522 304,004 --------- -------- -------- -------- -------- -------- End of period................... $ 460,756 $503,074 $367,076 $373,244 $289,434 $363,522 ========= ======== ======== ======== ======== ======== Beginning units................. 76,969 62,171 37,474 31,881 39,954 40,736 --------- -------- -------- -------- -------- -------- Units issued.................... 63,797 32,490 24,879 16,550 28,222 19,539 Units redeemed.................. (57,714) (17,692) (28,367) (10,957) (35,302) (20,321) --------- -------- -------- -------- -------- -------- Ending units.................... 83,052 76,969 33,986 37,474 32,874 39,954 ========= ======== ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A43
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP PROFUND VP MID-CAP GROWTH MID-CAP VALUE REAL ESTATE SMALL-CAP GROWTH -------------------- -------------------- -------------------- -------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ (1,427) $(1,063) $ (984) $ (735) $ (1,951) $ 2,964 $ (383) $ (313) 0 0 0 0 0 0 43 0 5,612 3,729 1,664 8,128 20,887 19,956 3,513 4,437 (15,105) 14,623 (9,053) 3,680 (21,958) 1,830 (4,807) 1,027 -------- ------- ------- -------- -------- -------- ------- -------- (10,920) 17,289 (8,373) 11,073 (3,022) 24,750 (1,634) 5,151 -------- ------- ------- -------- -------- -------- ------- -------- 16,804 9,111 18,364 7,336 13,703 9,624 1,958 286 0 0 0 0 0 0 0 0 (92) (82) (2,192) (408) (171) (410) (2,091) (329) (6,856) 1,468 3,080 (32,112) (32,886) (21,858) (21) (11,366) (788) (533) (633) (517) (1,059) (1,007) (209) (160) -------- ------- ------- -------- -------- -------- ------- -------- 9,068 9,964 18,619 (25,701) (20,413) (13,651) (363) (11,569) -------- ------- ------- -------- -------- -------- ------- -------- (1,852) 27,253 10,246 (14,628) (23,435) 11,099 (1,997) (6,418) 88,882 61,629 70,682 85,310 133,044 121,945 28,093 34,511 -------- ------- ------- -------- -------- -------- ------- -------- $ 87,030 $88,882 $80,928 $ 70,682 $109,609 $133,044 $26,096 $ 28,093 ======== ======= ======= ======== ======== ======== ======= ======== 8,315 7,296 7,138 10,224 15,569 17,522 2,676 4,073 -------- ------- ------- -------- -------- -------- ------- -------- 8,878 4,443 8,089 2,870 11,942 6,783 3,176 1,015 (8,683) (3,424) (6,593) (5,956) (15,082) (8,736) (3,361) (2,412) -------- ------- ------- -------- -------- -------- ------- -------- 8,510 8,315 8,634 7,138 12,429 15,569 2,491 2,676 ======== ======= ======= ======== ======== ======== ======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A44 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ---------------------------------------------------------------- PROFUND VP PROFUND VP SMALL-CAP VALUE TELECOMMUNICATIONS PROFUND VP UTILITIES -------------------- -------------------- -------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ---------- ---------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss)......................... $ (342) $ (294) $ 3,833 $ 2,949 $ 2,653 $ 2,096 Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... 2,484 1,211 1,355 (749) 14,234 (971) Net change in unrealized gain (loss) on investments.......... (4,269) 3,365 (17,520) 25,422 14,867 6,685 ------- ------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (2,127) 4,282 (12,332) 27,622 31,754 7,810 ------- ------- -------- -------- -------- -------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 2,175 1,939 39,282 24,193 49,250 48,462 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. 0 (326) (1,380) (577) (1,708) (1,566) Net transfers between other subaccounts or fixed rate option......................... (5,194) (1,423) (13,680) (25,361) (62,123) 9,949 Withdrawal and other charges........................ (196) (175) (2,212) (1,767) (2,276) (1,766) ------- ------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (3,215) 15 22,010 (3,512) (16,857) 55,079 ------- ------- -------- -------- -------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... (5,342) 4,297 9,678 24,110 14,897 62,889 NET ASSETS Beginning of period............. 24,601 20,304 245,062 220,952 243,845 180,956 ------- ------- -------- -------- -------- -------- End of period................... $19,259 $24,601 $254,740 $245,062 $258,742 $243,845 ======= ======= ======== ======== ======== ======== Beginning units................. 2,399 2,382 27,946 28,718 29,660 22,973 ------- ------- -------- -------- -------- -------- Units issued.................... 1,982 704 26,328 11,994 23,495 15,676 Units redeemed.................. (2,393) (687) (25,330) (12,766) (25,964) (8,989) ------- ------- -------- -------- -------- -------- Ending units.................... 1,988 2,399 28,944 27,946 27,191 29,660 ======= ======= ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A45
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------------- PROFUND VP PROFUND VP AST JENNISON LARGE-CAP LARGE-CAP GROWTH LARGE-CAP VALUE AST BOND PORTFOLIO 2020 VALUE PORTFOLIO -------------------- -------------------- ----------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/01/2010 TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ---------- ---------- ---------- ---------- ----------- ---------- ----------- ---------- $ (824) $ (816) $ (1,028) $ (634) $ (15,192) $ (43,264) $ (50,441) $ (14,024) 0 0 0 0 317,874 0 14,020 1,403 5,278 6,516 856 (355) (10,202) 176,767 (334,662) (8,320) (6,626) (1,196) (8,180) 14,033 32,756 (3,529) (267,112) 232,465 ------- -------- -------- -------- ----------- ---------- ----------- ---------- (2,172) 4,504 (8,352) 13,044 325,236 129,974 (638,195) 211,524 ------- -------- -------- -------- ----------- ---------- ----------- ---------- 572 0 23,502 13,096 4 454 2,749,806 2,119,285 0 0 0 0 0 0 0 0 (2,016) 0 (93) (82) (29,615) (45,408) (10,522) (3,477) (4,708) (24,098) (13,093) 2,711 (2,748,369) 3,115,330 (1,421,000) 252,938 (281) (204) (831) (631) (442) (1,277) (28,224) (4,908) ------- -------- -------- -------- ----------- ---------- ----------- ---------- (6,433) (24,302) 9,485 15,094 (2,778,422) 3,069,099 1,290,060 2,363,838 ------- -------- -------- -------- ----------- ---------- ----------- ---------- (8,605) (19,798) 1,133 28,138 (2,453,186) 3,199,073 651,865 2,575,362 45,548 65,346 139,447 111,309 3,199,073 0 2,684,385 109,023 ------- -------- -------- -------- ----------- ---------- ----------- ---------- $36,943 $ 45,548 $140,580 $139,447 $ 745,887 $3,199,073 $ 3,336,250 $2,684,385 ======= ======== ======== ======== =========== ========== =========== ========== 4,793 7,640 16,965 15,062 331,074 0 251,015 10,581 ------- -------- -------- -------- ----------- ---------- ----------- ---------- 4,644 1,818 9,971 5,279 242,070 984,691 561,052 278,190 (5,606) (4,665) (9,352) (3,376) (507,262) (653,617) (473,375) (37,756) ------- -------- -------- -------- ----------- ---------- ----------- ---------- 3,831 4,793 17,584 16,965 65,882 331,074 338,692 251,015 ======= ======== ======== ======== =========== ========== =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A46 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ------------------------------------------------------------------------------ CREDIT SUISSE TRUST AST JENNISON LARGE-CAP INTERNATIONAL EQUITY FLEX III GROWTH PORTFOLIO PORTFOLIO AST BOND PORTFOLIO 2017 ----------------------- ---------------------------- ----------------------- 01/01/2011 01/01/2010 01/01/2011 01/01/2010 01/01/2011 01/04/2010* TO TO TO TO TO TO 12/31/2011 12/31/2010 10/21/2011** 12/31/2010 12/31/2011 12/31/2010 ----------- ---------- ------------ ---------- ----------- ----------- OPERATIONS Net investment income (loss)......................... $ (67,085) $ (13,064) $ 16,190 $ (11,589) $ (162,337) $ (6,323) Capital gains distributions received....................... 0 0 0 0 23,155 0 Realized gain (loss) on shares redeemed....................... (137,141) 34,603 (57,016) 16,167 83,003 39,575 Net change in unrealized gain (loss) on investments.......... (158,484) 180,226 (99,917) 89,955 403,543 (335) ----------- ---------- --------- --------- ----------- --------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... (362,710) 201,765 (140,743) 94,533 347,364 32,917 ----------- ---------- --------- --------- ----------- --------- CONTRACT OWNER TRANSACTIONS Contract owner net payments....................... 4,398,143 1,909,988 1,122 0 85 1 Annuity Payments................ 0 0 0 (2,034) 0 0 Surrenders, withdrawals and death benefits................. (10,000) (485) (85,777) (135,105) (253,355) (23,336) Net transfers between other subaccounts or fixed rate option......................... (1,439,620) (52,320) (718,778) 14,730 20,837,042 195,571 Withdrawal and other charges........................ (24,802) (4,859) (435) (574) (3,919) 0 ----------- ---------- --------- --------- ----------- --------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 2,923,721 1,852,324 (803,868) (122,983) 20,579,853 172,236 ----------- ---------- --------- --------- ----------- --------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 2,561,011 2,054,089 (944,611) (28,450) 20,927,217 205,153 NET ASSETS Beginning of period............. 2,096,439 42,350 944,611 973,061 205,153 0 ----------- ---------- --------- --------- ----------- --------- End of period................... $ 4,657,450 $2,096,439 $ 0 $ 944,611 $21,132,370 $ 205,153 =========== ========== ========= ========= =========== ========= Beginning units................. 193,445 4,113 84,539 96,387 19,412 0 ----------- ---------- --------- --------- ----------- --------- Units issued.................... 724,888 262,706 2,376 9,258 2,884,171 138,503 Units redeemed.................. (483,262) (73,374) (86,915) (21,106) (1,067,679) (119,091) ----------- ---------- --------- --------- ----------- --------- Ending units.................... 435,071 193,445 0 84,539 1,835,904 19,412 =========== ========== ========= ========= =========== =========
* Date subaccount became available for investment ** Date subaccount was no longer available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A47
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT CORE EQUITY PORTFOLIO INTERNATIONAL EQUITY OMEGA GROWTH PORTFOLIO AST BOND PORTFOLIO 2021 SHARE CLASS 1 PORTFOLIO SHARE CLASS 1 SHARE CLASS 1 ----------------------- ----------------------- ----------------------- ----------------------- 01/01/2011 01/04/2010* 01/01/2011 7/16/2010* 01/01/2011 7/16/2010* 01/01/2011 7/16/2010* TO TO TO TO TO TO TO TO 12/31/2011 12/31/2010 8/26/2011** 12/31/2010 12/31/2011 12/31/2010 12/31/2011 12/31/2010 ----------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- $ (350,851) $ (26,471) $ (84) $ (2,252) $ (2,527) $ (1,834) $ (6,228) $ (2,753) 0 0 74,422 0 10,094 0 3,129 0 1,239,362 13,734 (49,779) 598 1,817 1,611 5,466 5,251 2,052,415 (54,472) (59,595) 59,595 (43,492) 43,390 (27,460) 78,491 ----------- ---------- --------- -------- -------- -------- -------- -------- 2,940,926 (67,209) (35,036) 57,941 (34,108) 43,167 (25,093) 80,989 ----------- ---------- --------- -------- -------- -------- -------- -------- 0 0 0 62 0 0 1 0 0 0 0 0 0 0 0 0 (367,153) (17,460) (10,746) (3,410) (5,488) (1,862) (4,972) (16,001) 26,606,619 4,443,832 (267,652) 258,896 3,005 200,893 (12,340) 303,350 (7,377) (8) (28) (27) (23) (18) (12) (4) ----------- ---------- --------- -------- -------- -------- -------- -------- 26,232,089 4,426,364 (278,426) 255,521 (2,506) 199,013 (17,323) 287,345 ----------- ---------- --------- -------- -------- -------- -------- -------- 29,173,015 4,359,155 (313,462) 313,462 (36,614) 242,180 (42,416) 368,334 4,359,155 0 313,462 0 242,180 0 368,334 0 ----------- ---------- --------- -------- -------- -------- -------- -------- $33,532,170 $4,359,155 $ 0 $313,462 $205,566 $242,180 $325,918 $368,334 =========== ========== ========= ======== ======== ======== ======== ======== 395,858 0 21,995 0 16,854 0 188,089 0 ----------- ---------- --------- -------- -------- -------- -------- -------- 4,630,709 670,492 0 22,261 1,211 17,885 3,130 201,014 (2,384,999) (274,634) (21,995) (266) (1,374) (1,031) (12,305) (12,925) ----------- ---------- --------- -------- -------- -------- -------- -------- 2,641,568 395,858 0 21,995 16,691 16,854 178,914 188,089 =========== ========== ========= ======== ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A48 FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2011 and 2010
SUBACCOUNTS ----------------------------------------------------------- WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE AST BOND VT SMALL CAP GROWTH VT SMALL CAP VALUE PORTFOLIO PORTFOLIO SHARE CLASS 1 PORTFOLIO SHARE CLASS 1 2022 ----------------------- ---------------------- ----------- 01/01/2011 7/16/2010* 01/01/2011 7/16/2010* 1/3/2011* TO TO TO TO TO 12/31/2011 12/31/2010 12/31/2011 12/31/2010 12/31/2011 ---------- ---------- ---------- ---------- ----------- OPERATIONS Net investment income (loss)........................... $0 $0 $ (512) $ (523) $ (94,888) Capital gains distributions received................... 0 0 0 0 0 Realized gain (loss) on shares redeemed................ 1 0 888 803 133,351 Net change in unrealized gain (loss) on investments.... (1) 1 (6,272) 13,246 597,720 --------- --------- -------- ------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................. 0 1 (5,896) 13,526 636,183 --------- --------- -------- ------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments............................ 0 4 0 9 0 Annuity Payments....................................... 0 0 0 0 0 Surrenders, withdrawals and death benefits............. (5) 0 (4,411) (1,544) (95,379) Net transfers between other subaccounts or fixed rate option................................................ 0 0 0 59,492 15,063,006 Withdrawal and other charges........................... 0 0 (199) (185) (23) --------- --------- -------- ------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS.......................................... (5) 4 (4,610) 57,772 14,967,604 --------- --------- -------- ------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (5) 5 (10,506) 71,298 15,603,787 NET ASSETS Beginning of period.................................... 5 0 71,298 0 0 --------- --------- -------- ------- ----------- End of period.......................................... $0 $5 $ 60,792 $71,298 $15,603,787 ========= ========= ======== ======= =========== Beginning units........................................ 0 0 6,040 0 0 --------- --------- -------- ------- ----------- Units issued........................................... 0 0 0 6,789 2,159,107 Units redeemed......................................... 0 0 (406) (749) (857,351) --------- --------- -------- ------- ----------- Ending units........................................... 0 0 5,634 6,040 1,301,756 ========= ========= ======== ======= ===========
* Date subaccount became available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A49
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------- WELLS FARGO AST BLACKROCK ADVANTAGE AST AST NEUBERGER GLOBAL STRATEGIES VT OPPORTUNITY PRUDENTIAL CORE BERMAN CORE PORTFOLIO FUND - CLASS 1 BOND PORTFOLIO BOND PORTFOLIO ----------------- -------------- --------------- -------------- 4/29/2011* 8/26/2011* 10/31/2011* 10/31/2011* TO TO TO TO 12/31/2011 12/31/2011 12/31/2011 12/31/2011 ----------------- -------------- --------------- -------------- $ (412,731) $ (1,571) $ (370) $ (518) 0 0 0 0 (384,884) 80 18 2 (2,193,000) 13,571 2,915 3,106 ----------- -------- -------- -------- (2,990,615) 12,080 2,563 2,590 ----------- -------- -------- -------- 17,654,025 0 270,483 333,800 (144,021) 0 0 0 (2,217,275) (2,734) 0 0 32,082,198 258,727 87,261 108,042 (70,539) 0 (3) (143) ----------- -------- -------- -------- 47,304,388 255,993 357,741 441,699 ----------- -------- -------- -------- 44,313,773 268,073 360,304 444,289 0 0 0 0 ----------- -------- -------- -------- $44,313,773 $268,073 $360,304 $444,289 =========== ======== ======== ======== 0 0 0 0 ----------- -------- -------- -------- 5,650,666 26,209 37,586 46,069 (815,964) (1,163) (1,811) (1,951) ----------- -------- -------- -------- 4,834,702 25,046 35,775 44,118 =========== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. A50 NOTES TO FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2011 NOTE 1: GENERAL Pruco Life of New Jersey Flexible Premium Variable Annuity Account (the "Account") was established on May 20, 1996 under New Jersey law as a separate investment account of Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), which is a wholly-owned subsidiary of Pruco Life Insurance Company (an Arizona domiciled company) and is indirectly wholly-owned by The Prudential Insurance Company of America ("Prudential"), a wholly-owned subsidiary of Prudential Financial, Inc. ("PFI"). Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from Pruco Life of New Jersey's other assets and liabilities. The portion of the Account's assets applicable to the variable annuity contracts is not chargeable with liabilities arising out of any other business Pruco Life of New Jersey may conduct. Proceeds from purchases of Strategic Partners Variable Annuity One, Strategic Partners Variable Annuity One 3, Strategic Partners Select, Strategic Partners Advisor, Strategic Partners Plus, Strategic Partners FlexElite, Discovery Select and Discovery Choice Variable Annuity Contracts, and Prudential Premier B, L, X Series, Prudential Premier Bb Series, Prudential Premier Retirement, X, B, L C Series, Prudential Premier Advisor Series and Prudential Premier Retirement Variable Annuity contracts are invested in the Account. The Account is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. The Account is a funding vehicle for individual variable annuity contracts. There are one hundred and ten subaccounts within the Account, of which one hundred and eight had activity during 2011. Each contract offers the option to invest in various subaccounts, each of which invests in either a corresponding portfolio of The Prudential Series Fund, Advanced Series Trust, (collectively the "Series Funds") or one of the non-Prudential administered funds (collectively, the "Portfolios"). Investment options vary by contract. The name of each Portfolio and the corresponding subaccount name are as follows: AllianceBernstein VPS Large Cap Growth Portfolio Class B American Century VP Value Fund AST Academic Strategies Asset Allocation Portfolio AST Advanced Strategies Portfolio AST American Century Income & Growth Portfolio AST Balanced Asset Allocation Portfolio AST BlackRock Global Strategies Portfolio (merged from Prudential SP Growth Asset Allocation Portfolio) AST BlackRock Value Portfolio (formerly AST Value Portfolio) AST Bond Portfolio 2016* AST Bond Portfolio 2017 AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Bond Portfolio 2020 AST Bond Portfolio 2021 AST Bond Portfolio 2022 AST Capital Growth Asset Allocation Portfolio AST CLS Growth Asset Allocation Portfolio AST CLS Moderate Asset Allocation Portfolio AST Cohen & Steers Realty Portfolio AST Federated Aggressive Growth Portfolio (merged from AST Neuberger Berman Small-Cap Growth Portfolio) AST FI Pyramis(R) Asset Allocation Portfolio AST First Trust Balanced Target Portfolio AST First Trust Capital Appreciation Target Portfolio AST Global Real Estate Portfolio AST Goldman Sachs Concentrated Growth Portfolio AST Goldman Sachs Large-Cap Value Portfolio (formerly AST AllianceBernstein Growth & Income Portfolio) AST Goldman Sachs Mid-Cap Growth Portfolio AST Goldman Sachs Small-Cap Value Portfolio AST High Yield Portfolio AST Horizon Growth Asset Allocation Portfolio AST Horizon Moderate Asset Allocation Portfolio AST International Growth Portfolio AST International Value Portfolio AST Investment Grade Bond Portfolio AST J.P. Morgan Strategic Opportunities Portfolio AST Jennison Large-Cap Growth Portfolio AST Jennison Large-Cap Value Portfolio AST JPMorgan International Equity Portfolio AST Large-Cap Value Portfolio A51 NOTE 1: GENERAL (CONTINUED) AST Lord Abbett Core Fixed Income Portfolio (formerly AST Lord Abbett Bond-Debenture Portfolio) AST Marsico Capital Growth Portfolio AST MFS Global Equity Portfolio AST MFS Growth Portfolio AST Mid-Cap Value Portfolio AST Money Market Portfolio AST Neuberger Berman / LSV Mid-Cap Value Portfolio AST Neuberger Berman Core Bond Portfolio AST Neuberger Berman Mid-Cap Growth Portfolio AST Neuberger Berman Small-Cap Growth Portfolio (merged to AST Federated Aggressive Growth Portfolio)** AST Parametric Emerging Markets Equity Portfolio AST PIMCO Limited Maturity Bond Portfolio AST PIMCO Total Return Bond Portfolio AST Preservation Asset Allocation Portfolio AST Prudential Core Bond Portfolio AST QMA US Equity Alpha Portfolio AST Quantitative Modeling Portfolio* AST Schroders Multi-Asset World Strategies Portfolio AST Small-Cap Growth Portfolio AST Small-Cap Value Portfolio AST T. Rowe Price Asset Allocation Portfolio AST T. Rowe Price Equity Income Portfolio AST T. Rowe Price Global Bond Portfolio AST T. Rowe Price Large-Cap Growth Portfolio AST T. Rowe Price Natural Resources Portfolio AST Wellington Management Hedged Equity Portfolio (formerly AST Aggressive Asset Allocation Portfolio) AST Western Asset Core Plus Bond Portfolio Credit Suisse Trust International Equity Flex III Portfolio** Davis Value Portfolio Prudential Global Portfolio FTVIP Franklin Small-Mid Cap Growth Securities Fund Invesco V.I. Core Equity Fund Janus Aspen Janus Portfolio - Institutional Shares Janus Aspen Janus Portfolio - Service Shares Janus Aspen Overseas Portfolio - Institutional Shares MFS(R) Growth Series - Initial Class MFS(R) Research Series - Initial Class NVIT Developing Markets Fund ProFund VP Consumer Goods Portfolio ProFund VP Consumer Services ProFund VP Financials ProFund VP Health Care ProFund VP Industrials ProFund VP Large-Cap Growth ProFund VP Large-Cap Value ProFund VP Mid-Cap Growth ProFund VP Mid-Cap Value ProFund VP Real Estate ProFund VP Small-Cap Growth ProFund VP Small-Cap Value ProFund VP Telecommunications ProFund VP Utilities Prudential SP Prudential U.S. Emerging Growth Portfolio Prudential Jennison 20/20 Focus Portfolio Prudential SP Growth Asset Allocation Portfolio (merged to AST BlackRock Global Strategies Portfolio)** Prudential High Yield Bond Portfolio Franklin Templeton VIP Founding Funds Allocation Fund Prudential Jennison Portfolio Prudential Money Market Portfolio Prudential Small Capitalization Stock Portfolio Prudential SP International Value Portfolio Prudential SP International Growth Portfolio Prudential Diversified Bond Portfolio Prudential Value Portfolio Prudential SP Small Cap Value Portfolio Prudential Stock Index Portfolio Prudential Equity Portfolio T. Rowe Price Equity Income Portfolio T. Rowe Price International Stock Portfolio Wells Fargo Advantage VT Small Cap Value Portfolio Share Class 1 Wells Fargo Advantage VT Core Equity Portfolio Share Class 1 (merged to Wells Fargo Advantage VT Opportunity Fund - Class 1)** Wells Fargo Advantage VT International Equity Portfolio Share Class 1 Wells Fargo Advantage VT Omega Growth Portfolio Share Class 1 Wells Fargo Advantage VT Opportunity Fund - Class 1 (merged from Wells Fargo Advantage VT Core Equity Portfolio Share Class 1) Wells Fargo Advantage VT Small Cap Growth Portfolio Share Class 1* -------- * Subaccount available for investment, but had no assets as of December 31, 2011 ** Subaccount no longer available for investment as of December 31, 2011 At December 31, 2011, there were no balances or transactions for the period then ended pertaining to AST Bond Portfolio 2016 and AST Quantitative Modeling Portfolio. The Series Funds are diversified open-ended management investment companies, and each portfolio of the Series Funds is managed by affiliates of Prudential. Each of the variable investment options of the Account indirectly bears exposure to the market, credit and liquidity risks of the portfolio in which it invests. These financial statements should be read in conjunction with the financial statements and footnotes of the Series Funds and externally managed portfolios. Additional information on these subaccounts is available upon request to the appropriate companies. A52 NOTE 1: GENERAL (CONTINUED) The following table sets forth the dates on which mergers took place in the Account along with relevant information pertaining to each merger. The transfers from the old subaccounts to the new subaccounts are reflected in the Statement of Changes in Net Assets for the year ended December 31, 2011 as net transfers between subaccounts. The transfers occurred as follows:
REMOVED PORTFOLIO SURVIVING PORTFOLIO APRIL 29, 2011 ----------------------- --------------------- AST NEUBERGER BERMAN AST FEDERATED SMALL-CAP GROWTH AGGRESSIVE GROWTH PORTFOLIO PORTFOLIO ----------------------- --------------------- Shares.................... 667,562 1,487,994 Net asset value per share. $ 10.24 $ 10.01 Net assets before merger.. $ 6,835,831 $ 8,058,989 Net assets after merger... $ 0 $14,894,820 PRUDENTIAL SP GROWTH ASSET ALLOCATION AST BLACKROCK GLOBAL PORTFOLIO STRATEGIES PORTFOLIO ----------------------- --------------------- Shares.................... 3,407,599 3,254,257 Net asset value per share. $ 9.55 $ 10.00 Net assets before merger.. $32,542,567 $ 0 Net assets after merger... $ 0 $32,542,567 REMOVED PORTFOLIO SURVIVING PORTFOLIO AUGUST 26, 2011 ----------------------- --------------------- WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE VT CORE EQUITY VT OPPORTUNITY PORTFOLIO SHARE CLASS 1 FUND - CLASS 1 ----------------------- --------------------- Shares.................... 20,990 16,111 Net asset value per share. $ 12.68 $ 16.52 Net assets before merger.. $ 266,172 $ 0 Net assets after merger... $ 0 $ 266,172
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Investments--The investments in shares of the portfolios are stated at the net asset value of the respective portfolios, which is obtained from the custodian and is based on the fair value of the underlying securities in the respective portfolios. All changes in fair value are recorded as changes in unrealized gains (losses) on investments in the statements of operations of the applicable Subaccount. Security Transactions--Realized gains and losses on security transactions are determined based upon an average cost of the investment sold. Purchase and sale transactions are recorded as of the trade date of the security being purchased or sold. Dividend Income and Distributions Received--Dividend and capital gain distributions received are reinvested in additional shares of the portfolios and are recorded on the ex-distribution date. FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS In May 2011, the Financial Accounting Standards Board ("FASB") issued updated guidance regarding the fair value measurements and disclosure requirements. The updated guidance clarifies existing guidance related to the application of fair value measurement methods and requires expanded disclosures. This new guidance is effective for the first interim or annual A53 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) reporting period beginning after December 15, 2011 and should be applied prospectively. The Account expects this guidance to have an impact on its financial statement disclosures but limited, if any, impact on the Account's financial position or results of operations. NOTE 3: FAIR VALUE Fair Value Measurement--Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance around fair value established a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows: Level 1--Fair value is based on unadjusted quoted prices in active markets that are accessible to the Account for identical assets or liabilities. These generally provide the most reliable evidence and are used to measure fair value whenever available. Active markets are defined as having the following characteristics for the measured asset/liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information publicly available. Investments which have a net asset value which is readily available to the public are classified as Level 1. Level 2--Fair value is based on significant inputs, other than Level 1 inputs, that are observable for the asset, either directly or indirectly, for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. Investments which have a net asset value which is only available to institutional clients are classified as Level 2. Level 3--Fair value is based on at least one or more significant unobservable inputs for the asset or liability. These inputs reflect the Account's assumptions about the inputs market participants would use in pricing the asset or liability. As of December 31, 2011, the Account did not have any Level 3 assets or liabilities. As of December 31, 2011, all funds have been classified as Level 1 with the exception of proprietary funds, consisting of "Series Funds", and any non-proprietary funds not available for public investment, which are classified as Level 2. The Level 2 fund balances of assets and liabilities measured at fair value on a recurring basis, as of December 31, 2011, are presented below. Proprietary Funds ("Series Funds")....................... $3,915,020,972 AllianceBernstein VPS Large Cap Growth Portfolio Class B. $ 466,570 Davis Value Portfolio.................................... $ 2,181,362 Janus Aspen Janus Portfolio - Service Shares............. $ 422,958 Janus Aspen Janus Portfolio - Institutional Shares....... $ 4,977,112 Janus Aspen Overseas Portfolio - Institutional Shares.... $ 8,735,377 NVIT Developing Markets Fund............................. $ 670,330 ProFund VP Consumer Services............................. $ 318,360 ProFund VP Consumer Goods Portfolio...................... $ 309,464 ProFund VP Financials.................................... $ 460,756 ProFund VP Health Care................................... $ 367,076 ProFund VP Industrials................................... $ 289,434 ProFund VP Mid-Cap Growth................................ $ 87,030
A54 NOTE 3: FAIR VALUE (CONTINUED) ProFund VP Mid-Cap Value.............................................. $ 80,928 ProFund VP Real Estate................................................ $109,609 ProFund VP Small-Cap Growth........................................... $ 26,096 ProFund VP Small-Cap Value............................................ $ 19,259 ProFund VP Telecommunications......................................... $254,740 ProFund VP Utilities.................................................. $258,742 ProFund VP Large-Cap Growth........................................... $ 36,943 ProFund VP Large-Cap Value............................................ $140,580 Wells Fargo Advantage VT International Equity Portfolio Share Class 1. $205,566 Wells Fargo Advantage VT Omega Growth Portfolio Share Class 1......... $325,918 Wells Fargo Advantage VT Opportunity Fund - Class 1................... $268,073 Wells Fargo Advantage VT Small Cap Value Portfolio Share Class 1...... $ 60,792
TRANSFERS BETWEEN LEVEL 1 AND LEVEL 2 During 2011, there were no significant transfers from Level 1 to Level 2. There were significant transfers from Level 2 to Level 1 of $10,422,649 in respect of the Invesco V.I. Core Equity Fund. The transfers are based on values as of December 31, 2010. Investments are transferred out of Level 1 and into Level 2 when a net asset value is no longer readily available to the public and conversely transferred out of Level 2 and into Level 1 when a net asset value becomes readily available to the public. As there are no Level 3 assets for either period, a presentation of the reconciliation of Level 3 assets is not required at this time. In addition, there are no other financial assets or liabilities valued on a non-recurring basis. NOTE 4: TAXES Pruco Life of New Jersey is taxed as a "life insurance company" as defined by the Internal Revenue Code. The results of operations of the Account form a part of PFI's consolidated federal tax return. No federal income taxes are payable by the Account. As such, no provision for tax liability has been recorded in these financial statements. Prudential management will review periodically the status of the policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the contracts. NOTE 5: PURCHASES AND SALES OF INVESTMENTS The aggregate costs of purchases and proceeds from sales, excluding distributions received and reinvested, of investments in the portfolios for the year ended December 31, 2011 were as follows:
PURCHASES SALES ------------ ------------- AllianceBernstein VPS Large Cap Growth Portfolio Class B. $ 88,174 $ (97,827) American Century VP Value Fund........................... $ 82,051 $ (353,856) AST Academic Strategies Asset Allocation Portfolio....... $166,969,049 $(136,140,865) AST Advanced Strategies Portfolio........................ $184,670,803 $(124,334,426) AST T. Rowe Price Equity Income Portfolio................ $ 8,437,573 $ (7,466,103) AST American Century Income & Growth Portfolio........... $ 12,433,682 $ (8,721,521) AST Balanced Asset Allocation Portfolio.................. $243,299,336 $(207,316,441) AST BlackRock Global Strategies Portfolio................ $ 53,812,802 $ (6,921,145) AST BlackRock Value Portfolio............................ $ 9,493,715 $ (6,648,722) AST Bond Portfolio 2017.................................. $ 32,447,759 $ (12,033,485) AST Bond Portfolio 2018.................................. $ 29,704,890 $ (9,851,103) AST Bond Portfolio 2019.................................. $ 0 $ (34,481) AST Bond Portfolio 2020.................................. $ 2,174,255 $ (4,993,382) AST Bond Portfolio 2021.................................. $ 53,086,827 $ (27,216,575) AST Bond Portfolio 2022.................................. $ 24,523,299 $ (9,650,582) AST Capital Growth Asset Allocation Portfolio............ $189,783,984 $(174,565,762) AST CLS Growth Asset Allocation Portfolio................ $110,992,344 $ (84,283,572)
A55 NOTE 5: PURCHASES AND SALES OF INVESTMENTS (CONTINUED)
PURCHASES SALES -------------- --------------- AST CLS Moderate Asset Allocation Portfolio........................... $ 112,556,663 $ (74,474,012) AST Cohen & Steers Realty Portfolio................................... $ 11,227,187 $ (7,835,877) AST Federated Aggressive Growth Portfolio............................. $ 18,916,151 $ (12,244,173) AST FI Pyramis(R) Asset Allocation Portfolio.......................... $ 71,145,875 $ (49,107,854) AST First Trust Balanced Target Portfolio............................. $ 132,366,619 $ (86,509,377) AST First Trust Capital Appreciation Target Portfolio................. $ 154,954,453 $ (123,814,599) AST Global Real Estate Portfolio...................................... $ 4,884,686 $ (4,114,032) AST Goldman Sachs Concentrated Growth Portfolio....................... $ 10,873,031 $ (9,928,003) AST Goldman Sachs Large-Cap Value Portfolio........................... $ 10,760,856 $ (8,301,014) AST Goldman Sachs Mid-Cap Growth Portfolio............................ $ 13,864,935 $ (12,255,504) AST Goldman Sachs Small-Cap Value Portfolio........................... $ 15,144,393 $ (12,411,186) AST High Yield Portfolio.............................................. $ 9,295,746 $ (7,140,264) AST Horizon Growth Asset Allocation Portfolio......................... $ 63,794,699 $ (43,934,429) AST Horizon Moderate Asset Allocation Portfolio....................... $ 72,013,250 $ (49,784,149) AST International Growth Portfolio.................................... $ 11,128,992 $ (8,606,354) AST International Value Portfolio..................................... $ 6,353,122 $ (5,093,733) AST Investment Grade Bond Portfolio................................... $1,751,409,852 $(1,088,317,132) AST J.P. Morgan Strategic Opportunities Portfolio..................... $ 58,572,601 $ (40,478,017) AST Jennison Large-Cap Growth Portfolio............................... $ 7,308,881 $ (4,452,245) AST Jennison Large-Cap Value Portfolio................................ $ 5,317,597 $ (4,090,508) AST JPMorgan International Equity Portfolio........................... $ 14,504,842 $ (12,787,532) AST Large-Cap Value Portfolio......................................... $ 5,210,824 $ (4,100,668) AST Lord Abbett Core Fixed Income Portfolio........................... $ 16,205,252 $ (5,469,828) AST Marsico Capital Growth Portfolio.................................. $ 23,142,151 $ (19,773,688) AST MFS Global Equity Portfolio....................................... $ 9,916,797 $ (8,038,137) AST MFS Growth Portfolio.............................................. $ 5,032,422 $ (4,071,341) AST Mid-Cap Value Portfolio........................................... $ 7,994,050 $ (6,685,333) AST Money Market Portfolio............................................ $ 38,039,276 $ (29,002,867) AST Neuberger Berman / LSV Mid-Cap Value Portfolio.................... $ 11,660,583 $ (9,152,642) AST Neuberger Berman Core Bond Portfolio.............................. $ 442,704 $ (1,523) AST Neuberger Berman Mid-Cap Growth Portfolio......................... $ 13,922,191 $ (11,306,958) AST Neuberger Berman Small-Cap Growth Portfolio....................... $ 1,715,071 $ (7,275,514) AST Parametric Emerging Markets Equity Portfolio...................... $ 24,531,792 $ (22,106,592) AST PIMCO Limited Maturity Bond Portfolio............................. $ 9,454,122 $ (6,720,057) AST PIMCO Total Return Bond Portfolio................................. $ 109,271,032 $ (94,428,144) AST Preservation Asset Allocation Portfolio........................... $ 139,823,634 $ (78,623,583) AST Prudential Core Bond Portfolio.................................... $ 360,743 $ (3,371) AST QMA US Equity Alpha Portfolio..................................... $ 3,548,152 $ (2,657,782) AST Schroders Multi-Asset World Strategies Portfolio.................. $ 110,439,574 $ (74,357,655) AST Small-Cap Growth Portfolio........................................ $ 8,735,454 $ (6,585,380) AST Small-Cap Value Portfolio......................................... $ 7,395,895 $ (6,284,483) AST T. Rowe Price Asset Allocation Portfolio.......................... $ 249,579,471 $ (158,967,774) AST T. Rowe Price Global Bond Portfolio............................... $ 10,436,870 $ (8,571,042) AST T. Rowe Price Large-Cap Growth Portfolio.......................... $ 18,588,783 $ (14,744,912) AST T. Rowe Price Natural Resources Portfolio......................... $ 27,501,261 $ (22,200,382) AST Wellington Management Hedged Equity Portfolio..................... $ 12,778,327 $ (5,569,914) AST Western Asset Core Plus Bond Portfolio............................ $ 28,621,049 $ (24,799,544) Credit Suisse Trust International Equity Flex III Portfolio........... $ 15,257 $ (828,972) Davis Value Portfolio................................................. $ 171,758 $ (380,815) FTVIP Franklin Small-Mid Cap Growth Securities Fund................... $ 241,506 $ (450,158) FTVIP Franklin Templeton VIP Founding Funds Allocation Fund - Class 2. $ 139,311,721 $ (116,507,405) Invesco V.I. Core Equity Fund......................................... $ 19,490 $ (1,403,167) Janus Aspen Janus Portfolio - Institutional Shares.................... $ 145,785 $ (960,275) Janus Aspen Janus Portfolio - Service Shares.......................... $ 24,638 $ (253,411) Janus Aspen Overseas Portfolio - Institutional Shares................. $ 186,987 $ (2,109,260) MFS(R) Growth Series - Initial Class.................................. $ 25,592 $ (910,636) MFS(R) Research Series - Initial Class................................ $ 4,970 $ (291,707) NVIT Developing Markets Fund.......................................... $ 159,992 $ (1,845,259) ProFund VP Consumer Goods Portfolio................................... $ 163,486 $ (179,584) ProFund VP Consumer Services.......................................... $ 187,102 $ (195,397) ProFund VP Financials................................................. $ 330,889 $ (275,953)
A56 NOTE 5: PURCHASES AND SALES OF INVESTMENTS (CONTINUED)
PURCHASES SALES ---------- ------------ ProFund VP Health Care................................................ $ 227,774 $ (258,301) ProFund VP Industrials................................................ $ 205,682 $ (254,193) ProFund VP Large-Cap Growth........................................... $ 43,421 $ (50,677) ProFund VP Large-Cap Value............................................ $ 74,374 $ (66,986) ProFund VP Mid-Cap Growth............................................. $ 90,616 $ (82,975) ProFund VP Mid-Cap Value.............................................. $ 70,033 $ (52,512) ProFund VP Real Estate................................................ $ 90,002 $ (112,366) ProFund VP Small-Cap Growth........................................... $ 30,546 $ (31,291) ProFund VP Small-Cap Value............................................ $ 17,629 $ (21,186) ProFund VP Telecommunications......................................... $ 205,799 $ (187,659) ProFund VP Utilities.................................................. $ 181,441 $ (202,283) Prudential Diversified Bond Portfolio................................. $ 478,726 $ (3,728,672) Prudential Equity Portfolio........................................... $ 119,695 $ (3,254,252) Prudential Global Portfolio........................................... $ 70,645 $ (991,800) Prudential High Yield Bond Portfolio.................................. $ 374,894 $ (4,324,576) Prudential Jennison 20/20 Focus Portfolio............................. $ 217,308 $ (844,210) Prudential Jennison Portfolio......................................... $ 290,650 $ (4,441,884) Prudential Money Market Portfolio..................................... $4,126,526 $ (8,161,613) Prudential Small Capitalization Stock Portfolio....................... $ 327,789 $ (824,869) Prudential SP Growth Asset Allocation Portfolio....................... $ 210,935 $(33,725,603) Prudential SP International Growth Portfolio.......................... $ 85,730 $ (829,188) Prudential SP International Value Portfolio........................... $ 158,391 $ (744,042) Prudential SP Small Cap Value Portfolio............................... $ 257,370 $ (4,422,250) Prudential Stock Index Portfolio...................................... $ 719,049 $ (5,164,192) Prudential Value Portfolio............................................ $ 236,006 $ (4,785,335) Prudential SP Prudential U.S. Emerging Growth Portfolio............... $ 635,153 $ (2,589,034) T. Rowe Price Equity Income Portfolio................................. $ 48,421 $ (929,330) T. Rowe Price International Stock Portfolio........................... $ 69,460 $ (420,615) Wells Fargo Advantage VT Core Equity Portfolio Share Class 1.......... $ 0 $ (281,936) Wells Fargo Advantage VT International Equity Portfolio Share Class 1. $ 15,413 $ (21,881) Wells Fargo Advantage VT Omega Growth Portfolio Share Class 1......... $ 5,727 $ (29,278) Wells Fargo Advantage VT Opportunity Fund - Class 1................... $ 267,891 $ (13,469) Wells Fargo Advantage VT Small Cap Growth Portfolio Share Class 1..... $ 0 $ (5) Wells Fargo Advantage VT Small Cap Value Portfolio Share Class 1...... $ 0 $ (5,707)
NOTE 6: RELATED PARTY TRANSACTIONS PFI and its affiliates perform various services on behalf of the portfolios of the Series Funds in which the Account invests and may receive fees for the services performed. These services include, among other things, investment management, subadvisory, shareholder communications, preparation, postage, fund transfer agency and various other record keeping, administrative and customer service functions. The Prudential Series Fund has entered into a management agreement with Prudential Investments LLC ("PI") and the Advanced Series Trust has entered into an agreement with PI and AST Investment Services, Inc, both indirect, wholly-owned subsidiaries of PFI (together the "Investment Managers"). Pursuant to these agreements, the Investment Managers have responsibility for all investment advisory services and supervise the subadvisors' performance of such services with respect to each portfolio. The Investment Managers entered into subadvisory agreements with several subadvisors, including Prudential Investment Management, Inc. and Jennison Associates LLC, which are indirect, wholly-owned subsidiaries of PFI. The Series Funds have distribution agreements with Prudential Investment Management Services LLC ("PIMS"), an indirect, wholly-owned subsidiary of PFI, which acts as the distributor of the Class I and Class II shares of the Series Funds. No distribution or service fees are paid to PIMS as distributor of the Class I shares of the portfolios of the Series Funds. However, service fees are paid to PIMS as distributor of the Class II shares of the A57 NOTE 6: RELATED PARTY TRANSACTIONS (CONTINUED) portfolios of the Series Funds. The Investment Managers have agreed to reimburse certain portfolios of the Series Funds the portion of the management fee for that Portfolio equal to the amount that the aggregate annual ordinary operating expenses (excluding interest, taxes, brokerage commissions, and acquired fund expenses, as applicable) exceeds various agreed upon percentages of the portfolio's average daily net assets. Prudential Mutual Fund Services LLC, an affiliate of the Investment Managers and an indirect, wholly-owned subsidiary of PFI, serves as the transfer agent of each portfolio of the Series Funds. The Account has extensive transactions and relationships with Prudential and other affiliates. Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among wholly unrelated parties. NOTE 7: FINANCIAL HIGHLIGHTS Pruco Life of New Jersey sells a number of variable annuity products that are funded by the Account. These products have unique combinations of features and fees that are charged against the contract owner's account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. The following table was developed by determining which products offered by Pruco Life of New Jersey and funded by the Account have the lowest and highest expense ratio. Only product designs within each subaccount that had units outstanding throughout the respective periods were considered when determining the lowest and highest expense ratio. The summary may not reflect the minimum and maximum contract charges offered by Pruco Life of New Jersey as contract owners may not have selected all available and applicable contract options.
AT YEAR ENDED FOR YEAR ENDED ------------------------------------ ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ --------------------- ------- ---------- ----------------- ------------------ PRUDENTIAL MONEY MARKET PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 15,082 $1.01024 to $10.22387 $18,883 0.02% 1.00% to 1.80% -1.77% to -0.96% December 31, 2010 18,414 $1.02843 to $10.32322 $22,913 0.03% 1.00% to 1.80% -1.73% to -0.96% December 31, 2009 15,430 $1.04657 to $10.42341 $18,850 0.43% 1.00% to 1.80% -1.40% to -0.60% December 31, 2008 23,300 $1.06138 to $ 1.37270 $28,397 2.59% 1.35% to 1.80% 0.82% to 1.30% December 31, 2007 18,166 $1.05271 to $ 1.35615 $22,032 4.96% 1.35% to 1.80% 3.20% to 3.63% PRUDENTIAL DIVERSIFIED BOND PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 11,805 $1.86014 to $ 2.24741 $26,479 4.28% 1.35% to 1.65% 5.78% to 6.08% December 31, 2010 13,115 $1.75857 to $ 2.11964 $27,736 4.18% 1.35% to 1.65% 8.78% to 9.10% December 31, 2009 15,202 $1.61669 to $ 1.94392 $29,488 4.69% 1.35% to 1.65% 18.56% to 18.91% December 31, 2008 17,358 $1.36361 to $ 1.63556 $28,332 5.12% 1.35% to 1.65% -5.02% to -4.74% December 31, 2007 21,214 $1.43562 to $ 1.71791 $36,374 5.01% 1.35% to 1.65% 4.00% to 4.31% PRUDENTIAL EQUITY PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 11,025 $1.15047 to $ 1.96226 $20,353 0.68% 1.35% to 1.80% -5.17% to -4.75% December 31, 2010 12,475 $1.21137 to $ 2.06117 $24,170 0.80% 1.35% to 1.80% 9.93% to 10.41% December 31, 2009 14,144 $1.10036 to $ 1.86775 $24,855 1.61% 1.35% to 1.80% 35.71% to 36.32% December 31, 2008 15,829 $0.80955 to $ 1.37073 $20,459 1.45% 1.35% to 1.80% -39.25% to -38.98% December 31, 2007 18,581 $1.33060 to $ 2.24766 $39,447 1.01% 1.35% to 1.80% 7.38% to 7.86% PRUDENTIAL VALUE PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 14,821 $1.28292 to $ 2.51241 $28,787 1.02% 1.35% to 1.80% -7.24% to -6.83% December 31, 2010 16,908 $1.38306 to $ 2.69800 $34,989 0.96% 1.35% to 1.80% 11.85% to 12.34% December 31, 2009 11,984 $1.23652 to $ 2.40272 $25,088 2.06% 1.35% to 1.80% 39.42% to 40.04% December 31, 2008 13,276 $0.88692 to $ 1.71665 $19,943 1.88% 1.35% to 1.80% -43.32% to -43.07% December 31, 2007 15,801 $1.56465 to $ 3.01663 $41,707 1.24% 1.35% to 1.80% 1.35% to 1.81%
A58 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED ------------------------------------ ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ --------------------- ------- ---------- ----------------- ------------------ PRUDENTIAL HIGH YIELD BOND PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 6,482 $1.74036 to $12.08103 $21,605 7.44% 1.35% to 2.10% 2.94% to 3.69% December 31, 2010 7,412 $1.68340 to $11.65524 $24,396 8.33% 1.35% to 2.10% 11.70% to 12.53% December 31, 2009 8,610 $1.50037 to $10.36252 $25,112 6.10% 1.35% to 1.80% 3.16% to 45.21% December 31, 2008 9,067 $1.03639 to $ 1.28867 $11,670 8.56% 1.35% to 1.65% -23.54% to -23.32% December 31, 2007 11,056 $1.35549 to $ 1.68122 $18,567 7.03% 1.35% to 1.65% 0.96% to 1.26% PRUDENTIAL STOCK INDEX PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 14,344 $0.87367 to $ 1.97156 $24,118 1.61% 1.35% to 1.75% 0.20% to 0.60% December 31, 2010 16,877 $0.87059 to $ 1.96089 $27,983 1.76% 1.35% to 1.75% 12.61% to 13.06% December 31, 2009 19,203 $0.77191 to $ 1.73514 $28,276 2.83% 1.35% to 1.75% 23.91% to 24.41% December 31, 2008 21,057 $0.62211 to $ 1.39552 $25,023 2.27% 1.35% to 1.75% -38.03% to -37.77% December 31, 2007 24,905 $1.00244 to $ 2.24407 $47,587 1.50% 1.35% to 1.75% 3.28% to 3.69% PRUDENTIAL GLOBAL PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 3,495 $0.80450 to $ 1.73216 $ 5,368 1.57% 1.35% to 1.80% -8.62% to -8.21% December 31, 2010 4,002 $0.87862 to $ 1.88807 $ 6,685 1.58% 1.35% to 1.80% 10.75% to 11.24% December 31, 2009 4,460 $0.79182 to $ 1.69810 $ 6,679 2.91% 1.35% to 1.80% 29.07% to 29.63% December 31, 2008 4,837 $0.61228 to $ 1.31055 $ 5,626 1.83% 1.35% to 1.80% -43.93% to -43.68% December 31, 2007 5,611 $1.08987 to $ 2.32839 $11,567 1.01% 1.35% to 1.80% 8.51% to 9.00% PRUDENTIAL JENNISON PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 13,279 $0.72609 to $ 2.08665 $23,576 0.30% 1.35% to 1.80% -1.46% to -1.03% December 31, 2010 15,574 $0.73544 to $ 2.10942 $27,512 0.44% 1.35% to 1.80% 9.97% to 10.46% December 31, 2009 16,183 $0.66747 to $ 1.91072 $26,409 0.68% 1.35% to 1.80% 40.50% to 41.12% December 31, 2008 18,563 $0.47423 to $ 1.35460 $21,442 0.53% 1.35% to 1.80% -38.39% to -38.11% December 31, 2007 22,125 $0.76811 to $ 2.19002 $41,555 0.28% 1.35% to 1.80% 10.01% to 10.50% PRUDENTIAL SMALL CAPITALIZATION STOCK PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 1,672 $2.10724 to $ 2.69556 $ 4,476 0.81% 1.35% to 1.65% -1.07% to -0.78% December 31, 2010 1,832 $2.13000 to $ 2.71805 $ 4,950 0.83% 1.35% to 1.65% 23.89% to 24.25% December 31, 2009 2,118 $1.71932 to $ 2.18866 $ 4,611 1.86% 1.35% to 1.65% 23.15% to 23.51% December 31, 2008 2,399 $1.39606 to $ 1.77290 $ 4,234 1.17% 1.35% to 1.65% -32.16% to -31.96% December 31, 2007 3,135 $2.05789 to $ 2.60699 $ 8,142 0.55% 1.35% to 1.65% -2.16% to -1.86% T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 1,305 $0.92976 to $ 1.26936 $ 1,655 1.44% 1.35% to 1.65% -14.25% to -14.00% December 31, 2010 1,532 $1.08424 to $ 1.47671 $ 2,254 0.90% 1.35% to 1.65% 12.60% to 12.92% December 31, 2009 1,706 $1.30828 to $ 1.30828 $ 2,232 2.70% 1.40% to 1.40% 50.29% to 50.37% December 31, 2008 1,818 $0.65977 to $ 0.87049 $ 1,582 1.84% 1.35% to 1.40% -49.42% to -49.39% December 31, 2007 2,261 $1.27297 to $ 1.72087 $ 3,889 1.38% 1.35% to 1.65% 11.19% to 11.52% T. ROWE PRICE EQUITY INCOME PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2011 3,092 $1.34518 to $ 2.08566 $ 6,387 1.73% 1.35% to 1.65% -2.32% to -2.03% December 31, 2010 3,462 $1.37716 to $ 2.13003 $ 7,300 1.89% 1.35% to 1.65% 13.16% to 13.49% December 31, 2009 3,901 $1.21705 to $ 1.87780 $ 7,273 2.00% 1.35% to 1.65% 23.55% to 23.93% December 31, 2008 4,460 $0.98503 to $ 1.51606 $ 6,720 2.32% 1.35% to 1.65% -37.15% to -36.96% December 31, 2007 5,156 $1.56731 to $ 2.40627 $12,300 1.67% 1.35% to 1.65% 1.58% to 1.88% INVESCO V.I. CORE EQUITY FUND ------------------------------------------------------------------------------------ December 31, 2011 5,089 $0.93773 to $ 1.78573 $ 9,075 0.95% 1.35% to 1.65% -1.68% to -1.40% December 31, 2010 5,771 $0.95379 to $ 1.81190 $10,423 0.96% 1.35% to 1.65% 7.77% to 8.09% December 31, 2009 6,508 $0.88500 to $ 1.67706 $10,854 1.83% 1.35% to 1.65% 26.20% to 26.61% December 31, 2008 7,327 $0.70126 to $ 1.32547 $ 9,665 2.00% 1.35% to 1.65% -31.28% to -31.08% December 31, 2007 9,004 $1.02044 to $ 1.92405 $17,237 1.03% 1.35% to 1.65% 6.35% to 6.66% JANUS ASPEN JANUS PORTFOLIO -- INSTITUTIONAL SHARES ------------------------------------------------------------------------------------ December 31, 2011 3,289 $0.73068 to $ 1.52032 $ 4,977 0.58% 1.35% to 1.65% -6.83% to -6.57% December 31, 2010 3,767 $0.78421 to $ 1.62786 $ 6,073 1.09% 1.35% to 1.65% 12.67% to 12.99% December 31, 2009 4,393 $0.69604 to $ 1.44140 $ 6,265 0.54% 1.35% to 1.65% 34.14% to 34.54% December 31, 2008 4,794 $0.51888 to $ 1.07198 $ 5,101 0.72% 1.35% to 1.65% -40.70% to -40.53% December 31, 2007 6,190 $0.87503 to $ 1.80324 $11,084 0.70% 1.35% to 1.65% 13.21% to 13.55%
A59 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED ----------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ -------------------- ------- ---------- ----------------- ------------------ JANUS ASPEN OVERSEAS PORTFOLIO -- INSTITUTIONAL SHARES ----------------------------------------------------------------------------------- December 31, 2011 2,904 $1.68615 to $3.04341 $ 8,735 0.46% 1.35% to 1.65% -33.27% to -33.07% December 31, 2010 3,325 $2.52677 to $4.54962 $14,939 0.68% 1.35% to 1.65% 23.28% to 23.64% December 31, 2009 3,937 $2.04970 to $3.68158 $14,332 0.56% 1.35% to 1.65% 76.64% to 77.17% December 31, 2008 4,558 $1.16037 to $2.07911 $ 9,376 1.19% 1.35% to 1.65% -52.89% to -52.75% December 31, 2007 5,607 $2.46327 to $4.40276 $24,465 0.62% 1.35% to 1.65% 26.22% to 26.60% MFS(R) RESEARCH SERIES -- INITIAL CLASS ----------------------------------------------------------------------------------- December 31, 2011 990 $1.62522 to $1.62522 $ 1,609 0.86% 1.40% to 1.40% -1.82% to -1.82% December 31, 2010 1,149 $1.65543 to $1.65543 $ 1,902 0.93% 1.40% to 1.40% 14.29% to 14.29% December 31, 2009 1,248 $1.44843 to $1.44843 $ 1,808 1.45% 1.40% to 1.40% 28.75% to 28.75% December 31, 2008 1,367 $1.12501 to $1.12501 $ 1,538 0.56% 1.40% to 1.40% -36.97% to -36.97% December 31, 2007 1,759 $1.11117 to $1.78496 $ 3,140 0.73% 1.40% to 1.65% 11.36% to 11.63% MFS(R) GROWTH SERIES -- INITIAL CLASS ----------------------------------------------------------------------------------- December 31, 2011 3,507 $0.88728 to $1.65595 $ 5,790 0.19% 1.35% to 1.65% -1.95% to -1.65% December 31, 2010 3,975 $0.90488 to $1.68460 $ 6,677 0.12% 1.35% to 1.65% 13.46% to 13.80% December 31, 2009 4,435 $0.79756 to $1.48114 $ 6,551 0.32% 1.35% to 1.65% 35.43% to 35.83% December 31, 2008 4,986 $0.58889 to $1.09086 $ 5,426 0.24% 1.35% to 1.65% -38.43% to -38.25% December 31, 2007 6,071 $0.95653 to $1.76744 $10,697 0.00% 1.35% to 1.65% 19.20% to 19.55% AMERICAN CENTURY VP VALUE FUND ----------------------------------------------------------------------------------- December 31, 2011 1,221 $1.63512 to $1.98177 $ 2,408 2.02% 1.35% to 1.65% -0.62% to -0.33% December 31, 2010 1,337 $1.64535 to $1.98934 $ 2,649 2.20% 1.35% to 1.65% 11.58% to 11.91% December 31, 2009 1,481 $1.47454 to $1.77852 $ 2,621 5.79% 1.35% to 1.65% 17.92% to 18.27% December 31, 2008 1,667 $1.25041 to $1.50461 $ 2,499 2.52% 1.35% to 1.65% -27.97% to -27.75% December 31, 2007 1,981 $1.73593 to $2.08379 $ 4,115 1.71% 1.35% to 1.65% -6.68% to -6.41% FTVIP FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND -- CLASS 2 ----------------------------------------------------------------------------------- December 31, 2011 1,511 $1.02535 to $1.77574 $ 2,657 0.00% 1.35% to 1.65% -6.37% to -6.09% December 31, 2010 1,608 $1.09508 to $1.89197 $ 3,000 0.00% 1.35% to 1.65% 25.55% to 25.93% December 31, 2009 1,702 $0.87224 to $1.50320 $ 2,523 0.00% 1.35% to 1.65% 41.25% to 41.68% December 31, 2008 1,856 $0.61753 to $1.06167 $ 1,943 0.00% 1.35% to 1.65% -43.43% to -43.26% December 31, 2007 2,176 $1.09168 to $1.87203 $ 4,026 0.00% 1.35% to 1.65% 9.41% to 9.75% PRUDENTIAL JENNISON 20/20 FOCUS PORTFOLIO ----------------------------------------------------------------------------------- December 31, 2011 2,433 $1.56151 to $1.65810 $ 4,027 0.08% 1.35% to 1.65% -5.72% to -5.44% December 31, 2010 2,744 $1.65622 to $1.75443 $ 4,807 0.00% 1.35% to 1.65% 6.08% to 6.40% December 31, 2009 2,995 $1.56131 to $1.64969 $ 4,934 0.49% 1.35% to 1.65% 55.28% to 55.73% December 31, 2008 3,327 $1.00550 to $1.05981 $ 3,523 0.55% 1.35% to 1.65% -40.14% to -39.96% December 31, 2007 3,704 $1.67967 to $1.76615 $ 6,538 0.56% 1.35% to 1.65% 8.79% to 9.12% DAVIS VALUE PORTFOLIO ----------------------------------------------------------------------------------- December 31, 2011 2,104 $1.00779 to $1.04304 $ 2,181 0.81% 1.35% to 1.65% -5.73% to -5.45% December 31, 2010 2,278 $1.06904 to $1.10314 $ 2,499 1.31% 1.35% to 1.65% 10.93% to 11.25% December 31, 2009 2,563 $0.96368 to $0.99157 $ 2,528 0.88% 1.35% to 1.65% 29.03% to 29.41% December 31, 2008 3,060 $0.74684 to $0.76620 $ 2,334 0.91% 1.35% to 1.65% -41.30% to -41.12% December 31, 2007 3,939 $1.27220 to $1.30132 $ 5,105 1.06% 1.35% to 1.65% 2.92% to 3.24% ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO CLASS B ----------------------------------------------------------------------------------- December 31, 2011 785 $0.57787 to $0.59481 $ 467 0.09% 1.40% to 1.65% -4.83% to -4.61% December 31, 2010 795 $0.60717 to $0.62731 $ 495 0.27% 1.35% to 1.65% 8.05% to 8.37% December 31, 2009 852 $0.56193 to $0.57885 $ 490 0.00% 1.35% to 1.65% 34.87% to 35.31% December 31, 2008 980 $0.41663 to $0.42781 $ 417 0.00% 1.35% to 1.65% -40.80% to -40.62% December 31, 2007 1,134 $0.70378 to $0.72051 $ 813 0.00% 1.35% to 1.65% 11.76% to 12.10% PRUDENTIAL SP SMALL CAP VALUE PORTFOLIO ----------------------------------------------------------------------------------- December 31, 2011 5,636 $1.37284 to $1.79660 $ 9,694 0.66% 1.35% to 1.80% -4.49% to -4.06% December 31, 2010 7,783 $1.43734 to $1.87355 $14,070 0.65% 1.35% to 1.80% 24.03% to 24.59% December 31, 2009 8,611 $1.15887 to $1.50448 $12,502 1.50% 1.35% to 1.80% 28.50% to 29.05% December 31, 2008 9,556 $0.90185 to $1.16633 $10,785 1.11% 1.35% to 1.80% -31.74% to -31.43% December 31, 2007 11,378 $1.32111 to $1.70189 $18,750 0.66% 1.35% to 1.80% -5.34% to -4.92%
A60 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ JANUS ASPEN JANUS PORTFOLIO -- SERVICE SHARES -------------------------------------------------------------------------------------- December 31, 2011 428 $ 0.61555 to $ 1.36100 $ 423 0.40% 1.40% to 1.75% -7.16% to -6.84% December 31, 2010 679 $ 0.66210 to $ 1.46090 $ 668 0.37% 1.40% to 1.75% 12.30% to 12.68% December 31, 2009 566 $ 0.58877 to $ 1.29652 $ 533 0.38% 1.40% to 1.75% 33.67% to 34.14% December 31, 2008 662 $ 0.43971 to $ 0.96655 $ 479 0.58% 1.40% to 1.75% -40.91% to -40.70% December 31, 2007 774 $ 0.74290 to $ 1.62992 $ 926 0.55% 1.40% to 1.75% 12.81% to 13.20% PRUDENTIAL SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 4,764 $ 1.13467 to $ 2.49218 $ 9,168 0.59% 1.35% to 1.80% 0.42% to 0.86% December 31, 2010 5,712 $ 1.12786 to $ 2.47225 $ 10,859 0.40% 1.35% to 1.80% 18.30% to 18.82% December 31, 2009 3,805 $ 0.95142 to $ 2.08159 $ 6,160 0.74% 1.35% to 1.80% 39.39% to 40.00% December 31, 2008 4,497 $ 0.68135 to $ 1.48767 $ 5,091 0.30% 1.35% to 1.80% -37.36% to -37.08% December 31, 2007 5,536 $ 1.08548 to $ 2.36566 $ 9,816 0.26% 1.35% to 1.80% 14.74% to 15.25% PRUDENTIAL SP GROWTH ASSET ALLOCATION PORTFOLIO (EXPIRED APRIL 29, 2011) -------------------------------------------------------------------------------------- December 31, 2011 0 $ 0 to $ 0 $ 0 0.00% 1.40% to 2.35% 5.78% to 6.11% December 31, 2010 17,274 $ 1.05696 to $11.05168 $ 31,471 1.97% 1.40% to 2.35% 11.29% to 12.33% December 31, 2009 19,041 $ 0.94281 to $ 9.89707 $ 31,604 2.19% 1.40% to 2.35% 23.32% to 24.48% December 31, 2008 20,266 $ 0.75897 to $ 7.99800 $ 26,816 1.71% 1.40% to 2.35% -37.82% to -37.24% December 31, 2007 23,637 $ 1.21163 to $12.81910 $ 48,721 1.45% 1.40% to 2.35% 6.71% to 7.71% PRUDENTIAL SP INTERNATIONAL GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 2,217 $ 0.64172 to $ 1.56912 $ 2,650 1.29% 1.35% to 1.80% -16.42% to -16.04% December 31, 2010 2,753 $ 0.76618 to $ 1.86993 $ 3,873 1.53% 1.40% to 1.80% 11.98% to 12.44% December 31, 2009 2,842 $ 0.68282 to $ 1.66303 $ 3,568 2.18% 1.40% to 1.80% 34.72% to 35.26% December 31, 2008 3,161 $ 0.50582 to $ 1.22951 $ 2,916 1.64% 1.35% to 1.80% -51.18% to -50.96% December 31, 2007 3,565 $ 1.03403 to $ 2.50846 $ 6,708 0.69% 1.35% to 1.80% 17.42% to 17.94% PRUDENTIAL SP INTERNATIONAL VALUE PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 1,944 $ 0.93318 to $ 1.58079 $ 2,638 2.42% 1.40% to 1.75% -14.59% to -14.29% December 31, 2010 2,288 $ 1.09095 to $ 1.84445 $ 3,609 2.19% 1.40% to 1.80% 8.85% to 9.28% December 31, 2009 2,567 $ 1.00020 to $ 1.68786 $ 3,658 3.13% 1.40% to 1.80% 30.01% to 30.52% December 31, 2008 2,902 $ 0.76784 to $ 1.29318 $ 3,162 2.81% 1.40% to 1.80% -45.05% to -44.83% December 31, 2007 3,194 $ 1.39477 to $ 2.34427 $ 6,327 1.67% 1.40% to 1.80% 15.99% to 16.44% AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 907 $ 7.84754 to $12.53734 $ 8,531 1.07% 0.85% to 2.45% -15.50% to -6.59% December 31, 2010 722 $ 8.41375 to $13.52811 $ 7,184 1.22% 1.15% to 2.45% 7.31% to 11.60% December 31, 2009 254 $ 7.55020 to $12.21751 $ 2,033 2.52% 1.15% to 2.05% 16.79% to 20.67% December 31, 2008 70 $ 6.59044 to $ 7.21408 $ 477 1.69% 1.15% to 2.05% -41.88% to -41.36% December 31, 2007 49 $11.34013 to $12.29954 $ 583 1.24% 1.15% to 2.05% 3.00% to 3.93% AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 1,061 $ 9.12113 to $14.15216 $ 11,176 1.04% 1.15% to 2.85% 0.62% to 2.40% December 31, 2010 767 $ 8.96487 to $13.93020 $ 7,763 1.09% 1.15% to 2.70% 7.22% to 12.55% December 31, 2009 301 $ 8.01628 to $12.47459 $ 2,505 1.82% 1.15% to 2.50% 14.90% to 23.81% December 31, 2008 82 $ 6.92900 to $ 7.53614 $ 605 2.14% 1.15% to 1.80% -35.90% to -35.49% December 31, 2007 79 $10.80965 to $11.72224 $ 908 2.60% 1.15% to 1.80% -1.88% to -1.25% AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 10,204 $ 9.73713 to $12.88722 $105,294 1.58% 0.55% to 2.85% -6.13% to -3.91% December 31, 2010 7,045 $ 9.72815 to $13.59785 $ 76,431 0.54% 0.55% to 2.85% 7.06% to 10.54% December 31, 2009 1,392 $ 9.24887 to $12.39836 $ 13,894 1.08% 1.15% to 2.55% 22.51% to 26.21% December 31, 2008 262 $ 7.35331 to $ 8.26716 $ 2,074 2.23% 1.15% to 2.40% -31.83% to -27.07% December 31, 2007 103 $11.31065 to $12.00848 $ 1,204 5.35% 1.15% to 2.40% 6.35% to 7.67% AST COHEN & STEERS REALTY PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 780 $ 9.38275 to $19.17281 $ 9,555 0.73% 0.85% to 2.85% -6.17% to 5.38% December 31, 2010 542 $ 8.36127 to $18.33755 $ 6,254 1.23% 1.00% to 2.85% 17.47% to 27.42% December 31, 2009 149 $ 7.87308 to $14.52687 $ 1,281 2.78% 1.15% to 2.10% 29.15% to 51.09% December 31, 2008 70 $ 6.07516 to $ 8.21151 $ 495 4.81% 1.15% to 1.80% -36.20% to -35.79% December 31, 2007 85 $ 9.52250 to $12.82033 $ 951 4.16% 1.15% to 1.80% -21.36% to -20.85%
A61 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED ------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- ------- ---------- ----------------- ------------------ AST J.P. MORGAN STRATEGIC OPPORTUNITIES PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 8,024 $10.15261 to $12.08786 $85,179 0.89% 0.55% to 2.85% -2.62% to -0.32% December 31, 2010 6,294 $10.26045 to $12.29454 $68,277 0.36% 0.55% to 2.85% 4.70% to 7.11% December 31, 2009 2,802 $ 9.68501 to $11.67943 $29,570 0.83% 1.15% to 2.50% 15.87% to 20.87% December 31, 2008 1,404 $ 8.04051 to $ 9.52935 $12,483 0.29% 1.15% to 2.40% -20.61% to -18.55% December 31, 2007 227 $10.54506 to $11.72906 $ 2,569 2.46% 1.15% to 2.40% -0.46% to 0.78% AST BLACKROCK VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 596 $ 8.45207 to $13.74775 $ 6,050 0.76% 0.55% to 2.85% -10.70% to -1.04% December 31, 2010 369 $ 8.25078 to $14.08474 $ 3,786 0.98% 1.00% to 2.85% 6.06% to 11.33% December 31, 2009 113 $ 7.82812 to $12.77034 $ 939 0.79% 1.15% to 2.10% 15.83% to 26.46% December 31, 2008 86 $ 6.73868 to $ 7.95205 $ 608 2.50% 1.15% to 1.80% -38.41% to -38.01% December 31, 2007 65 $10.94144 to $12.86054 $ 749 1.24% 1.15% to 1.80% -0.62% to 0.02% AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO (EXPIRED APRIL 29, 2011) ------------------------------------------------------------------------------------- December 31, 2011 0 $ 0 to $ 0 $ 0 0.00% 1.15% to 2.50% 11.87% to 12.36% December 31, 2010 469 $ 8.83896 to $14.24972 $ 4,830 0.00% 1.15% to 2.50% 14.27% to 18.90% December 31, 2009 174 $ 7.48169 to $12.07932 $ 1,361 0.00% 1.15% to 2.50% 19.57% to 21.59% December 31, 2008 29 $ 6.21411 to $ 7.28449 $ 189 0.00% 1.15% to 2.15% -43.75% to -43.19% December 31, 2007 17 $11.00942 to $12.85490 $ 197 0.00% 1.15% to 1.80% 16.60% to 17.36% AST HIGH YIELD PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 1,020 $10.70991 to $14.11698 $11,410 6.50% 1.15% to 2.85% 0.24% to 2.00% December 31, 2010 812 $10.68442 to $13.94919 $ 9,044 3.48% 1.00% to 2.85% 7.02% to 12.38% December 31, 2009 295 $ 9.93381 to $12.52966 $ 3,095 4.14% 1.15% to 2.50% 25.08% to 34.28% December 31, 2008 158 $ 7.42367 to $ 7.97763 $ 1,243 9.02% 1.15% to 1.80% -26.86% to -25.76% December 31, 2007 147 $10.62868 to $10.86456 $ 1,579 10.58% 1.15% to 1.80% 0.66% to 1.31% AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 859 $ 8.63723 to $14.40189 $ 8,662 0.47% 1.00% to 2.85% -15.59% to -13.97% December 31, 2010 423 $10.11934 to $16.89809 $ 4,990 0.03% 1.00% to 2.85% 21.04% to 31.23% December 31, 2009 140 $ 7.77201 to $12.99734 $ 1,164 0.15% 1.15% to 2.10% 29.87% to 31.41% December 31, 2008 69 $ 5.96393 to $ 7.39352 $ 465 0.00% 1.15% to 1.90% -45.14% to -44.73% December 31, 2007 67 $10.85969 to $13.40975 $ 825 0.00% 1.15% to 1.80% 9.24% to 9.94% AST MID-CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 550 $10.02005 to $15.20886 $ 5,953 0.69% 1.15% to 2.85% -6.20% to -4.55% December 31, 2010 481 $10.56476 to $16.05923 $ 5,460 0.39% 1.15% to 2.85% 14.32% to 22.20% December 31, 2009 135 $ 8.70075 to $13.24524 $ 1,225 1.57% 1.15% to 2.15% 32.64% to 37.31% December 31, 2008 63 $ 6.37746 to $ 7.22665 $ 423 1.11% 1.15% to 2.15% -39.43% to -38.83% December 31, 2007 51 $10.49274 to $11.84309 $ 566 0.40% 1.15% to 1.80% 0.93% to 1.58% AST SMALL-CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 522 $ 9.54341 to $14.76666 $ 5,461 0.63% 0.55% to 2.85% -8.65% to -6.49% December 31, 2010 464 $10.30053 to $16.01106 $ 5,239 0.35% 1.00% to 2.85% 14.25% to 24.75% December 31, 2009 180 $ 8.34836 to $10.20589 $ 1,610 1.65% 1.15% to 2.15% 24.33% to 25.56% December 31, 2008 137 $ 6.69183 to $ 8.14863 $ 977 1.14% 1.15% to 1.90% -31.03% to -30.52% December 31, 2007 73 $ 9.69280 to $11.75648 $ 758 1.15% 1.15% to 1.80% -7.29% to -6.69% AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 872 $10.01355 to $13.09897 $ 8,999 0.16% 1.15% to 2.70% -6.55% to -5.05% December 31, 2010 825 $10.70162 to $13.90429 $ 9,069 0.07% 1.15% to 2.70% 6.96% to 9.03% December 31, 2009 376 $ 9.87807 to $12.85313 $ 3,872 0.00% 1.15% to 2.55% 27.43% to 47.70% December 31, 2008 116 $ 6.73082 to $ 7.74360 $ 833 0.15% 1.15% to 1.90% -41.38% to -40.95% December 31, 2007 108 $11.47169 to $13.14587 $ 1,339 0.00% 1.15% to 1.80% 11.97% to 12.69% AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 1,008 $10.76129 to $15.09953 $11,359 0.00% 0.55% to 2.50% -5.35% to -3.51% December 31, 2010 934 $11.36976 to $15.86600 $11,177 0.00% 1.00% to 2.50% 13.48% to 18.64% December 31, 2009 352 $10.37465 to $13.49906 $ 3,793 0.00% 1.15% to 2.50% 34.19% to 55.61% December 31, 2008 91 $ 6.72291 to $ 7.63476 $ 638 0.00% 1.15% to 1.90% -41.90% to -41.47% December 31, 2007 78 $11.55954 to $13.07586 $ 965 0.00% 1.15% to 1.80% 17.23% to 17.98%
A62 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED ------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- ------- ---------- ----------------- ------------------ AST LARGE-CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 841 $ 7.39857 to $13.29726 $ 7,377 1.30% 0.85% to 2.45% -10.31% to -5.27% December 31, 2010 748 $ 7.86044 to $14.14819 $ 6,727 0.97% 1.15% to 2.45% 5.87% to 11.87% December 31, 2009 629 $ 7.07131 to $12.74667 $ 4,841 2.80% 1.15% to 1.95% 17.21% to 26.67% December 31, 2008 594 $ 6.02732 to $ 6.82177 $ 3,908 2.14% 1.15% to 1.90% -42.58% to -39.90% December 31, 2007 153 $10.48704 to $11.82253 $ 1,670 1.37% 1.15% to 1.80% -4.71% to -4.10% AST LORD ABBETT CORE FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 1,576 $10.42419 to $14.54337 $18,985 1.50% 0.85% to 2.85% 4.25% to 8.92% December 31, 2010 612 $10.74306 to $13.45763 $ 7,233 6.06% 1.15% to 2.85% 7.56% to 12.13% December 31, 2009 348 $10.30711 to $12.09710 $ 3,865 7.45% 1.15% to 2.00% 20.56% to 33.07% December 31, 2008 187 $ 7.75694 to $ 8.54833 $ 1,586 7.72% 1.15% to 1.80% -24.61% to -22.56% December 31, 2007 164 $10.91333 to $11.29424 $ 1,839 7.30% 1.15% to 1.80% 4.20% to 4.87% AST MARSICO CAPITAL GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 1,718 $ 9.08180 to $14.53184 $18,293 0.32% 0.85% to 2.85% -8.96% to -1.89% December 31, 2010 1,534 $ 9.48403 to $14.95140 $16,557 0.54% 1.15% to 2.85% 12.33% to 18.39% December 31, 2009 614 $ 8.02264 to $12.72864 $ 5,313 0.77% 1.15% to 2.15% 27.03% to 28.28% December 31, 2008 338 $ 6.26305 to $ 7.27809 $ 2,337 0.51% 1.15% to 1.80% -44.66% to -39.89% December 31, 2007 168 $11.52992 to $13.09923 $ 2,074 0.20% 1.15% to 1.80% 12.92% to 13.65% AST MFS GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 456 $ 9.23171 to $13.12223 $ 4,780 0.38% 0.55% to 2.45% -7.50% to -1.14% December 31, 2010 382 $ 9.93078 to $13.45761 $ 4,081 0.10% 1.15% to 2.45% 8.30% to 11.50% December 31, 2009 138 $ 8.96358 to $12.16473 $ 1,297 0.15% 1.15% to 2.10% 21.30% to 23.13% December 31, 2008 57 $ 7.34079 to $ 8.28286 $ 449 0.30% 1.15% to 1.80% -37.43% to -37.03% December 31, 2007 18 $11.73220 to $13.19875 $ 228 0.03% 1.15% to 1.80% 13.06% to 13.79% AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 862 $ 9.20532 to $15.58152 $10,193 0.00% 0.55% to 2.70% -7.23% to 1.13% December 31, 2010 694 $10.47140 to $15.62143 $ 8,235 0.00% 1.00% to 2.70% 19.02% to 27.40% December 31, 2009 181 $ 8.24353 to $12.37664 $ 1,685 0.00% 1.15% to 2.15% 24.05% to 28.31% December 31, 2008 109 $ 6.83068 to $ 8.62745 $ 836 0.00% 1.15% to 2.15% -44.38% to -43.83% December 31, 2007 84 $12.23897 to $15.39741 $ 1,180 0.00% 1.15% to 1.80% 20.03% to 20.81% AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 817 $ 9.36543 to $15.90297 $ 8,617 0.95% 1.15% to 2.85% -5.26% to -3.59% December 31, 2010 659 $ 9.77667 to $16.62562 $ 7,138 0.89% 1.15% to 2.70% 11.77% to 22.03% December 31, 2009 252 $ 8.06289 to $13.73161 $ 2,160 1.69% 1.15% to 2.00% 35.54% to 39.05% December 31, 2008 143 $ 5.83598 to $ 6.90162 $ 900 1.73% 1.15% to 1.80% -43.28% to -42.92% December 31, 2007 129 $10.28916 to $12.12014 $ 1,454 0.81% 1.15% to 1.80% 1.34% to 1.99% AST PIMCO LIMITED MATURITY BOND PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 1,419 $ 9.94129 to $12.18917 $15,100 0.94% 1.00% to 2.85% -0.66% to 1.24% December 31, 2010 1,124 $10.00728 to $12.07057 $12,054 1.91% 1.15% to 2.85% 0.00% to 2.72% December 31, 2009 419 $10.49444 to $11.78015 $ 4,866 4.82% 1.15% to 2.10% 5.04% to 9.19% December 31, 2008 270 $ 9.71676 to $10.83660 $ 2,892 5.62% 1.15% to 1.80% -2.91% to -0.03% December 31, 2007 148 $10.66071 to $10.86715 $ 1,594 5.28% 1.15% to 1.80% 4.90% to 5.58% AST T. ROWE PRICE EQUITY INCOME PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 750 $ 7.81876 to $13.84402 $ 7,094 1.17% 0.85% to 2.85% -10.17% to -2.76% December 31, 2010 718 $ 8.09199 to $14.34884 $ 6,844 1.08% 1.15% to 2.85% 4.77% to 11.96% December 31, 2009 291 $ 7.27422 to $12.91774 $ 2,229 3.24% 1.15% to 2.15% 21.19% to 27.90% December 31, 2008 78 $ 5.98171 to $ 6.73924 $ 501 3.24% 1.15% to 1.80% -42.91% to -42.55% December 31, 2007 81 $10.47838 to $11.75873 $ 911 2.55% 1.15% to 1.80% -5.28% to -4.67% AST QMA US EQUITY ALPHA PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2011 294 $ 8.85664 to $14.68191 $ 3,025 0.76% 1.00% to 2.85% 0.51% to 2.43% December 31, 2010 231 $ 8.64622 to $14.46757 $ 2,243 0.58% 1.00% to 2.85% 8.14% to 13.91% December 31, 2009 125 $ 7.59041 to $12.82018 $ 982 1.80% 1.00% to 1.95% 19.67% to 27.22% December 31, 2008 100 $ 6.29304 to $ 7.04101 $ 652 2.27% 1.00% to 1.80% -39.80% to -39.32% December 31, 2007 85 $10.75145 to $11.65038 $ 931 1.94% 1.15% to 1.80% 0.27% to 0.92%
A63 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 2,024 $ 7.67745 to $13.57744 $ 20,366 0.61% 0.85% to 2.85% -22.38% to -15.76% December 31, 2010 1,711 $11.39318 to $16.26883 $ 20,899 0.39% 1.00% to 2.85% 15.56% to 19.26% December 31, 2009 704 $ 9.76890 to $13.76951 $ 7,797 1.19% 1.15% to 2.55% 33.15% to 47.95% December 31, 2008 333 $ 6.65868 to $ 9.18555 $ 2,681 0.61% 1.15% to 1.90% -50.92% to -50.55% December 31, 2007 330 $13.55366 to $18.62348 $ 5,662 0.66% 1.15% to 1.80% 38.01% to 38.90% AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 24,391 $ 9.50439 to $13.30691 $264,165 1.11% 0.55% to 2.85% -4.90% to 1.42% December 31, 2010 16,476 $10.44562 to $13.30202 $178,780 0.79% 0.95% to 2.85% 6.24% to 10.43% December 31, 2009 4,962 $ 9.48714 to $12.15888 $ 50,136 1.94% 1.15% to 2.55% 20.65% to 22.97% December 31, 2008 1,437 $ 7.74163 to $ 8.78196 $ 11,921 1.95% 1.15% to 2.40% -27.68% to -23.34% December 31, 2007 621 $11.09246 to $12.03647 $ 7,244 2.40% 1.15% to 2.40% 3.82% to 5.11% AST MFS GLOBAL EQUITY PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 738 $ 9.90992 to $13.97222 $ 7,786 0.50% 0.55% to 2.55% -5.54% to -3.66% December 31, 2010 600 $10.33903 to $14.70491 $ 6,737 0.40% 0.55% to 2.55% 8.66% to 10.94% December 31, 2009 157 $ 9.36927 to $13.37974 $ 1,625 1.58% 1.15% to 2.55% 29.06% to 32.83% December 31, 2008 46 $ 7.73203 to $ 9.03881 $ 374 1.20% 1.15% to 1.90% -35.22% to -34.74% December 31, 2007 51 $11.92451 to $13.88494 $ 653 2.68% 1.15% to 1.80% 7.46% to 8.15% AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 1,314 $ 8.17393 to $12.74350 $ 12,054 1.38% 0.55% to 2.70% -11.60% to -9.65% December 31, 2010 1,247 $ 9.19808 to $14.30022 $ 12,690 0.94% 0.55% to 2.70% 4.51% to 7.63% December 31, 2009 446 $ 8.73715 to $13.60349 $ 4,142 3.19% 1.15% to 2.55% 33.02% to 34.60% December 31, 2008 119 $ 6.54565 to $ 8.06508 $ 847 2.58% 1.15% to 1.90% -42.48% to -42.05% December 31, 2007 101 $11.36747 to $13.95132 $ 1,284 1.73% 1.15% to 1.80% 7.50% to 8.19% AST T. ROWE PRICE GLOBAL BOND PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 1,035 $ 9.89515 to $12.88781 $ 11,416 2.75% 0.85% to 2.85% -1.04% to 2.94% December 31, 2010 830 $10.23639 to $12.51967 $ 9,083 2.31% 1.00% to 2.85% 2.58% to 4.70% December 31, 2009 245 $10.44910 to $11.97584 $ 2,848 7.36% 1.15% to 2.15% 9.75% to 11.06% December 31, 2008 160 $ 9.44110 to $10.80461 $ 1,667 4.52% 1.15% to 1.80% -5.95% to -3.54% December 31, 2007 92 $10.62669 to $11.20170 $ 996 2.92% 1.15% to 1.80% 7.70% to 8.39% AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 1,819 $ 8.69622 to $13.60557 $ 16,415 0.27% 0.55% to 2.55% -12.00% to -4.55% December 31, 2010 1,007 $ 9.12442 to $14.22692 $ 9,779 0.47% 1.15% to 2.55% 11.79% to 13.33% December 31, 2009 1,080 $ 8.06289 to $12.72682 $ 9,291 1.01% 1.15% to 2.55% -0.05% to 26.97% December 31, 2008 296 $ 6.48888 to $ 7.01024 $ 1,988 0.72% 1.15% to 2.15% -43.54% to -42.98% December 31, 2007 321 $11.45397 to $12.32551 $ 3,816 0.16% 1.15% to 1.80% 7.61% to 8.31% AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 21,421 $ 9.07555 to $13.11625 $216,804 0.51% 0.55% to 2.85% -9.16% to -2.96% December 31, 2010 20,678 $ 9.65397 to $13.70422 $217,009 1.00% 0.95% to 2.85% 7.78% to 12.25% December 31, 2009 12,118 $ 8.62574 to $12.32315 $112,363 1.89% 1.15% to 2.55% 22.27% to 23.91% December 31, 2008 7,656 $ 6.97189 to $ 7.79077 $ 57,872 0.96% 1.15% to 2.65% -36.62% to -31.11% December 31, 2007 7,141 $11.26366 to $12.14221 $ 84,864 0.23% 1.15% to 2.75% 6.78% to 8.48% AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 24,615 $ 9.17759 to $12.82397 $249,346 0.61% 0.55% to 2.85% -5.43% to -3.20% December 31, 2010 22,016 $ 9.28559 to $13.43083 $232,089 0.84% 0.55% to 2.85% 7.50% to 10.91% December 31, 2009 14,229 $ 8.58144 to $12.22943 $134,688 2.36% 0.95% to 2.50% 21.32% to 23.19% December 31, 2008 10,411 $ 7.20298 to $ 7.99594 $ 80,836 1.14% 1.00% to 2.40% -33.43% to -28.71% December 31, 2007 9,980 $10.91282 to $11.89376 $116,304 0.37% 1.00% to 2.40% 6.64% to 7.96% AST BALANCED ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 33,653 $ 9.27105 to $12.86748 $352,782 0.64% 0.55% to 2.85% -7.28% to -1.76% December 31, 2010 30,549 $ 9.68344 to $13.27946 $330,206 0.76% 0.95% to 2.85% 6.86% to 11.26% December 31, 2009 17,628 $ 8.92139 to $12.05401 $173,025 1.32% 0.95% to 2.55% -0.30% to 22.14% December 31, 2008 6,523 $ 7.42670 to $ 8.27064 $ 52,641 1.01% 1.15% to 2.40% -30.37% to -26.37% December 31, 2007 5,009 $11.24456 to $11.76251 $ 58,099 0.40% 1.15% to 2.40% 6.51% to 7.83%
A64 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST PRESERVATION ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 24,615 $ 9.60825 to $12.48452 $266,301 0.90% 0.85% to 2.85% -3.91% to 0.04% December 31, 2010 18,568 $10.51978 to $12.60207 $204,499 1.18% 0.95% to 2.85% 5.32% to 9.48% December 31, 2009 8,321 $ 9.68149 to $11.61945 $ 87,353 1.01% 1.00% to 2.50% -0.26% to 18.91% December 31, 2008 2,403 $ 8.57497 to $ 9.09941 $ 21,353 0.78% 1.00% to 2.40% -21.37% to -20.28% December 31, 2007 882 $11.11502 to $11.45988 $ 9,942 0.32% 1.15% to 2.40% 6.16% to 7.48% AST FIRST TRUST BALANCED TARGET PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 13,265 $ 9.10499 to $13.34133 $138,313 1.76% 0.85% to 2.85% -6.65% to -2.44% December 31, 2010 9,357 $ 9.46532 to $13.80890 $ 99,358 1.32% 0.95% to 2.85% 9.61% to 13.06% December 31, 2009 3,171 $ 8.51674 to $12.30994 $ 28,154 3.78% 1.15% to 2.65% 20.65% to 22.94% December 31, 2008 1,611 $ 7.05881 to $ 7.34272 $ 11,611 2.06% 1.15% to 2.65% -36.18% to -35.23% December 31, 2007 993 $11.06059 to $11.35095 $ 11,119 0.55% 1.15% to 2.65% 5.74% to 7.32% AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 11,105 $ 8.34511 to $13.06962 $113,082 1.19% 0.55% to 2.85% -11.82% to -6.73% December 31, 2010 9,121 $ 8.66171 to $14.20708 $ 97,680 0.81% 0.55% to 2.85% 14.67% to 17.84% December 31, 2009 3,465 $ 7.87730 to $12.16947 $ 29,024 2.13% 1.00% to 2.65% 21.40% to 24.79% December 31, 2008 1,205 $ 6.41884 to $ 6.74838 $ 7,954 1.20% 1.15% to 2.65% -42.24% to -41.38% December 31, 2007 979 $11.11363 to $11.52104 $ 11,130 0.29% 1.15% to 2.65% 8.53% to 10.14% AST ADVANCED STRATEGIES PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 17,019 $ 9.30664 to $13.61010 $182,811 1.04% 0.55% to 2.85% -6.93% to -0.44% December 31, 2010 11,837 $10.05863 to $13.85960 $129,172 0.87% 0.55% to 2.85% 8.44% to 12.58% December 31, 2009 3,810 $ 9.34808 to $12.42655 $ 37,034 2.84% 1.00% to 2.65% 22.94% to 24.95% December 31, 2008 2,220 $ 7.60358 to $ 7.98587 $ 17,350 1.77% 1.15% to 2.65% -31.62% to -30.60% December 31, 2007 1,280 $11.11930 to $11.53588 $ 14,537 0.53% 1.15% to 2.65% 6.67% to 8.26% AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 1,503 $10.28972 to $14.43104 $ 16,199 0.00% 0.55% to 2.85% -4.49% to -2.24% December 31, 2010 1,233 $10.65531 to $14.96577 $ 13,734 0.00% 0.55% to 2.85% 10.89% to 14.49% December 31, 2009 478 $ 9.36618 to $13.17447 $ 4,644 0.00% 1.15% to 2.00% 31.92% to 51.63% December 31, 2008 282 $ 6.21674 to $ 6.60360 $ 1,770 0.14% 1.15% to 1.90% -41.68% to -38.77% December 31, 2007 40 $11.11888 to $11.23891 $ 445 0.14% 1.15% to 1.80% 6.31% to 7.00% AST MONEY MARKET PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 2,221 $ 9.36043 to $10.43487 $ 21,882 0.02% 1.00% to 2.85% -2.82% to -0.96% December 31, 2010 1,274 $ 9.59652 to $10.55197 $ 12,842 0.02% 1.15% to 2.85% -2.46% to -1.02% December 31, 2009 540 $ 9.83880 to $10.67105 $ 5,650 0.21% 1.15% to 2.55% -1.87% to -0.90% December 31, 2008 328 $10.09598 to $10.76754 $ 3,490 2.30% 1.15% to 2.30% 0.20% to 1.34% December 31, 2007 122 $10.40843 to $10.62479 $ 1,284 4.67% 1.15% to 2.40% 2.43% to 3.70% AST SMALL-CAP GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 647 $11.19338 to $12.39878 $ 7,766 0.00% 1.15% to 2.70% -3.65% to -2.10% December 31, 2010 507 $11.54673 to $12.68615 $ 6,183 0.20% 1.15% to 2.70% 25.91% to 34.87% December 31, 2009 313 $ 8.64603 to $ 8.96499 $ 2,783 0.05% 1.15% to 2.15% 31.09% to 32.39% December 31, 2008 259 $ 6.63894 to $ 6.77186 $ 1,750 0.00% 1.15% to 1.90% -36.21% to -33.33% December 31, 2007 11 $10.42523 to $10.53785 $ 114 0.00% 1.15% to 1.80% 5.25% to 5.93% AST PIMCO TOTAL RETURN BOND PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 14,092 $ 9.99564 to $13.38718 $154,438 1.86% 0.55% to 2.85% -0.04% to 2.61% December 31, 2010 12,278 $10.27781 to $13.12390 $134,467 1.50% 0.55% to 2.85% 2.72% to 6.65% December 31, 2009 5,519 $ 9.92693 to $12.32370 $ 59,184 0.89% 1.15% to 2.55% -0.63% to 15.43% December 31, 2008 377 $ 9.41587 to $10.69755 $ 3,968 3.46% 1.15% to 1.90% -5.98% to -3.37% December 31, 2007 189 $10.95233 to $11.07079 $ 2,078 3.06% 1.15% to 1.80% 6.38% to 7.07% AST INTERNATIONAL VALUE PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 494 $ 7.59729 to $12.25942 $ 4,480 1.51% 1.15% to 2.85% -15.04% to -13.54% December 31, 2010 408 $ 8.80034 to $14.29181 $ 4,276 0.67% 1.15% to 2.85% 7.95% to 9.82% December 31, 2009 164 $ 8.02537 to $13.11671 $ 1,466 1.96% 1.15% to 2.55% 27.75% to 29.64% December 31, 2008 72 $ 6.84949 to $ 7.03242 $ 499 2.55% 1.15% to 2.15% -45.18% to -44.64% December 31, 2007 91 $12.56729 to $12.70293 $ 1,152 1.64% 1.15% to 1.80% 15.71% to 16.46%
A65 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST INTERNATIONAL GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 784 $ 7.21877 to $12.74401 $ 7,164 0.71% 0.85% to 2.85% -18.51% to -13.91% December 31, 2010 593 $ 8.39779 to $14.92060 $ 6,331 0.26% 1.15% to 2.85% 11.65% to 13.98% December 31, 2009 160 $ 7.42983 to $13.28533 $ 1,308 1.40% 1.15% to 2.10% 30.98% to 33.75% December 31, 2008 76 $ 5.56317 to $ 6.16356 $ 463 1.43% 1.15% to 1.80% -51.11% to -44.91% December 31, 2007 60 $12.39320 to $12.52703 $ 749 0.52% 1.15% to 1.80% 16.94% to 17.69% NVIT DEVELOPING MARKETS FUND -------------------------------------------------------------------------------------- December 31, 2011 51 $12.87876 to $13.22905 $ 670 0.25% 1.40% to 1.80% -23.78% to -23.48% December 31, 2010 151 $16.89594 to $17.28741 $ 2,586 0.00% 1.40% to 1.80% 14.09% to 14.54% December 31, 2009 161 $14.80944 to $15.09299 $ 2,415 1.13% 1.40% to 1.80% 59.36% to 59.99% December 31, 2008 168 $ 9.31057 to $ 9.43370 $ 1,579 0.74% 1.40% to 1.75% -58.59% to -58.44% December 31, 2007 230 $22.48208 to $22.70075 $ 5,203 0.30% 1.40% to 1.75% 41.03% to 41.52% AST INVESTMENT GRADE BOND PORTFOLIO (AVAILABLE JANUARY 28, 2008) -------------------------------------------------------------------------------------- December 31, 2011 56,740 $10.87605 to $14.45223 $688,204 0.20% 0.55% to 2.25% 8.68% to 11.82% December 31, 2010 469 $10.57538 to $13.00047 $ 6,003 7.78% 0.95% to 2.25% 5.69% to 9.55% December 31, 2009 1,117 $11.72128 to $11.86699 $ 13,151 1.36% 1.15% to 1.80% 9.34% to 10.04% December 31, 2008 4,157 $10.72041 to $10.78453 $ 44,675 0.00% 1.15% to 1.80% 7.22% to 7.86% AST WESTERN ASSET CORE PLUS BOND PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2011 2,628 $10.63550 to $11.84188 $ 28,880 2.89% 0.55% to 2.85% 3.01% to 5.44% December 31, 2010 2,192 $10.32483 to $11.38650 $ 23,213 1.26% 1.00% to 2.85% 3.27% to 6.73% December 31, 2009 555 $10.05881 to $10.76877 $ 5,704 2.74% 1.15% to 2.15% 7.80% to 10.36% December 31, 2008 43 $ 9.12808 to $ 9.32157 $ 399 0.13% 1.30% to 1.80% -8.80% to -6.61% December 31, 2007 3 $ 9.98048 to $ 9.98048 $ 31 0.00% 1.60% to 1.60% -0.18% to -0.18% AST BOND PORTFOLIO 2018 (AVAILABLE JANUARY 28, 2008) -------------------------------------------------------------------------------------- December 31, 2011 1,787 $11.64275 to $13.48663 $ 21,049 0.16% 1.90% to 2.85% 10.35% to 11.47% December 31, 2010 18 $12.01294 to $12.09943 $ 211 0.93% 1.90% to 2.15% 8.85% to 9.11% December 31, 2009 30 $11.03670 to $11.08899 $ 332 0.33% 1.50% to 2.15% -8.03% to -7.44% December 31, 2008 6 $12.00012 to $12.07153 $ 75 0.00% 1.50% to 2.15% 20.02% to 20.73% AST BOND PORTFOLIO 2019**** (AVAILABLE JANUARY 28, 2008) -------------------------------------------------------------------------------------- December 31, 2011 0 $13.49739 to $13.62798 $ 0 0.91% 1.90% to 2.15% 13.54% to 13.81% December 31, 2010 3 $11.88816 to $12.18296 $ 33 0.74% 1.30% to 2.15% 9.02% to 9.93% December 31, 2009 14 $10.90486 to $11.08225 $ 156 0.27% 1.30% to 2.15% -9.64% to -8.88% December 31, 2008 3 $12.06868 to $12.16291 $ 41 0.00% 1.30% to 2.15% 20.71% to 21.64% AST GLOBAL REAL ESTATE PORTFOLIO (AVAILABLE JULY 21, 2008) -------------------------------------------------------------------------------------- December 31, 2011 334 $ 8.72255 to $15.32029 $ 3,472 2.28% 1.15% to 2.85% -7.74% to -6.12% December 31, 2010 289 $ 9.41466 to $16.44739 $ 3,166 1.17% 1.15% to 2.85% 14.96% to 18.83% December 31, 2009 79 $ 8.02826 to $13.95016 $ 651 0.69% 1.15% to 2.50% 31.80% to 41.49% December 31, 2008 1 $ 6.10058 to $ 6.11016 $ 5 0.00% 1.80% to 2.15% -40.04% to -39.95% AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO (AVAILABLE JULY 21, 2008) -------------------------------------------------------------------------------------- December 31, 2011 1,592 $ 7.61998 to $13.89229 $ 14,499 0.94% 0.55% to 2.85% -23.87% to -20.71% December 31, 2010 1,468 $10.76214 to $17.76396 $ 17,086 0.28% 1.15% to 2.85% 16.62% to 20.88% December 31, 2009 303 $ 9.02175 to $14.81166 $ 2,792 0.25% 1.15% to 2.50% 47.32% to 64.95% December 31, 2008 2 $ 5.57715 to $ 5.57838 $ 11 0.00% 1.50% to 1.55% -44.79% to -44.78% FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 11,946 $ 8.68157 to $13.39083 $119,693 0.02% 0.85% to 2.85% -10.47% to -2.60% December 31, 2010 10,403 $ 9.04060 to $13.88351 $106,344 3.82% 0.95% to 2.85% 5.95% to 8.99% December 31, 2009 2,729 $ 8.39751 to $12.83927 $ 23,605 4.92% 1.15% to 2.40% 27.02% to 28.84% December 31, 2008 486 $ 6.61132 to $ 6.66608 $ 3,230 3.31% 1.15% to 2.40% -34.40% to -33.86% AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 959 $ 9.17568 to $15.78149 $ 11,040 0.50% 0.55% to 2.70% -7.35% to 0.75% December 31, 2010 791 $11.42102 to $15.88201 $ 9,197 0.35% 0.55% to 2.70% 14.62% to 25.51% December 31, 2009 188 $ 9.46659 to $12.77276 $ 1,808 0.58% 1.15% to 2.15% 24.18% to 28.33% December 31, 2008 4 $ 7.62336 to $ 7.64561 $ 30 0.00% 1.50% to 2.15% -24.02% to -23.80%
A66 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST CLS GROWTH ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 7,911 $ 8.75838 to $13.26883 $ 81,484 0.29% 0.55% to 2.85% -8.49% to -2.93% December 31, 2010 5,917 $ 9.19665 to $13.85815 $ 62,348 0.24% 0.55% to 2.85% 9.18% to 13.04% December 31, 2009 1,375 $ 8.24406 to $12.35611 $ 11,560 0.44% 1.15% to 2.50% 22.92% to 25.66% December 31, 2008 240 $ 6.66587 to $ 6.72112 $ 1,608 0.03% 1.15% to 2.40% -34.00% to -33.45% AST CLS MODERATE ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 11,121 $ 9.20021 to $12.63456 $114,175 0.40% 0.55% to 2.85% -6.86% to -2.36% December 31, 2010 7,792 $ 9.60436 to $13.11882 $ 81,960 0.42% 0.95% to 2.85% 7.21% to 10.65% December 31, 2009 1,753 $ 8.79604 to $11.95029 $ 15,710 0.29% 1.15% to 2.50% 19.03% to 21.99% December 31, 2008 135 $ 7.31182 to $ 7.37228 $ 991 0.03% 1.15% to 2.40% -27.47% to -26.87% AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 4,964 $ 9.31537 to $13.35045 $ 52,174 0.34% 0.55% to 2.85% -6.67% to -1.12% December 31, 2010 3,330 $ 9.76990 to $13.68833 $ 35,436 0.23% 0.95% to 2.85% 8.19% to 12.52% December 31, 2009 810 $ 8.78979 to $12.26108 $ 7,410 0.23% 1.15% to 2.40% 22.11% to 25.23% December 31, 2008 61 $ 7.11750 to $ 7.16470 $ 435 0.01% 1.15% to 2.15% -29.61% to -29.15% AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 8,325 $ 9.41906 to $12.68275 $ 86,341 0.47% 0.55% to 2.85% -5.72% to -1.05% December 31, 2010 6,330 $ 9.95339 to $12.99556 $ 66,678 0.38% 0.95% to 2.85% 6.37% to 10.33% December 31, 2009 2,050 $ 9.13296 to $11.87199 $ 19,145 0.20% 1.15% to 2.40% 18.43% to 22.22% December 31, 2008 238 $ 7.57974 to $ 7.64237 $ 1,815 0.01% 1.15% to 2.40% -24.87% to -24.25% AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 5,117 $ 9.32332 to $12.74316 $ 53,097 0.22% 0.55% to 2.85% -5.25% to -3.01% December 31, 2010 3,298 $ 9.78877 to $13.32052 $ 35,509 0.24% 0.55% to 2.85% 8.04% to 12.26% December 31, 2009 504 $ 8.84522 to $11.98361 $ 4,585 0.33% 0.95% to 2.40% 18.39% to 20.09% December 31, 2008 44 $ 7.47127 to $ 7.53310 $ 330 0.01% 1.15% to 2.40% -26.05% to -25.44% PROFUND VP CONSUMER SERVICES (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2011 28 $11.29470 to $11.29470 $ 318 0.00% 1.50% to 1.50% 3.94% to 3.94% December 31, 2010 30 $10.86622 to $10.86622 $ 322 0.00% 1.50% to 1.50% 19.60% to 19.60% December 31, 2009 26 $ 9.08577 to $ 9.08577 $ 238 0.00% 1.50% to 1.50% 28.87% to 28.87% PROFUND VP CONSUMER GOODS PORTFOLIO (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2011 28 $11.20680 to $11.20680 $ 309 1.28% 1.50% to 1.50% 5.37% to 5.37% December 31, 2010 29 $10.63581 to $10.63581 $ 314 0.54% 1.50% to 1.50% 15.63% to 15.63% December 31, 2009 26 $ 9.19832 to $ 9.19832 $ 242 1.51% 1.50% to 1.50% 19.77% to 19.77% PROFUND VP FINANCIALS (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2011 83 $ 5.42982 to $ 5.54883 $ 461 0.00% 1.50% to 2.10% -15.60% to -15.10% December 31, 2010 77 $ 6.53605 to $ 6.53605 $ 503 0.29% 1.50% to 1.50% 9.29% to 9.29% December 31, 2009 62 $ 5.98047 to $ 5.98047 $ 372 2.43% 1.50% to 1.50% 13.31% to 13.31% PROFUND VP HEALTH CARE (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2011 34 $10.57454 to $10.80547 $ 367 0.31% 1.50% to 2.10% 7.85% to 8.49% December 31, 2010 37 $ 9.96007 to $ 9.96007 $ 373 0.28% 1.50% to 1.50% 1.32% to 1.32% December 31, 2009 32 $ 9.82996 to $ 9.82996 $ 313 0.89% 1.50% to 1.50% 17.79% to 17.79% PROFUND VP INDUSTRIALS (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2011 33 $ 8.80429 to $ 8.80429 $ 289 0.28% 1.50% to 1.50% -3.23% to -3.23% December 31, 2010 40 $ 9.09853 to $11.41249 $ 364 0.23% 1.50% to 1.55% 14.03% to 21.92% December 31, 2009 41 $ 7.46270 to $ 7.46270 $ 304 1.28% 1.50% to 1.50% 22.27% to 22.27% December 31, 2008 1 $ 6.10367 to $ 6.10367 $ 6 0.16% 1.50% to 1.50% -39.96% to -39.96% PROFUND VP MID-CAP GROWTH (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2011 9 $10.01888 to $10.23808 $ 87 0.00% 1.50% to 2.10% -4.89% to -4.33% December 31, 2010 8 $10.53374 to $10.70104 $ 89 0.00% 1.50% to 2.10% 25.78% to 26.52% December 31, 2009 7 $ 8.37491 to $ 8.45797 $ 62 0.00% 1.50% to 2.10% 35.47% to 36.27% PROFUND VP MID-CAP VALUE (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2011 9 $ 9.37296 to $ 9.44100 $ 81 0.15% 1.30% to 1.50% -5.34% to -5.16% December 31, 2010 7 $ 9.90192 to $ 9.90192 $ 71 0.29% 1.50% to 1.50% 18.67% to 18.67% December 31, 2009 10 $ 8.34400 to $ 8.34400 $ 85 1.42% 1.50% to 1.50% 28.94% to 28.94%
A67 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED ------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- ------- ---------- ----------------- ------------------ PROFUND VP REAL ESTATE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2011 12 $ 8.69881 to $ 8.82559 $ 110 0.00% 1.50% to 1.90% 2.80% to 3.20% December 31, 2010 16 $ 8.46186 to $11.54906 $ 133 3.89% 1.50% to 1.90% 15.86% to 22.85% December 31, 2009 18 $ 6.91515 to $ 6.96107 $ 122 3.45% 1.50% to 1.90% 25.51% to 26.01% PROFUND VP SMALL-CAP GROWTH (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2011 2 $10.47427 to $10.55029 $ 26 0.00% 1.30% to 1.50% -0.21% to -0.02% December 31, 2010 3 $10.49669 to $10.49669 $ 28 0.00% 1.50% to 1.50% 23.87% to 23.87% December 31, 2009 4 $ 8.47414 to $ 8.47414 $ 35 0.00% 1.50% to 1.50% 24.31% to 24.31% PROFUND VP SMALL-CAP VALUE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2011 2 $ 9.68994 to $ 9.68994 $ 19 0.00% 1.50% to 1.50% -5.52% to -5.52% December 31, 2010 2 $10.25585 to $10.25585 $ 25 0.10% 1.50% to 1.50% 20.30% to 20.30% December 31, 2009 2 $ 8.52534 to $ 8.52534 $ 20 0.41% 1.50% to 1.50% 18.62% to 18.62% PROFUND VP TELECOMMUNICATIONS (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2011 29 $ 8.80105 to $ 8.80105 $ 255 2.96% 1.50% to 1.50% 0.36% to 0.36% December 31, 2010 28 $ 8.76916 to $12.16509 $ 245 2.84% 1.50% to 1.55% 13.98% to 21.09% December 31, 2009 29 $ 7.69379 to $ 7.69379 $ 221 11.48% 1.50% to 1.50% 5.73% to 5.73% PROFUND VP UTILITIES (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2011 27 $ 9.38722 to $ 9.52393 $ 259 2.51% 1.50% to 1.90% 15.32% to 15.78% December 31, 2010 30 $ 8.14003 to $10.77660 $ 244 2.49% 1.50% to 1.90% 3.97% to 7.40% December 31, 2009 23 $ 7.82890 to $ 7.88054 $ 181 6.24% 1.50% to 1.90% 8.67% to 9.10% PROFUND VP LARGE-CAP GROWTH (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2011 4 $ 9.52935 to $ 9.73772 $ 37 0.00% 1.50% to 2.10% 1.01% to 1.61% December 31, 2010 5 $ 9.43387 to $ 9.58358 $ 46 0.07% 1.50% to 2.10% 10.86% to 11.51% December 31, 2009 8 $ 8.51005 to $ 8.59420 $ 65 0.00% 1.50% to 2.10% 27.07% to 27.82% PROFUND VP LARGE-CAP VALUE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2011 18 $ 7.99461 to $ 7.99461 $ 141 0.76% 1.50% to 1.50% -2.74% to -2.74% December 31, 2010 17 $ 8.21947 to $ 8.21947 $ 139 0.96% 1.50% to 1.50% 11.23% to 11.23% December 31, 2009 15 $ 7.38987 to $ 7.38987 $ 111 1.33% 1.50% to 1.50% 17.70% to 17.70% AST BOND PORTFOLIO 2020 (AVAILABLE ON JANUARY 02, 2009) ------------------------------------------------------------------------------------- December 31, 2011 66 $11.06416 to $12.41953 $ 746 1.13% 1.30% to 2.55% 15.73% to 17.15% December 31, 2010 331 $ 9.54633 to $10.66744 $ 3,199 0.00% 1.30% to 2.55% 6.10% to 10.41% December 31, 2009 0 $ 0.00000 to $ 0.00000 $ 0 0.00% 1.30% to 2.15% -6.43% to -5.91% AST JENNISON LARGE-CAP VALUE PORTFOLIO (AVAILABLE ON NOVEMBER 16, 2009) ------------------------------------------------------------------------------------- December 31, 2011 339 $ 8.50545 to $10.78439 $ 3,336 0.33% 0.55% to 2.45% -14.75% to -6.39% December 31, 2010 251 $10.51922 to $11.58869 $ 2,684 0.02% 1.15% to 2.45% 5.50% to 12.43% December 31, 2009 11 $10.29877 to $10.30741 $ 109 0.00% 1.15% to 1.80% 1.51% to 1.59% AST JENNISON LARGE-CAP GROWTH PORTFOLIO (AVAILABLE ON NOVEMBER 16, 2009) ------------------------------------------------------------------------------------- December 31, 2011 435 $10.49190 to $11.27814 $ 4,657 0.00% 0.55% to 2.70% -2.05% to 0.11% December 31, 2010 193 $10.71155 to $11.33263 $ 2,096 0.00% 1.15% to 2.70% 7.43% to 10.05% December 31, 2009 4 $10.29227 to $10.29766 $ 42 0.00% 1.15% to 1.55% 2.06% to 2.11% CREDIT SUISSE TRUST INTERNATIONAL EQUITY FLEX III PORTFOLIO (EXPIRED OCTOBER 21, 2011) ------------------------------------------------------------------------------------- December 31, 2011 0 $ 0 to $ 0 $ 0 2.99% 1.35% to 1.40% -16.52% to -16.48% December 31, 2010 85 $11.17366 to $11.17971 $ 945 0.10% 1.35% to 1.40% 10.68% to 10.74% December 31, 2009 96 $10.09539 to $10.09567 $ 973 0.00% 1.35% to 1.40% 0.28% to 0.28% AST BOND PORTFOLIO 2017 (AVAILABLE ON JANUARY 4, 2010) ------------------------------------------------------------------------------------- December 31, 2011 1,836 $11.37404 to $11.57526 $21,132 0.04% 1.90% to 2.85% 8.24% to 9.30% December 31, 2010 19 $10.52124 to $10.59081 $ 205 0.00% 1.90% to 2.70% 5.24% to 5.92% AST BOND PORTFOLIO 2021 (AVAILABLE ON JANUARY 4, 2010) ------------------------------------------------------------------------------------- December 31, 2011 2,642 $12.48861 to $13.14210 $33,532 0.06% 1.30% to 2.85% 16.88% to 18.76% December 31, 2010 396 $10.93130 to $11.06626 $ 4,359 0.00% 1.30% to 2.55% 9.31% to 10.66%
A68 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
AT YEAR ENDED FOR YEAR ENDED ------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- ------- ---------- ----------------- ------------------ WELLS FARGO ADVANTAGE VT CORE EQUITY PORTFOLIO SHARE CLASS 1 (EXPIRED AUGUST 26, 2011) ------------------------------------------------------------------------------------- December 31, 2011 0 $ 0 to $ 0 $ 0 1.10% 1.50% to 1.75% -11.77% to -11.63% December 31, 2010 22 $14.22981 to $14.47992 $ 313 0.00% 1.50% to 1.75% 22.51% to 22.65% WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY PORTFOLIO SHARE CLASS 1 (AVAILABLE ON JULY 16, 2010) ------------------------------------------------------------------------------------- December 31, 2011 17 $12.31349 to $12.56056 $ 206 0.63% 1.50% to 1.75% -14.29% to -14.08% December 31, 2010 17 $14.36608 to $14.61842 $ 242 0.00% 1.50% to 1.75% 20.88% to 21.01% WELLS FARGO ADVANTAGE VT OMEGA GROWTH PORTFOLIO SHARE CLASS 1 (AVAILABLE ON JULY 16, 2010) ------------------------------------------------------------------------------------- December 31, 2011 179 $ 1.82068 to $ 1.86164 $ 326 0.00% 1.50% to 1.75% -6.99% to -6.75% December 31, 2010 188 $ 1.95742 to $ 1.99650 $ 368 0.00% 1.50% to 1.75% 26.08% to 26.21% WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH PORTFOLIO SHARE CLASS 1**** (AVAILABLE ON JULY 16, 2010) ------------------------------------------------------------------------------------- December 31, 2011 0 $11.51170 to $11.51170 $ 0 0.00% 1.75% to 1.75% -5.98% to -5.98% December 31, 2010 0 $12.24453 to $12.24453 $ 0 0.00% 0.00% to 0.00% 27.64% to 27.64% WELLS FARGO ADVANTAGE VT SMALL CAP VALUE PORTFOLIO SHARE CLASS 1 (AVAILABLE ON JULY 16, 201 ------------------------------------------------------------------------------------- December 31, 2011 6 $10.77879 to $10.81752 $ 61 0.89% 1.50% to 1.75% -8.65% to -8.43% December 31, 2010 6 $11.79975 to $11.81311 $ 71 0.00% 1.50% to 1.75% 21.84% to 21.98% AST BOND PORTFOLIO 2022 (AVAILABLE ON JANUARY 3, 2011) ------------------------------------------------------------------------------------- December 31, 2011 1,302 $11.89255 to $12.08351 $15,604 0.00% 1.30% to 2.85% 18.93% to 20.84% AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO (AVAILABLE ON APRIL 29, 2011) ------------------------------------------------------------------------------------- December 31, 2011 4,835 $ 9.12583 to $ 9.21697 $44,314 0.00% 0.85% to 2.35% -8.74% to -7.82% WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND-CLASS 1 (AVAILABLE ON AUGUST 26, 2011) ------------------------------------------------------------------------------------- December 31, 2011 25 $10.70255 to $10.71170 $ 268 0.00% 1.50% to 1.75% 4.69% to 4.78% AST PRUDENTIAL CORE BOND PORTFOLIO (AVAILABLE ON OCTOBER 31, 2011) ------------------------------------------------------------------------------------- December 31, 2011 36 $10.06003 to $10.07683 $ 360 0.00% 1.30% to 2.25% 0.42% to 0.58% AST NEUBERGER BERMAN CORE BOND PORTFOLIO (AVAILABLE ON OCTOBER 31, 2011) ------------------------------------------------------------------------------------- December 31, 2011 44 $10.06278 to $10.07694 $ 444 0.00% 1.30% to 2.10% 0.35% to 0.48%
-------- * These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. This ratio is annualized and excludes those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded. ***These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Product designs within a subaccount with an effective date during a period were excluded from the range of total return for that period. Contract owners may experience different total returns based on their A69 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED) investment options. Investment options with a date notation indicate the effective date of that investment option in the Account. Total returns for periods less than one year are not annualized. The total return is calculated for each of the five years in the period ended December 31, 2011 or from the effective date of the subaccount through the end of the reporting period. ****Represents a fund containing less than 1,000 units and/or $1,000 in net assets. A. MORTALITY RISK AND EXPENSE RISK CHARGES The mortality risk and expense risk charges are applied daily against the net assets of the separate account attributable to each of the contracts. Mortality risk is that annuitants may live longer than estimated and expense risk is that the cost of issuing and administering the contracts may exceed related charges by Pruco Life of New Jersey. The mortality risk and expense risk charges are assessed through the reduction in unit values. B. ADMINISTRATION CHARGE The administration charge is applied daily against the net assets held in each subaccount. Administration charges include costs associated with issuing the contract, establishing and maintaining records, and providing reports to contract owners. This charge is assessed through the reduction in unit values.
ASSET-BASED CHARGE LEVEL DESCRIPTION OF WHEN APPLICABLE ------------ --------------------------------------------------------------------------- 0.55% Premier Retirement Advisor - No Optional Benefits 0.85% Premier Retirement Variable Annuity - No Optional Benefits 0.95% Premier Bb Series - No Optional Benefits Premier Retirement Advisor - With HAV 1.15% Premier B Series - No Optional Benefits Premier Retirement Advisor - With HD GRO II OR GRO Plus II 1.20% Premier Bb Series with HAV 1.30% Premier Bb Series - with HD GRO Premier Retirement B - No Optional Benefits 1.35% Discovery Choice Basic - No Optional Benefits Premier Bb Series - with HAV 1.40% No Optional Benefits Discovery Select Variable Annuity (0.15% Admin and 1.25% M&E) Strategic Partners Annuity One Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Strategic Partners Plus Enhanced - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor Premier B Series with HAV 1.50% No Optional Benefits Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier L Series Premier B Series with HD GRO 1.52% Strategic Partners Select GMDB with Step Up and Roll Up 1.55% Premier X Series - No Optional Benefits Premier B Series with HAV Premier Bb Series with LT5 or HD5 Premier Bb Series with HD GRO Premier Bb Series with HD GRO and HAV Premier Retirement Advisor - With HAV and HD GRO II OR HAV and GRO Plus II
A70 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
ASSET-BASED CHARGE LEVEL DESCRIPTION OF WHEN APPLICABLE ------------ ------------------------------------------------------------------------------------------ 1.60% No Optional Benefits Strategic Partners FlexElite GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Plus Strategic Partners Plus Enhanced - Non Bonus Version 1.65% Discovery Choice Enhanced - No Optional Benefit GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor with GMDB with Step Up and Roll Up 1.70% GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Plus Enhanced - Bonus Version GMDB with-Greater of Roll Up and Step Up Strategic Partners Annuity One Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Plus Enhanced - Non Bonus Version GMDB with Step Up and Roll Up Strategic Partners Plus Strategic Partners Plus Enhanced - Non Bonus Version Premier Bb Series with SLT5 and GMIB and HAV Premier Retirement B - With HAV Premier Retirement L - No Optional Benefits 1.75% Premier B Series with LT5 or HD5 or HD GRO GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier B Series with HD GRO and HAV Premier L Series with HAV Premier Retirement C - No Optional Benefits 1.80% Strategic Partners FlexElite with GMDB Annual Step Up or 5% Roll Up Strategic Partners Plus Enhanced - Bonus Version with GMDB with Step Up and Roll Up Strategic Partners Annuity One Enhanced - Bonus Version with GMDB with Greater of Roll Up and Step Up Premier X Series with HAV Premier Bb Series with LT5 or HD5 and HAV Premier Bb Series with HD GRO and HAV 1.85% Premier L Series with HD GRO Premier Retirement X - No Optional Benefits 1.90% Premier B Series with SLT5 Premier L Series with HAV Strategic Partners FlexElite with GMDB with Greater of Roll Up and Step Up Premier X Series with HD GRO Premier Retirement B - With HD GRO II OR GRO Plus II 1.95% Premier Bb Series with GMIB and HDV or Combo Premier X Series with HAV Premier Bb Series with HD GRO and HAV 2.00% With LT5 or HD5 Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor Premier B Series with LT5 Premier B Series with HD5 and HAV Premier B Series with HD GRO and HAV
A71 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED)
ASSET-BASED CHARGE LEVEL DESCRIPTION OF WHEN APPLICABLE ------------ ------------------------------------------------------------------------------------------- 2.10% With LT5 or HD5 Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier L Series Premier L Series with HD GRO Premier L Series with HD GRO and HAV Premier Retirement L - With HAV 2.15% With SLT5 Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Premier B Series with HD GRO and HAV Premier X Series with LT5 or HD5 Premier X Series with HD GRO Premier X Series with HD GRO and HAV Premier Retirement C - With HAV 2.20% With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Plus Enhanced - Non Bonus Version 2.25% With SLT5 Premier L Series Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor with LT5 or HD5 and GMDB with Step Up and Roll Up Premier Retirement X - With HAV 2.30% Premier X Series with SLT5 Strategic Partners Plus Enhanced - Non Bonus Version with LT5 or HD5 and GMDB with Step Up and Roll Up With LT5 or HD5 and GMDB with Greater of Roll Up and Step Up Strategic Partners Annuity One Enhanced - Non Bonus Version With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Plus Enhanced - Bonus Version Premier Retirement B - With HAV and HD GRO II OR HAV and GRO Plus II Premier Retirement L - With HD GRO II OR GRO Plus II 2.35% With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier L Series with LT5 Premier L Series with HD5 and HAV Premier L Series with HD GRO and HAV Premier Retirement C - With HD GRO II OR GRO Plus II 2.40% With LT5 or HD5 and GMDB with Greater of Roll Up and Step Up Strategic Partners Annuity One Enhanced - Bonus Version With LT5 or HD5 and GMDB with Step Up and Roll Up Strategic Partners Plus Enhanced - Bonus Version Premier X Series with LT5 Premier X Series with HD5 and HAV Premier X Series with HD GRO and HAV 2.45% Premier Retirement X - With HD GRO II OR GRO Plus II 2.50% Premier L Series with HD GRO and HAV 2.55% Premier X Series with HD GRO and HAV 2.70% Premier Retirement L - With HAV and HD GRO II OR HAV and GRO Plus II 2.75% Premier Retirement C - With HAV and HD GRO II OR HAV and GRO Plus II 2.85% Premier Retirement X - With HAV and HD GRO II OR HAV and GRO Plus II
A72 NOTE 7: FINANCIAL HIGHLIGHTS (CONTINUED) C. WITHDRAWAL CHARGES A deferred sales charge may be made upon full or partial contract owner redemptions. The charge compensates Pruco Life of New Jersey for paying the expenses of selling and distributing the contracts, including sales commissions, printing of prospectuses, sales administration, preparation of sales literature, and other promotional activities. No withdrawal charge is imposed whenever earnings are withdrawn. The range for withdrawal charges is 0%-9%. The charge is assessed through the redemption of units. D. OTHER RELATED CHARGES For Highest Daily Lifetime Seven, Highest Daily Lifetime Seven with Beneficiary Income Option, Highest Daily Lifetime Seven with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven with Beneficiary Income Option, the Optional Benefit Fee is a percentage of the Protected Withdrawal Value and is deducted pro rata from the Subaccounts on a quarterly basis. For Highest Daily Lifetime Income, Highest Daily Lifetime Income with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Income, Highest Daily Lifetime Six Plus, Highest Daily Lifetime Six Plus with Beneficiary Income Option, Highest Daily Lifetime Six Plus with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Six Plus, and Spousal Highest Daily Lifetime Six Plus with Beneficiary Income Option, Highest Daily Lifetime Seven Plus, Highest Daily Lifetime Seven Plus with Beneficiary Income Option, Highest Daily Lifetime Seven Plus with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Seven Plus, and Spousal Highest Daily Lifetime Seven Plus with Beneficiary Income Option, the Optional Benefit Fee is assessed against the greater of the unadjusted account value or the Protected Withdrawal Value and is deducted pro rata from the Subaccounts on a quarterly basis. An annual Maintenance Fee is charged if purchase payments or account is less than a stated amount (varies by product). NOTE 8: OTHER Contract owner net payments--represent contract owner contributions under the Variable Annuity Policies reduced by applicable deductions, charges, and state premium taxes. Annuity payments--represent periodic payments distributed under the terms of the policy. Surrenders, withdrawals, and death benefits--are payments to contract owners and beneficiaries made under the terms of the Variable Annuity Policies, and amounts that contract owners have requested to be withdrawn or paid to them. Net transfers between other subaccounts or fixed rate options--are amounts that contract owners have directed to be moved among subaccounts, including permitted transfers to and from the Guaranteed Interest Account and Market Value Adjustment. Withdrawals and other charges--are various contract level charges as described in contract charges and features section located above. A73 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Contract Owners of Pruco Life of New Jersey Flexible Premium Variable Annuity Account and the Board of Directors of Pruco Life Insurance Company of New Jersey In our opinion, the accompanying statements of net assets and the related statements of operations and of changes in net assets present fairly, in all material respects, the financial position of each of the subaccounts listed in Note 1 of the Pruco Life of New Jersey Flexible Premium Variable Annuity Account at December 31, 2011, and the results of each of their operations and the changes in each of their net assets for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of Pruco Life Insurance Company of New Jersey. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments at December 31, 2011 by correspondence with the transfer agents of the investee mutual funds, provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York April 12, 2012 A74 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS -------------------------------------------------------------------------- PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL MONEY MARKET DIVERSIFIED BOND PRUDENTIAL EQUITY VALUE HIGH YIELD PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO BOND PORTFOLIO ------------ ---------------- ----------------- ----------- -------------- ASSETS Investment in the portfolios, at fair value................................... $15,400,747 $25,549,699 $20,375,085 $28,401,782 $21,224,146 ----------- ----------- ----------- ----------- ----------- Net Assets............................... $15,400,747 $25,549,699 $20,375,085 $28,401,782 $21,224,146 =========== =========== =========== =========== =========== NET ASSETS, representing: Accumulation units....................... $15,400,747 $25,549,699 $20,375,085 $28,401,782 $21,224,146 ----------- ----------- ----------- ----------- ----------- $15,400,747 $25,549,699 $20,375,085 $28,401,782 $21,224,146 =========== =========== =========== =========== =========== Units outstanding........................ 12,368,609 10,432,889 9,308,349 12,843,377 5,736,847 =========== =========== =========== =========== =========== Portfolio shares held.................... 1,540,075 2,150,648 759,981 1,571,764 4,035,009 Portfolio net asset value per share...... $ 10.00 $ 11.88 $ 26.81 $ 18.07 $ 5.26 Investment in portfolio shares, at cost.. $15,400,747 $23,884,603 $20,462,994 $30,181,131 $21,400,447 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS -------------------------------------------------------------------------- PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL MONEY MARKET DIVERSIFIED BOND PRUDENTIAL EQUITY VALUE HIGH YIELD PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO BOND PORTFOLIO ------------ ---------------- ----------------- ----------- -------------- INVESTMENT INCOME Dividend income.......................... $ 2,180 $ 1,141,701 $ 124,434 $ 284,698 $ 1,485,527 ----------- ----------- ----------- ----------- ----------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 246,961 364,804 299,043 426,612 315,652 Reimbursement for excess expenses........ 0 0 0 0 0 ----------- ----------- ----------- ----------- ----------- NET EXPENSES............................... 246,961 364,804 299,043 426,612 315,652 ----------- ----------- ----------- ----------- ----------- NET INVESTMENT INCOME (LOSS)............... (244,782) 776,896 (174,609) (141,914) 1,169,875 ----------- ----------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 0 1,139,718 0 0 0 Realized gain (loss) on shares redeemed................................ 0 255,645 (25,831) (455,486) (80,810) Net change in unrealized gain (loss) on investments............................. 0 121,486 2,600,794 4,147,124 1,483,484 ----------- ----------- ----------- ----------- ----------- NET GAIN (LOSS) ON INVESTMENTS............................. 0 1,516,850 2,574,963 3,691,638 1,402,674 ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ (244,782) $ 2,293,746 $ 2,400,354 $ 3,549,724 $ 2,572,549 =========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A1
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------------- PRUDENTIAL PRUDENTIAL PRUDENTIAL SMALL T. ROWE PRICE T. ROWE PRICE JANUS ASPEN JANUS PRUDENTIAL STOCK GLOBAL JENNISON CAPITALIZATION INTERNATIONAL EQUITY INCOME INVESCO V.I. CORE PORTFOLIO - INDEX PORTFOLIO PORTFOLIO PORTFOLIO STOCK PORTFOLIO STOCK PORTFOLIO PORTFOLIO EQUITY FUND INSTITUTIONAL SHARES ---------------- ---------- ----------- --------------- --------------- ------------- ----------------- -------------------- $23,537,089 $5,575,078 $23,688,274 $4,435,232 $1,837,735 $6,444,866 $9,074,698 $5,085,360 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $23,537,089 $5,575,078 $23,688,274 $4,435,232 $1,837,735 $6,444,866 $9,074,698 $5,085,360 =========== ========== =========== ========== ========== ========== ========== ========== $23,537,089 $5,575,078 $23,688,274 $4,435,232 $1,837,735 $6,444,866 $9,074,698 $5,085,360 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $23,537,089 $5,575,078 $23,688,274 $4,435,232 $1,837,735 $6,444,866 $9,074,698 $5,085,360 =========== ========== =========== ========== ========== ========== ========== ========== 12,163,692 3,127,004 11,490,600 1,447,624 1,239,510 2,698,038 4,530,883 2,872,755 =========== ========== =========== ========== ========== ========== ========== ========== 660,227 284,879 877,994 238,967 132,211 289,397 301,085 192,263 $ 35.65 $ 19.57 $ 26.98 $ 18.56 $ 13.90 $ 22.27 $ 30.14 $ 26.45 $21,526,528 $5,471,654 $20,097,455 $3,918,005 $1,779,458 $5,715,445 $7,370,095 $4,978,064 SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------------- PRUDENTIAL PRUDENTIAL PRUDENTIAL SMALL T. ROWE PRICE T. ROWE PRICE JANUS ASPEN JANUS PRUDENTIAL STOCK GLOBAL JENNISON CAPITALIZATION INTERNATIONAL EQUITY INCOME INVESCO V.I. CORE PORTFOLIO - INDEX PORTFOLIO PORTFOLIO PORTFOLIO STOCK PORTFOLIO STOCK PORTFOLIO PORTFOLIO EQUITY FUND INSTITUTIONAL SHARES ---------------- ---------- ----------- --------------- --------------- ------------- ----------------- -------------------- $ 415,771 $ 89,939 $ 39,056 $ 27,486 $ 22,345 $ 139,979 $ 88,593 $ 28,653 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 354,630 80,315 356,134 62,666 24,376 91,428 128,904 73,058 0 0 0 0 0 0 0 0 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 354,630 80,315 356,134 62,666 24,376 91,428 128,904 73,058 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 61,141 9,625 (317,078) (35,179) (2,032) 48,551 (40,311) (44,406) ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 73,521 0 0 228,962 0 0 0 89,288 348,859 (10,604) 592,328 64,391 (2,769) 78,505 204,223 (6,820) 2,762,567 815,282 3,102,356 349,869 277,759 819,802 912,898 780,632 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 3,184,947 804,678 3,694,683 643,222 274,990 898,307 1,117,121 863,100 ----------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $ 3,246,088 $ 814,302 $ 3,377,606 $ 608,042 $ 272,959 $ 946,859 $1,076,810 $ 818,694 =========== ========== =========== ========== ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A2 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS ---------------------------------------------------------------------- JANUS ASPEN FTVIP FRANKLIN OVERSEAS MFS(R) MFS(R) SMALL-MID CAP PORTFOLIO - RESEARCH GROWTH AMERICAN GROWTH INSTITUTIONAL SERIES - SERIES - CENTURY VP SECURITIES FUND - SHARES INITIAL CLASS INITIAL CLASS VALUE FUND CLASS 2 ------------- ------------- ------------- ---------- ----------------- ASSETS Investment in the portfolios, at fair value................................... $8,556,231 $1,601,446 $5,897,749 $2,317,673 $2,702,927 ---------- ---------- ---------- ---------- ---------- Net Assets............................... $8,556,231 $1,601,446 $5,897,749 $2,317,673 $2,702,927 ========== ========== ========== ========== ========== NET ASSETS, representing: Accumulation units....................... $8,556,231 $1,601,446 $5,897,749 $2,317,673 $2,702,927 ---------- ---------- ---------- ---------- ---------- $8,556,231 $1,601,446 $5,897,749 $2,317,673 $2,702,927 ========== ========== ========== ========== ========== Units outstanding........................ 2,538,273 852,060 3,081,086 1,041,468 1,402,007 ========== ========== ========== ========== ========== Portfolio shares held.................... 225,401 73,293 204,570 355,471 128,466 Portfolio net asset value per share...... $ 37.96 $ 21.85 $ 28.83 $ 6.52 $ 21.04 Investment in portfolio shares, at cost.. $7,389,136 $1,283,275 $4,806,175 $2,329,949 $2,663,090 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS ---------------------------------------------------------------------- JANUS ASPEN FTVIP FRANKLIN OVERSEAS MFS(R) MFS(R) SMALL-MID CAP PORTFOLIO - RESEARCH GROWTH AMERICAN GROWTH INSTITUTIONAL SERIES - SERIES - CENTURY VP SECURITIES FUND - SHARES INITIAL CLASS INITIAL CLASS VALUE FUND CLASS 2 ------------- ------------- ------------- ---------- ----------------- INVESTMENT INCOME Dividend income.......................... $ 59,768 $ 12,894 $ 0 $ 45,961 $ 0 ---------- ---------- ---------- ---------- ---------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 120,813 22,879 83,026 33,573 38,481 Reimbursement for excess expenses........ 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- NET EXPENSES............................... 120,813 22,879 83,026 33,573 38,481 ---------- ---------- ---------- ---------- ---------- NET INVESTMENT INCOME (LOSS)............... (61,045) (9,985) (83,026) 12,388 (38,481) ---------- ---------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 915,648 0 0 0 198,220 Realized gain (loss) on shares redeemed................................ 203,028 45,260 129,543 (25,601) 7,673 Net change in unrealized gain (loss) on investments............................. (74,237) 206,058 834,252 303,551 75,483 ---------- ---------- ---------- ---------- ---------- NET GAIN (LOSS) ON INVESTMENTS............................. 1,044,439 251,318 963,796 277,950 281,376 ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 983,394 $ 241,332 $ 880,770 $ 290,339 $ 242,895 ========== ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A3
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------ PRUDENTIAL SP ALLIANCEBERNSTEIN PRUDENTIAL PRUDENTIAL PRUDENTIAL SP PRUDENTIAL VPS LARGE CAP SP SMALL JANUS ASPEN JANUS U.S. EMERGING INTERNATIONAL PRUDENTIAL SP JENNISON 20/20 DAVIS VALUE GROWTH PORTFOLIO CAP VALUE PORTFOLIO - SERVICE GROWTH GROWTH INTERNATIONAL FOCUS PORTFOLIO PORTFOLIO CLASS B PORTFOLIO SHARES PORTFOLIO PORTFOLIO VALUE PORTFOLIO --------------- ----------- ----------------- ---------- ------------------- ------------- ------------- --------------- $4,016,134 $2,130,939 $457,152 $9,189,254 $389,239 $8,478,809 $2,642,339 $2,374,218 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- $4,016,134 $2,130,939 $457,152 $9,189,254 $389,239 $8,478,809 $2,642,339 $2,374,218 ========== ========== ======== ========== ======== ========== ========== ========== $4,016,134 $2,130,939 $457,152 $9,189,254 $389,239 $8,478,809 $2,642,339 $2,374,218 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- $4,016,134 $2,130,939 $457,152 $9,189,254 $389,239 $8,478,809 $2,642,339 $2,374,218 ========== ========== ======== ========== ======== ========== ========== ========== 2,215,043 1,842,533 671,147 4,681,532 354,179 3,841,916 1,850,761 1,533,494 ========== ========== ======== ========== ======== ========== ========== ========== 252,111 194,962 15,048 670,748 14,896 1,005,790 498,555 358,643 $ 15.93 $ 10.93 $ 30.38 $ 13.70 $ 26.13 $ 8.43 $ 5.30 $ 6.62 $3,427,540 $2,159,721 $429,619 $8,319,087 $304,117 $7,259,235 $3,096,296 $2,904,011 SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------ PRUDENTIAL SP ALLIANCEBERNSTEIN PRUDENTIAL PRUDENTIAL PRUDENTIAL SP PRUDENTIAL VPS LARGE CAP SP SMALL JANUS ASPEN JANUS U.S. EMERGING INTERNATIONAL PRUDENTIAL SP JENNISON 20/20 DAVIS VALUE GROWTH PORTFOLIO CAP VALUE PORTFOLIO - SERVICE GROWTH GROWTH INTERNATIONAL FOCUS PORTFOLIO PORTFOLIO CLASS B PORTFOLIO SHARES PORTFOLIO PORTFOLIO VALUE PORTFOLIO --------------- ----------- ----------------- ---------- ------------------- ------------- ------------- --------------- $ 0 $ 34,916 $ 145 $ 43,998 $ 1,886 $ 37,960 $ 17,839 $ 67,583 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- 57,052 30,093 6,848 149,992 7,106 142,745 42,511 39,548 0 0 0 0 0 0 0 0 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- 57,052 30,093 6,848 149,992 7,106 142,745 42,511 39,548 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- (57,052) 4,823 (6,703) (105,994) (5,221) (104,785) (24,673) 28,036 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- 142,038 128,020 0 0 7,934 654,025 0 0 82,708 5,966 4,568 77,414 24,779 319,389 (172,428) (250,350) 204,349 97,350 69,422 1,310,579 38,273 445,233 695,469 577,066 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- 429,094 231,336 73,990 1,387,993 70,986 1,418,647 523,041 326,716 ---------- ---------- -------- ---------- -------- ---------- ---------- ---------- $ 372,042 $ 236,159 $ 67,287 $1,281,999 $ 65,765 $1,313,862 $ 498,369 $ 354,752 ========== ========== ======== ========== ======== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A4 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS ------------------------------------------------------------------------------- AST AST SCHRODERS AST J.P. MORGAN GOLDMAN SACHS AST AMERICAN MULTI-ASSET WORLD AST COHEN & STRATEGIC LARGE-CAP CENTURY INCOME & STRATEGIES STEERS REALTY OPPORTUNITIES VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------------- ---------------- ----------------- ------------- --------------- ASSETS Investment in the portfolios, at fair value................................... $14,804,482 $ (0) $163,821,978 $18,830,252 $144,461,910 ----------- ---------- ------------ ----------- ------------ Net Assets............................... $14,804,482 $ (0) $163,821,978 $18,830,252 $144,461,910 =========== ========== ============ =========== ============ NET ASSETS, representing: Accumulation units....................... $14,804,482 $ 0 $163,821,978 $18,830,252 $144,461,910 ----------- ---------- ------------ ----------- ------------ $14,804,482 $ 0 $163,821,978 $18,830,252 $144,461,910 =========== ========== ============ =========== ============ Units outstanding........................ 1,312,699 (0) 14,548,632 1,350,938 12,551,418 =========== ========== ============ =========== ============ Portfolio shares held.................... 840,209 0 11,853,978 2,565,429 10,281,986 Portfolio net asset value per share...... $ 17.62 $ 0 $ 13.82 $ 7.34 $ 14.05 Investment in portfolio shares, at cost.. $13,182,391 $ (0) $155,268,094 $17,216,407 $133,529,218 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS ------------------------------------------------------------------------------- AST AST SCHRODERS AST J.P. MORGAN GOLDMAN SACHS AST AMERICAN MULTI-ASSET WORLD AST COHEN & STRATEGIC LARGE-CAP CENTURY INCOME & STRATEGIES STEERS REALTY OPPORTUNITIES VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------------- ---------------- ----------------- ------------- --------------- INVESTMENT INCOME Dividend income.......................... $ 129,065 $ 0 $ 2,814,567 $ 195,658 $ 1,716,155 ----------- ---------- ------------ ----------- ------------ EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 199,329 85,753 2,409,691 251,562 1,959,776 Reimbursement for excess expenses........ 0 0 0 0 0 ----------- ---------- ------------ ----------- ------------ NET EXPENSES............................... 199,329 85,753 2,409,691 251,562 1,959,776 ----------- ---------- ------------ ----------- ------------ NET INVESTMENT INCOME (LOSS)............... (70,264) (85,753) 404,876 (55,904) (243,621) ----------- ---------- ------------ ----------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 0 0 0 0 0 Realized gain (loss) on shares redeemed................................ 207,666 1,719,868 649,719 351,957 952,250 Net change in unrealized gain (loss) on investments............................. 1,644,817 (604,836) 9,970,290 1,237,297 8,423,788 ----------- ---------- ------------ ----------- ------------ NET GAIN (LOSS) ON INVESTMENTS............................. 1,852,484 1,115,032 10,620,010 1,589,254 9,376,038 ----------- ---------- ------------ ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 1,782,220 $1,029,280 $ 11,024,886 $ 1,533,349 $ 9,132,418 =========== ========== ============ =========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A5
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------------------------------------------------- AST GOLDMAN AST FEDERATED SACHS AST GOLDMAN AST BLACKROCK AST HIGH YIELD AGGRESSIVE AST MID-CAP AST SMALL-CAP CONCENTRATED SACHS MID-CAP AST LARGE-CAP VALUE PORTFOLIO PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO --------------- -------------- ---------------- --------------- --------------- ---------------- ---------------- --------------- $13,689,815 $21,590,509 $14,553,898 $9,840,223 $8,843,631 $15,908,158 $21,760,590 $14,774,555 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- $13,689,815 $21,590,509 $14,553,898 $9,840,223 $8,843,631 $15,908,158 $21,760,590 $14,774,555 =========== =========== =========== ========== ========== =========== =========== =========== $13,689,815 $21,590,509 $14,553,898 $9,840,223 $8,843,631 $15,908,158 $21,760,590 $14,774,555 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- $13,689,815 $21,590,509 $14,553,898 $9,840,223 $8,843,631 $15,908,158 $21,760,590 $14,774,555 =========== =========== =========== ========== ========== =========== =========== =========== 1,193,778 1,737,157 1,223,055 778,074 726,993 1,312,965 1,659,188 1,417,423 =========== =========== =========== ========== ========== =========== =========== =========== 1,436,497 2,818,604 1,511,308 733,251 592,737 507,599 4,144,874 1,040,462 $ 9.53 $ 7.66 $ 9.63 $ 13.42 $ 14.92 $ 31.34 $ 5.25 $ 14.20 $12,800,065 $20,508,783 $13,646,030 $8,738,835 $7,829,268 $14,127,662 $20,978,804 $14,393,564 SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------------------------------------------------- AST GOLDMAN AST FEDERATED SACHS AST GOLDMAN AST BLACKROCK AST HIGH YIELD AGGRESSIVE AST MID-CAP AST SMALL-CAP CONCENTRATED SACHS MID-CAP AST LARGE-CAP VALUE PORTFOLIO PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO --------------- -------------- ---------------- --------------- --------------- ---------------- ---------------- --------------- $ 116,991 $ 1,033,431 $ 0 $ 37,060 $ 30,797 $ 30,786 $ 0 $ 353,461 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 187,773 296,837 212,143 144,392 129,414 212,584 288,568 168,021 0 0 0 0 0 0 0 0 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 187,773 296,837 212,143 144,392 129,414 212,584 288,568 168,021 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- (70,782) 736,594 (212,143) (107,332) (98,616) (181,799) (288,568) 185,440 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 0 0 0 32,967 0 0 1,788,797 0 80,094 198,589 297,998 217,403 186,176 394,306 288,440 (56,104) 907,248 970,177 1,502,577 959,471 877,635 1,585,979 535,464 1,321,717 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 987,342 1,168,766 1,800,575 1,209,841 1,063,811 1,980,286 2,612,701 1,265,613 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- $ 916,560 $ 1,905,360 $ 1,588,431 $1,102,509 $ 965,195 $ 1,798,487 $ 2,324,133 $ 1,451,053 =========== =========== =========== ========== ========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A6 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS ---------------------------------------------------------------------------- AST NEUBERGER AST LORD ABBETT AST MARSICO AST NEUBERGER BERMAN / LSV CORE FIXED CAPITAL GROWTH AST MFS GROWTH BERMAN MID-CAP MID-CAP VALUE INCOME PORTFOLIO PORTFOLIO PORTFOLIO GROWTH PORTFOLIO PORTFOLIO ---------------- -------------- -------------- ---------------- ------------- ASSETS Investment in the portfolios, at fair value................................... $41,194,293 $30,011,751 $10,767,609 $19,517,409 $15,761,970 ----------- ----------- ----------- ----------- ----------- Net Assets............................... $41,194,293 $30,011,751 $10,767,609 $19,517,409 $15,761,970 =========== =========== =========== =========== =========== NET ASSETS, representing: Accumulation units....................... $41,194,293 $30,011,751 $10,767,609 $19,517,409 $15,761,970 ----------- ----------- ----------- ----------- ----------- $41,194,293 $30,011,751 $10,767,609 $19,517,409 $15,761,970 =========== =========== =========== =========== =========== Units outstanding........................ 3,352,512 2,543,256 893,995 1,510,695 1,288,697 =========== =========== =========== =========== =========== Portfolio shares held.................... 3,582,112 1,405,045 963,976 799,566 929,910 Portfolio net asset value per share...... $ 11.50 $ 21.36 $ 11.17 $ 24.41 $ 16.95 Investment in portfolio shares, at cost.. $40,001,857 $27,942,247 $ 9,738,480 $18,065,049 $14,132,111 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS ---------------------------------------------------------------------------- AST NEUBERGER AST LORD ABBETT AST MARSICO AST NEUBERGER BERMAN / LSV CORE FIXED CAPITAL GROWTH AST MFS GROWTH BERMAN MID-CAP MID-CAP VALUE INCOME PORTFOLIO PORTFOLIO PORTFOLIO GROWTH PORTFOLIO PORTFOLIO ---------------- -------------- -------------- ---------------- ------------- INVESTMENT INCOME Dividend income.......................... $ 358,091 $ 97,729 $ 0 $ 0 $ 124,483 ----------- ----------- ----------- ----------- ----------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 510,349 449,884 134,732 270,677 223,781 Reimbursement for excess expenses........ 0 0 0 0 0 ----------- ----------- ----------- ----------- ----------- NET EXPENSES............................... 510,349 449,884 134,732 270,677 223,781 ----------- ----------- ----------- ----------- ----------- NET INVESTMENT INCOME (LOSS)............... (152,258) (352,155) (134,732) (270,677) (99,298) ----------- ----------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 851,791 0 0 0 0 Realized gain (loss) on shares redeemed................................ 218,595 673,619 203,666 384,771 227,472 Net change in unrealized gain (loss) on investments............................. 321,933 1,569,539 890,109 1,045,463 1,438,918 ----------- ----------- ----------- ----------- ----------- NET GAIN (LOSS) ON INVESTMENTS............................. 1,392,320 2,243,158 1,093,775 1,430,235 1,666,390 ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 1,240,062 $ 1,891,002 $ 959,043 $ 1,159,558 $ 1,567,091 =========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A7
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------- AST T. ROWE AST T. ROWE AST T. ROWE AST PIMCO PRICE EQUITY AST QMA US PRICE NATURAL PRICE ASSET AST JPMORGAN AST T. ROWE LIMITED MATURITY INCOME EQUITY ALPHA RESOURCES ALLOCATION AST MFS GLOBAL INTERNATIONAL PRICE GLOBAL BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO EQUITY PORTFOLIO EQUITY PORTFOLIO BOND PORTFOLIO ---------------- ------------ ------------ ------------- ------------ ---------------- ---------------- -------------- $21,291,795 $20,789,254 $7,120,449 $29,949,908 $550,691,991 $14,766,508 $19,759,279 $17,671,374 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- $21,291,795 $20,789,254 $7,120,449 $29,949,908 $550,691,991 $14,766,508 $19,759,279 $17,671,374 =========== =========== ========== =========== ============ =========== =========== =========== $21,291,795 $20,789,254 $7,120,449 $29,949,908 $550,691,991 $14,766,508 $19,759,279 $17,671,374 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- $21,291,795 $20,789,254 $7,120,449 $29,949,908 $550,691,991 $14,766,508 $19,759,279 $17,671,374 =========== =========== ========== =========== ============ =========== =========== =========== 1,960,957 1,858,286 566,643 2,949,646 45,496,718 1,163,913 1,785,072 1,565,870 =========== =========== ========== =========== ============ =========== =========== =========== 2,012,457 2,188,342 523,562 1,520,300 28,877,399 1,244,019 890,058 1,579,211 $ 10.58 $ 9.50 $ 13.60 $ 19.70 $ 19.07 $ 11.87 $ 22.20 $ 11.19 $21,317,450 $18,877,996 $6,539,855 $30,326,997 $505,981,779 $12,836,854 $17,466,766 $17,520,676 SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------------------- AST T. ROWE AST T. ROWE AST T. ROWE AST PIMCO PRICE EQUITY AST QMA US PRICE NATURAL PRICE ASSET AST JPMORGAN AST T. ROWE LIMITED MATURITY INCOME EQUITY ALPHA RESOURCES ALLOCATION AST MFS GLOBAL INTERNATIONAL PRICE GLOBAL BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO EQUITY PORTFOLIO EQUITY PORTFOLIO BOND PORTFOLIO ---------------- ------------ ------------ ------------- ------------ ---------------- ---------------- -------------- $ 258,485 $ 25,073 $ 41,348 $ 108,212 $ 5,116,398 $ 121,058 $ 280,999 $ 361,781 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- 329,353 244,565 95,332 445,804 6,933,632 190,325 276,841 248,388 0 0 0 0 0 0 0 0 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- 329,353 244,565 95,332 445,804 6,933,632 190,325 276,841 248,388 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- (70,868) (219,492) (53,984) (337,592) (1,817,234) (69,267) 4,158 113,393 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- 633,956 0 0 0 3,244,064 0 0 251,729 (8,495) 272,418 210,908 (938,086) 3,780,200 243,678 47,047 31,346 44,946 1,711,409 534,982 1,295,662 34,237,999 1,903,728 2,750,619 118,159 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- 670,407 1,983,827 745,890 357,576 41,262,263 2,147,406 2,797,666 401,234 ----------- ----------- ---------- ----------- ------------ ----------- ----------- ----------- $ 599,540 $ 1,764,335 $ 691,906 $ 19,984 $ 39,445,029 $ 2,078,139 $ 2,801,824 $ 514,628 =========== =========== ========== =========== ============ =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A8 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS ----------------------------------------------------------------------- AST ACADEMIC AST AST WELLINGTON AST CAPITAL STRATEGIES AST BALANCED PRESERVATION MANAGEMENT GROWTH ASSET ASSET ASSET ASSET HEDGED ALLOCATION ALLOCATION ALLOCATION ALLOCATION EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------------- ------------ ------------ ------------ ------------ ASSETS Investment in the portfolios, at fair value................................... $39,949,959 $337,550,536 $348,772,697 $532,182,338 $426,840,024 ----------- ------------ ------------ ------------ ------------ Net Assets............................... $39,949,959 $337,550,536 $348,772,697 $532,182,338 $426,840,024 =========== ============ ============ ============ ============ NET ASSETS, representing: Accumulation units....................... $39,949,959 $337,550,536 $348,772,697 $532,182,338 $426,840,024 ----------- ------------ ------------ ------------ ------------ $39,949,959 $337,550,536 $348,772,697 $532,182,338 $426,840,024 =========== ============ ============ ============ ============ Units outstanding........................ 4,100,061 29,647,790 30,992,629 45,923,327 36,655,273 =========== ============ ============ ============ ============ Portfolio shares held.................... 4,015,071 29,557,840 30,513,797 45,369,338 35,422,409 Portfolio net asset value per share...... $ 9.95 $ 11.42 $ 11.43 $ 11.73 $ 12.05 Investment in portfolio shares, at cost.. $37,520,076 $310,927,252 $320,394,491 $491,616,071 $407,149,474 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS ----------------------------------------------------------------------- AST ACADEMIC AST AST WELLINGTON AST CAPITAL STRATEGIES AST BALANCED PRESERVATION MANAGEMENT GROWTH ASSET ASSET ASSET ASSET HEDGED ALLOCATION ALLOCATION ALLOCATION ALLOCATION EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------------- ------------ ------------ ------------ ------------ INVESTMENT INCOME Dividend income.......................... $ 74,461 $ 2,300,420 $ 3,069,302 $ 4,228,995 $ 3,813,902 ----------- ------------ ------------ ------------ ------------ EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 480,906 5,041,229 5,552,386 7,788,468 5,950,363 Reimbursement for excess expenses........ 0 0 0 0 0 ----------- ------------ ------------ ------------ ------------ NET EXPENSES............................... 480,906 5,041,229 5,552,386 7,788,468 5,950,363 ----------- ------------ ------------ ------------ ------------ NET INVESTMENT INCOME (LOSS)............... (406,446) (2,740,809) (2,483,084) (3,559,473) (2,136,461) ----------- ------------ ------------ ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 0 0 0 13,537,034 19,769,310 Realized gain (loss) on shares redeemed................................ 256,583 4,530,791 3,262,162 5,104,906 1,988,511 Net change in unrealized gain (loss) on investments............................. 2,226,379 25,645,314 27,729,344 26,157,340 6,895,289 ----------- ------------ ------------ ------------ ------------ NET GAIN (LOSS) ON INVESTMENTS............................. 2,482,962 30,176,105 30,991,506 44,799,280 28,653,110 ----------- ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 2,076,516 $ 27,435,296 $ 28,508,422 $ 41,239,807 $ 26,516,649 =========== ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A9
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------- AST FIRST AST FIRST AST T. ROWE TRUST TRUST CAPITAL AST PRICE AST AST BALANCED APPRECIATION ADVANCED LARGE-CAP AST MONEY SMALL-CAP AST PIMCO INTERNATIONAL TARGET TARGET STRATEGIES GROWTH MARKET GROWTH TOTAL RETURN VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO ------------ ------------- ------------ ----------- ----------- ----------- -------------- ------------- $248,028,103 $222,116,253 $379,954,133 $34,617,197 $19,916,588 $13,871,106 $247,468,156 $7,387,404 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- $248,028,103 $222,116,253 $379,954,133 $34,617,197 $19,916,588 $13,871,106 $247,468,156 $7,387,404 ============ ============ ============ =========== =========== =========== ============ ========== $248,028,103 $222,116,253 $379,954,133 $34,617,197 $19,916,588 $13,871,106 $247,468,156 $7,387,404 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- $248,028,103 $222,116,253 $379,954,133 $34,617,197 $19,916,588 $13,871,106 $247,468,156 $7,387,404 ============ ============ ============ =========== =========== =========== ============ ========== 21,669,843 19,406,256 31,622,440 2,773,359 2,056,152 1,035,622 21,224,806 705,540 ============ ============ ============ =========== =========== =========== ============ ========== 24,245,171 21,733,489 31,453,157 2,419,091 19,916,588 612,141 19,765,827 480,951 $ 10.23 $ 10.22 $ 12.08 $ 14.31 $ 1.00 $ 22.66 $ 12.52 $ 15.36 $232,690,882 $209,194,834 $349,653,304 $31,423,316 $19,916,588 $12,459,763 $238,583,310 $6,916,786 SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------- AST FIRST AST FIRST AST T. ROWE TRUST TRUST CAPITAL AST PRICE AST AST BALANCED APPRECIATION ADVANCED LARGE-CAP AST MONEY SMALL-CAP AST PIMCO INTERNATIONAL TARGET TARGET STRATEGIES GROWTH MARKET GROWTH TOTAL RETURN VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO ------------ ------------- ------------ ----------- ----------- ----------- -------------- ------------- $ 3,762,850 $ 2,212,537 $ 3,698,718 $ 0 $ 1,892 $ 0 $ 5,301,988 $ 133,328 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- 3,387,700 2,953,939 4,824,454 450,257 333,708 200,792 3,457,513 106,704 0 0 0 0 0 0 0 0 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- 3,387,700 2,953,939 4,824,454 450,257 333,708 200,792 3,457,513 106,704 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- 375,149 (741,403) (1,125,737) (450,257) (331,816) (200,792) 1,844,475 26,624 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- 0 0 978,632 0 0 0 2,122,034 0 1,121,650 1,325,613 2,685,004 595,258 0 232,825 1,368,839 (88,699) 12,984,047 13,624,196 25,417,674 2,690,050 0 828,600 9,112,176 833,703 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- 14,105,698 14,949,809 29,081,310 3,285,308 0 1,061,425 12,603,049 745,004 ------------ ------------ ------------ ----------- ----------- ----------- ------------ ---------- $ 14,480,847 $ 14,208,406 $ 27,955,573 $ 2,835,051 $ (331,816) $ 860,633 $ 14,447,524 $ 771,628 ============ ============ ============ =========== =========== =========== ============ ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A10 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS ----------------------------------------------------------------------- AST INTERNATIONAL NVIT AST INVESTMENT AST WESTERN GROWTH DEVELOPING GRADE BOND ASSET CORE PLUS AST BOND PORTFOLIO MARKETS FUND PORTFOLIO BOND PORTFOLIO PORTFOLIO 2018 ------------- ------------ -------------- --------------- -------------- ASSETS Investment in the portfolios, at fair value................................... $12,832,439 $665,169 $272,250,724 $45,582,105 $21,894,358 ----------- -------- ------------ ----------- ----------- Net Assets............................... $12,832,439 $665,169 $272,250,724 $45,582,105 $21,894,358 =========== ======== ============ =========== =========== NET ASSETS, representing: Accumulation units....................... $12,832,439 $665,169 $272,250,724 $45,582,105 $21,894,358 ----------- -------- ------------ ----------- ----------- $12,832,439 $665,169 $272,250,724 $45,582,105 $21,894,358 =========== ======== ============ =========== =========== Units outstanding........................ 1,205,057 44,357 20,928,766 3,919,578 1,799,476 =========== ======== ============ =========== =========== Portfolio shares held.................... 1,081,993 105,582 41,250,110 4,252,062 1,764,251 Portfolio net asset value per share...... $ 11.86 $ 6.30 $ 6.60 $ 10.72 $ 12.41 Investment in portfolio shares, at cost.. $11,575,031 $885,617 $267,407,251 $44,963,434 $20,657,784 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS ----------------------------------------------------------------------- AST INTERNATIONAL NVIT AST INVESTMENT AST WESTERN GROWTH DEVELOPING GRADE BOND ASSET CORE PLUS AST BOND PORTFOLIO MARKETS FUND PORTFOLIO BOND PORTFOLIO PORTFOLIO 2018 ------------- ------------ -------------- --------------- -------------- INVESTMENT INCOME Dividend income.......................... $ 106,131 $ 667 $ 5,008,576 $ 1,302,848 $ 100,867 ----------- -------- ------------ ----------- ----------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 169,632 10,630 6,190,071 697,665 464,780 Reimbursement for excess expenses........ 0 0 0 0 0 ----------- -------- ------------ ----------- ----------- NET EXPENSES............................... 169,632 10,630 6,190,071 697,665 464,780 ----------- -------- ------------ ----------- ----------- NET INVESTMENT INCOME (LOSS)............... (63,501) (9,963) (1,181,495) 605,183 (363,913) ----------- -------- ------------ ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 0 0 5,700,628 1,333,248 110,842 Realized gain (loss) on shares redeemed................................ 46,543 (74,592) 35,842,163 345,313 344,006 Net change in unrealized gain (loss) on investments............................. 1,639,718 177,614 (9,733,697) (19,061) 622,643 ----------- -------- ------------ ----------- ----------- NET GAIN (LOSS) ON INVESTMENTS............................. 1,686,261 103,022 31,809,093 1,659,501 1,077,491 ----------- -------- ------------ ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 1,622,760 $ 93,059 $ 30,627,599 $ 2,264,684 $ 713,578 =========== ======== ============ =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A11
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------- FRANKLIN AST CLS AST GLOBAL AST PARAMETRIC TEMPLETON VIP AST GOLDMAN AST SCHRODERS MODERATE ASSET AST J.P. MORGAN AST BOND REAL ESTATE EMERGING MARKETS FOUNDING FUNDS SACHS SMALL-CAP GLOBAL TACTICAL ALLOCATION GLOBAL THEMATIC PORTFOLIO 2019 PORTFOLIO EQUITY PORTFOLIO ALLOCATION FUND VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO -------------- ----------- ---------------- --------------- --------------- --------------- -------------- --------------- $2,283,140 $7,170,435 $26,030,950 $ (0) $19,892,230 $179,780,827 $235,725,370 $111,416,624 ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ $2,283,140 $7,170,435 $26,030,950 $ (0) $19,892,230 $179,780,827 $235,725,370 $111,416,624 ========== ========== =========== =========== =========== ============ ============ ============ $2,283,140 $7,170,435 $26,030,950 $ 0 $19,892,230 $179,780,827 $235,725,370 $111,416,624 ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ $2,283,140 $7,170,435 $26,030,950 $ 0 $19,892,230 $179,780,827 $235,725,370 $111,416,624 ========== ========== =========== =========== =========== ============ ============ ============ 183,095 547,133 2,458,495 0 1,524,692 15,190,242 21,003,523 9,458,185 ========== ========== =========== =========== =========== ============ ============ ============ 220,593 760,385 2,908,486 0 1,642,628 15,171,378 23,087,695 10,306,811 $ 10.35 $ 9.43 $ 8.95 $ 0 $ 12.11 $ 11.85 $ 10.21 $ 10.81 $2,286,948 $6,196,181 $24,575,045 $ 0 $17,681,673 $165,385,638 $225,543,768 $103,336,058 SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------- FRANKLIN AST CLS AST GLOBAL AST PARAMETRIC TEMPLETON VIP AST GOLDMAN AST SCHRODERS MODERATE ASSET AST J.P. MORGAN AST BOND REAL ESTATE EMERGING MARKETS FOUNDING FUNDS SACHS SMALL-CAP GLOBAL TACTICAL ALLOCATION GLOBAL THEMATIC PORTFOLIO 2019 PORTFOLIO EQUITY PORTFOLIO ALLOCATION FUND VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO -------------- ----------- ---------------- --------------- --------------- --------------- -------------- --------------- $ 2,349 $ 81,801 $ 247,236 $ 4,634,544 $ 78,376 $ 606,948 $ 934,844 $ 372,802 ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ 15,999 93,211 369,212 1,906,338 273,589 2,244,875 2,927,793 1,410,500 0 0 0 0 0 0 0 0 ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ 15,999 93,211 369,212 1,906,338 273,589 2,244,875 2,927,793 1,410,500 ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ (13,650) (11,410) (121,976) 2,728,206 (195,213) (1,637,928) (1,992,949) (1,037,698) ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ 29,557 0 339,838 0 0 602,053 4,402,813 496,390 (1,419) 134,049 (336,541) 15,394,586 409,844 2,099,981 984,445 818,542 (3,809) 993,606 2,880,354 (2,097,431) 1,514,979 13,523,798 8,685,465 7,800,617 ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ 24,329 1,127,655 2,883,651 13,297,155 1,924,823 16,225,831 14,072,724 9,115,549 ---------- ---------- ----------- ----------- ----------- ------------ ------------ ------------ $ 10,679 $1,116,245 $ 2,761,675 $16,025,361 $ 1,729,610 $ 14,587,904 $ 12,079,775 $ 8,077,851 ========== ========== =========== =========== =========== ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A12 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS -------------------------------------------------------------------- AST HORIZON MODERATE ASSET AST FI PYRAMIS(R) PROFUND VP PROFUND VP ALLOCATION ASSET ALLOCATION CONSUMER CONSUMER GOODS PROFUND VP PORTFOLIO PORTFOLIO SERVICES PORTFOLIO FINANCIALS -------------- ----------------- ---------- -------------- ---------- ASSETS Investment in the portfolios, at fair value................................... $139,813,228 $120,257,369 $329,782 $309,540 $469,299 ------------ ------------ -------- -------- -------- Net Assets............................... $139,813,228 $120,257,369 $329,782 $309,540 $469,299 ============ ============ ======== ======== ======== NET ASSETS, representing: Accumulation units....................... $139,813,228 $120,257,369 $329,782 $309,540 $469,299 ------------ ------------ -------- -------- -------- $139,813,228 $120,257,369 $329,782 $309,540 $469,299 ============ ============ ======== ======== ======== Units outstanding........................ 12,411,997 10,343,938 24,272 25,290 68,847 ============ ============ ======== ======== ======== Portfolio shares held.................... 13,202,382 11,388,008 8,034 7,712 22,064 Portfolio net asset value per share...... $ 10.59 $ 10.56 $ 41.05 $ 40.14 $ 21.27 Investment in portfolio shares, at cost.. $132,929,235 $111,661,207 $236,850 $247,113 $381,832 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS -------------------------------------------------------------------- AST HORIZON MODERATE ASSET AST FI PYRAMIS(R) PROFUND VP PROFUND VP ALLOCATION ASSET ALLOCATION CONSUMER CONSUMER GOODS PROFUND VP PORTFOLIO PORTFOLIO SERVICES PORTFOLIO FINANCIALS -------------- ----------------- ---------- -------------- ---------- INVESTMENT INCOME Dividend income.......................... $ 664,747 $ 434,455 $ 0 $ 3,092 $ 515 ------------ ------------ -------- -------- -------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 1,928,723 1,520,520 5,515 5,269 7,454 Reimbursement for excess expenses........ 0 0 0 0 0 ------------ ------------ -------- -------- -------- NET EXPENSES............................... 1,928,723 1,520,520 5,515 5,269 7,454 ------------ ------------ -------- -------- -------- NET INVESTMENT INCOME (LOSS)............... (1,263,976) (1,086,065) (5,515) (2,177) (6,939) ------------ ------------ -------- -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 2,879,907 0 1,660 0 0 Realized gain (loss) on shares redeemed................................ 627,204 716,635 28,512 17,887 24,480 Net change in unrealized gain (loss) on investments............................. 5,821,376 8,675,694 41,779 14,842 83,373 ------------ ------------ -------- -------- -------- NET GAIN (LOSS) ON INVESTMENTS............................. 9,328,486 9,392,329 71,951 32,729 107,853 ------------ ------------ -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 8,064,511 $ 8,306,264 $ 66,436 $ 30,553 $100,913 ============ ============ ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A13
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP PROFUND VP PROFUND VP PROFUND VP MID-CAP MID-CAP PROFUND VP SMALL-CAP SMALL-CAP PROFUND VP HEALTH CARE INDUSTRIALS GROWTH VALUE REAL ESTATE GROWTH VALUE TELECOMMUNICATIONS ----------- ----------- ---------- ---------- ----------- ---------- ---------- ------------------ $374,852 $315,112 $119,203 $69,651 $144,105 $31,817 $20,483 $246,598 -------- -------- -------- ------- -------- ------- ------- -------- $374,852 $315,112 $119,203 $69,651 $144,105 $31,817 $20,483 $246,598 ======== ======== ======== ======= ======== ======= ======= ======== $374,852 $315,112 $119,203 $69,651 $144,105 $31,817 $20,483 $246,598 -------- -------- -------- ------- -------- ------- ------- -------- $374,852 $315,112 $119,203 $69,651 $144,105 $31,817 $20,483 $246,598 ======== ======== ======== ======= ======== ======= ======= ======== 30,013 31,372 10,225 6,471 14,160 2,741 1,847 24,409 ======== ======== ======== ======= ======== ======= ======= ======== 10,098 7,564 3,110 2,398 2,788 975 674 29,533 $ 37.12 $ 41.66 $ 38.33 $ 29.04 $ 51.69 $ 32.62 $ 30.41 $ 8.35 $289,710 $254,339 $103,775 $55,844 $117,731 $27,093 $15,965 $211,040 SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP PROFUND VP PROFUND VP PROFUND VP MID-CAP MID-CAP PROFUND VP SMALL-CAP SMALL-CAP PROFUND VP HEALTH CARE INDUSTRIALS GROWTH VALUE REAL ESTATE GROWTH VALUE TELECOMMUNICATIONS ----------- ----------- ---------- ---------- ----------- ---------- ---------- ------------------ $ 1,658 $ 892 $ 0 $ 134 $ 3,491 $ 0 $ 0 $ 11,801 -------- -------- -------- ------- -------- ------- ------- -------- 6,324 5,064 1,591 1,350 2,050 497 294 4,268 0 0 0 0 0 0 0 0 -------- -------- -------- ------- -------- ------- ------- -------- 6,324 5,064 1,591 1,350 2,050 497 294 4,268 -------- -------- -------- ------- -------- ------- ------- -------- (4,666) (4,171) (1,591) (1,216) 1,440 (497) (294) 7,533 -------- -------- -------- ------- -------- ------- ------- -------- 0 0 0 0 0 0 0 0 28,837 20,490 3,168 7,323 8,170 1,488 955 14,768 35,071 25,260 10,667 6,156 7,362 1,969 2,160 18,321 -------- -------- -------- ------- -------- ------- ------- -------- 63,908 45,749 13,835 13,479 15,532 3,457 3,115 33,089 -------- -------- -------- ------- -------- ------- ------- -------- $ 59,242 $ 41,578 $ 12,245 $12,263 $ 16,972 $ 2,960 $ 2,821 $ 40,622 ======== ======== ======== ======= ======== ======= ======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A14 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS -------------------------------------------------------------- PROFUND VP PROFUND VP AST JENNISON PROFUND VP LARGE-CAP LARGE-CAP AST BOND LARGE-CAP UTILITIES GROWTH VALUE PORTFOLIO 2020 VALUE PORTFOLIO ---------- ---------- ---------- -------------- --------------- ASSETS Investment in the portfolios, at fair value................................... $211,621 $49,185 $75,397 $134,938 $6,100,699 -------- ------- ------- -------- ---------- Net Assets............................... $211,621 $49,185 $75,397 $134,938 $6,100,699 ======== ======= ======= ======== ========== NET ASSETS, representing: Accumulation units....................... $211,621 $49,185 $75,397 $134,938 $6,100,699 -------- ------- ------- -------- ---------- $211,621 $49,185 $75,397 $134,938 $6,100,699 ======== ======= ======= ======== ========== Units outstanding........................ 22,559 4,585 8,294 10,681 556,714 ======== ======= ======= ======== ========== Portfolio shares held.................... 6,680 1,262 2,764 20,445 484,182 Portfolio net asset value per share...... $ 31.68 $ 38.98 $ 27.28 $ 6.60 $ 12.60 Investment in portfolio shares, at cost.. $194,656 $44,192 $62,568 $140,036 $5,649,628 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS -------------------------------------------------------------- PROFUND VP PROFUND VP AST JENNISON PROFUND VP LARGE-CAP LARGE-CAP AST BOND LARGE-CAP UTILITIES GROWTH VALUE PORTFOLIO 2020 VALUE PORTFOLIO ---------- ---------- ---------- -------------- --------------- INVESTMENT INCOME Dividend income.......................... $ 7,360 $ 37 $ 773 $ 1,072 $ 21,308 -------- ------- ------- -------- ---------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 4,118 853 1,516 3,347 84,493 Reimbursement for excess expenses........ 0 0 0 0 0 -------- ------- ------- -------- ---------- NET EXPENSES............................... 4,118 853 1,516 3,347 84,493 -------- ------- ------- -------- ---------- NET INVESTMENT INCOME (LOSS)............... 3,243 (816) (743) (2,275) (63,185) -------- ------- ------- -------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 0 0 0 12,074 0 Realized gain (loss) on shares redeemed................................ 11,656 3,326 13,261 34,556 15,087 Net change in unrealized gain (loss) on investments............................. (17,498) 1,514 2,978 (34,325) 485,373 -------- ------- ------- -------- ---------- NET GAIN (LOSS) ON INVESTMENTS............................. (5,842) 4,840 16,239 12,305 500,459 -------- ------- ------- -------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ (2,599) $ 4,024 $15,497 $ 10,030 $ 437,274 ======== ======= ======= ======== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A15
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT AST JENNISON INTERNATIONAL OMEGA GROWTH SMALL CAP VALUE AST QUANTITATIVE LARGE-CAP AST BOND AST BOND EQUITY PORTFOLIO PORTFOLIO SHARE PORTFOLIO SHARE AST BOND MODELING GROWTH PORTFOLIO PORTFOLIO 2017 PORTFOLIO 2021 SHARE CLASS 1 CLASS 1 CLASS 1 PORTFOLIO 2022 PORTFOLIO ---------------- -------------- -------------- ---------------- --------------- --------------- -------------- ---------------- $10,609,945 $21,846,905 $28,166,626 $219,724 $365,261 $62,762 $21,558,826 $73,661 ----------- ----------- ----------- -------- -------- ------- ----------- ------- $10,609,945 $21,846,905 $28,166,626 $219,724 $365,261 $62,762 $21,558,826 $73,661 =========== =========== =========== ======== ======== ======= =========== ======= $10,609,945 $21,846,905 $28,166,626 $219,724 $365,261 $62,762 $21,558,826 $73,661 ----------- ----------- ----------- -------- -------- ------- ----------- ------- $10,609,945 $21,846,905 $28,166,626 $219,724 $365,261 $62,762 $21,558,826 $73,661 =========== =========== =========== ======== ======== ======= =========== ======= 875,800 1,846,896 2,129,378 15,969 168,936 5,173 1,736,527 7,416 =========== =========== =========== ======== ======== ======= =========== ======= 756,233 1,798,099 2,011,902 44,479 14,290 6,670 1,667,349 7,236 $ 14.03 $ 12.15 $ 14.00 $ 4.94 $ 25.56 $ 9.41 $ 12.93 $ 10.18 $ 9,908,867 $20,870,951 $26,172,948 $209,876 $279,468 $49,337 $20,355,901 $69,283 SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT AST JENNISON INTERNATIONAL OMEGA GROWTH SMALL CAP VALUE AST QUANTITATIVE LARGE-CAP AST BOND AST BOND EQUITY PORTFOLIO PORTFOLIO SHARE PORTFOLIO SHARE AST BOND MODELING GROWTH PORTFOLIO PORTFOLIO 2017 PORTFOLIO 2021 SHARE CLASS 1 CLASS 1 CLASS 1 PORTFOLIO 2022 PORTFOLIO ---------------- -------------- -------------- ---------------- --------------- --------------- -------------- ---------------- $ 0 $ 105,377 $ 234,343 $ 3,408 $ 0 $ 726 $ 5,235 $ 25 ----------- ----------- ----------- -------- -------- ------- ----------- ------- 144,628 454,961 669,383 3,598 6,125 1,049 384,663 859 0 0 0 0 0 0 0 0 ----------- ----------- ----------- -------- -------- ------- ----------- ------- 144,628 454,961 669,383 3,598 6,125 1,049 384,663 859 ----------- ----------- ----------- -------- -------- ------- ----------- ------- (144,628) (349,585) (435,040) (190) (6,125) (323) (379,427) (834) ----------- ----------- ----------- -------- -------- ------- ----------- ------- 0 0 622,481 13,810 23,469 0 36,319 0 132,373 366,417 1,311,773 1,218 7,982 1,216 531,946 (25) 678,640 572,745 (4,266) 9,950 34,762 6,451 605,205 4,378 ----------- ----------- ----------- -------- -------- ------- ----------- ------- 811,014 939,161 1,929,988 24,978 66,214 7,667 1,173,470 4,353 ----------- ----------- ----------- -------- -------- ------- ----------- ------- $ 666,386 $ 589,577 $ 1,494,948 $ 24,788 $ 60,089 $ 7,344 $ 794,042 $ 3,519 =========== =========== =========== ======== ======== ======= =========== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A16 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF NET ASSETS December 31, 2012
SUBACCOUNTS ---------------------------------------------------------------------------- WELLS FARGO AST BLACKROCK ADVANTAGE VT AST PRUDENTIAL AST NEUBERGER GLOBAL STRATEGIES OPPORTUNITY CORE BOND BERMAN CORE AST BOND PORTFOLIO FUND - CLASS 1 PORTFOLIO BOND PORTFOLIO PORTFOLIO 2023 ----------------- -------------- -------------- -------------- -------------- ASSETS Investment in the portfolios, at fair value................................... $86,714,025 $209,692 $6,835,314 $3,621,232 $3,908,447 ----------- -------- ---------- ---------- ---------- Net Assets............................... $86,714,025 $209,692 $6,835,314 $3,621,232 $3,908,447 =========== ======== ========== ========== ========== NET ASSETS, representing: Accumulation units....................... $86,714,025 $209,692 $6,835,314 $3,621,232 $3,908,447 ----------- -------- ---------- ---------- ---------- $86,714,025 $209,692 $6,835,314 $3,621,232 $3,908,447 =========== ======== ========== ========== ========== Units outstanding........................ 8,594,013 17,208 643,150 348,513 376,166 =========== ======== ========== ========== ========== Portfolio shares held.................... 8,402,522 10,474 632,314 341,948 369,070 Portfolio net asset value per share...... $ 10.32 $ 20.02 $ 10.81 $ 10.59 $ 10.59 Investment in portfolio shares, at cost.. $82,270,028 $173,248 $6,657,016 $3,540,857 $3,873,515 STATEMENT OF OPERATIONS For the year ended December 31, 2012 SUBACCOUNTS ---------------------------------------------------------------------------- WELLS FARGO AST BLACKROCK ADVANTAGE VT AST PRUDENTIAL AST NEUBERGER GLOBAL STRATEGIES OPPORTUNITY CORE BOND BERMAN CORE AST BOND PORTFOLIO FUND - CLASS 1 PORTFOLIO BOND PORTFOLIO PORTFOLIO 2023 ----------------- -------------- -------------- -------------- -------------- INVESTMENT INCOME Dividend income.......................... $ 311,619 $ 1,190 $ 6,323 $ 5,075 $ 0 ----------- -------- ---------- ---------- ---------- EXPENSES Charges to contract owners for assuming mortality risk and expense risk and for administration............. 1,118,707 3,751 59,954 36,373 24,877 Reimbursement for excess expenses........ 0 0 0 0 0 ----------- -------- ---------- ---------- ---------- NET EXPENSES............................... 1,118,707 3,751 59,954 36,373 24,877 ----------- -------- ---------- ---------- ---------- NET INVESTMENT INCOME (LOSS)............... (807,088) (2,561) (53,632) (31,297) (24,877) ----------- -------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received..... 0 71 6,348 1,317 0 Realized gain (loss) on shares redeemed................................ 36,625 14,141 44,175 5,928 7,752 Net change in unrealized gain (loss) on investments............................. 6,636,996 22,873 175,383 77,269 34,932 ----------- -------- ---------- ---------- ---------- NET GAIN (LOSS) ON INVESTMENTS............................. 6,673,621 37,084 225,906 84,514 42,683 ----------- -------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 5,866,533 $ 34,524 $ 172,275 $ 53,217 $ 17,806 =========== ======== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A17
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------- AST FRANKLIN AST NEW AST WESTERN TEMPLETON FOUNDING DISCOVERY ASSET ASSET EMERGING AST MFS FUNDS ALLOCATION ALLOCATION MARKETS DEBT LARGE-CAP PORTFOLIO PORTFOLIO PORTFOLIO VALUE PORTFOLIO ------------------ --------------- -------------- --------------- $209,727,629 $23,600,557 $67,696 $40,197 ------------ ----------- ------- ------- $209,727,629 $23,600,557 $67,696 $40,197 ============ =========== ======= ======= $209,727,629 $23,600,557 $67,696 $40,197 ------------ ----------- ------- ------- $209,727,629 $23,600,557 $67,696 $40,197 ============ =========== ======= ======= 19,510,744 2,285,241 6,510 3,943 ============ =========== ======= ======= 19,294,170 2,289,094 6,478 3,918 $ 10.87 $ 10.31 $ 10.45 $ 10.26 $205,927,745 $22,764,603 $67,121 $39,965 SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------- AST FRANKLIN AST NEW AST WESTERN TEMPLETON FOUNDING DISCOVERY ASSET ASSET EMERGING AST MFS FUNDS ALLOCATION ALLOCATION MARKETS DEBT LARGE-CAP PORTFOLIO PORTFOLIO PORTFOLIO VALUE PORTFOLIO ------------------ --------------- -------------- --------------- $ 0 $ 180,309 $ 0 $ 0 ------------ ----------- ------- ------- 981,950 209,424 80 98 0 0 0 0 ------------ ----------- ------- ------- 981,950 209,424 80 98 ------------ ----------- ------- ------- (981,950) (29,116) (80) (98) ------------ ----------- ------- ------- 0 0 0 0 (464,899) (116,623) (14) (57) 3,799,884 835,954 575 232 ------------ ----------- ------- ------- 3,334,985 719,331 561 175 ------------ ----------- ------- ------- $ 2,353,035 $ 690,215 $ 481 $ 78 ============ =========== ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A18 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ------------------------------------------------------------------------------ PRUDENTIAL MONEY MARKET PRUDENTIAL DIVERSIFIED BOND PRUDENTIAL EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ -------------------------- ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ----------- ----------- ----------- ----------- OPERATIONS Net investment income (loss).... $ (244,782) $ (280,119) $ 776,896 $ 788,589 $ (174,609) $ (167,794) Capital gains distributions received....................... 0 0 1,139,718 626,795 0 0 Realized gain (loss) on shares redeemed....................... 0 0 255,645 251,851 (25,831) (211,841) Net change in unrealized gain (loss) on investments.......... 0 0 121,486 (53,592) 2,600,794 (625,359) ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ (244,782) (280,119) 2,293,746 1,613,643 2,400,354 (1,004,994) ----------- ----------- ----------- ----------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 160,467 246,545 106,299 125,726 177,262 103,894 Annuity Payments................ (236,935) (43,772) (241,759) (39,049) (67,725) (205,140) Surrenders, withdrawals and death benefits................. (4,867,505) (4,593,592) (2,914,577) (3,209,635) (2,303,729) (2,190,802) Net transfers between other subaccounts or fixed rate option......................... 1,717,959 654,286 (162,581) 263,660 (167,042) (501,118) Withdrawal and other charges.... (11,115) (14,037) (10,221) (11,153) (17,184) (18,660) ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (3,237,129) (3,750,570) (3,222,840) (2,870,451) (2,378,418) (2,811,826) ----------- ----------- ----------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (3,481,911) (4,030,689) (929,093) (1,256,808) 21,934 (3,816,820) NET ASSETS Beginning of period............. 18,882,658 22,913,347 26,478,792 27,735,600 20,353,150 24,169,970 ----------- ----------- ----------- ----------- ----------- ----------- End of period................... $15,400,747 $18,882,658 $25,549,699 $26,478,792 $20,375,085 $20,353,150 =========== =========== =========== =========== =========== =========== Beginning units................. 15,081,905 18,414,358 11,804,540 13,115,233 11,025,380 12,475,419 ----------- ----------- ----------- ----------- ----------- ----------- Units issued.................... 4,076,923 3,837,949 295,489 483,619 254,562 141,157 Units redeemed.................. (6,790,219) (7,170,402) (1,667,140) (1,794,312) (1,471,593) (1,591,196) ----------- ----------- ----------- ----------- ----------- ----------- Ending units.................... 12,368,609 15,081,905 10,432,889 11,804,540 9,808,349 11,025,380 =========== =========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A19
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------- PRUDENTIAL VALUE PRUDENTIAL HIGH YIELD BOND PRUDENTIAL STOCK INDEX PRUDENTIAL GLOBAL PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ------------------------ ------------------------ ----------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- $ (141,914) $ (146,740) $ 1,169,875 $ 1,373,509 $ 61,141 $ 43,098 $ 9,625 $ 8,149 0 0 0 0 73,521 0 0 0 (455,486) (472,832) (80,810) (136,950) 348,859 (34,971) (10,604) (38,730) 4,147,124 (1,512,573) 1,483,484 (415,432) 2,762,567 193,315 815,282 (452,439) ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- 3,549,724 (2,132,145) 2,572,549 821,127 3,246,088 201,442 814,302 (483,020) ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- 122,033 38,416 142,923 44,014 95,987 103,001 10,832 17,713 (63,221) (27,555) (103,176) (41,041) (96,699) (133,194) (3,155) (37,081) (3,408,357) (3,546,889) (2,876,057) (3,020,998) (3,121,466) (2,908,177) (555,958) (651,159) (545,885) (491,024) (91,404) (566,559) (678,269) (1,100,751) (52,465) (156,477) (39,526) (42,623) (25,837) (27,624) (26,136) (27,972) (6,446) (7,007) ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- (3,934,956) (4,069,675) (2,953,551) (3,612,208) (3,826,583) (4,067,093) (607,193) (834,011) ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- (385,232) (6,201,820) (381,003) (2,791,081) (580,495) (3,865,651) 207,110 (1,317,031) 28,787,014 34,988,834 21,605,149 24,396,230 24,117,584 27,983,235 5,367,968 6,684,999 ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- $28,401,782 $28,787,014 $21,224,146 $21,605,149 $23,537,089 $24,117,584 $5,575,078 $ 5,367,968 =========== =========== =========== =========== =========== =========== ========== =========== 14,821,037 16,908,321 6,482,108 7,412,235 14,344,274 16,877,441 3,495,084 4,001,680 ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- 350,567 277,200 274,094 172,243 932,935 535,922 44,103 78,774 (2,328,227) (2,364,484) (1,019,355) (1,102,370) (3,113,517) (3,069,089) (412,183) (585,370) ----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- 12,843,377 14,821,037 5,736,847 6,482,108 12,163,692 14,344,274 3,127,004 3,495,084 =========== =========== =========== =========== =========== =========== ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A20 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS --------------------------------------------------------------------------- PRUDENTIAL T. ROWE PRICE PRUDENTIAL JENNISON SMALL CAPITALIZATION STOCK INTERNATIONAL STOCK PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ------------------------- ---------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss).... $ (317,078) $ (295,693) $ (35,179) $ (27,624) $ (2,032) $ 881 Capital gains distributions received....................... 0 0 228,962 63,415 0 0 Realized gain (loss) on shares redeemed....................... 592,328 406,976 64,391 43,769 (2,769) (308) Net change in unrealized gain (loss) on investments.......... 3,102,356 (270,329) 349,869 (122,408) 277,759 (276,997) ----------- ----------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 3,377,606 (159,046) 608,042 (42,848) 272,959 (276,424) ----------- ----------- ---------- ---------- ---------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 88,955 122,286 20,984 5,188 5,675 1,487 Annuity Payments................ (53,740) (80,628) (6,444) (18,663) (18,270) (13,833) Surrenders, withdrawals and death benefits................. (2,661,043) (3,012,651) (479,516) (549,818) (119,315) (286,228) Net transfers between other subaccounts or fixed rate option......................... (615,752) (781,997) (181,263) 134,343 42,640 (23,792) Withdrawal and other charges.... (23,464) (24,422) (2,089) (2,253) (666) (783) ----------- ----------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (3,265,043) (3,777,412) (648,327) (431,203) (89,936) (323,149) ----------- ----------- ---------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 112,563 (3,936,458) (40,285) (474,051) 183,022 (599,573) NET ASSETS Beginning of period............. 23,575,711 27,512,169 4,475,517 4,949,568 1,654,713 2,254,286 ----------- ----------- ---------- ---------- ---------- ---------- End of period................... $23,688,274 $23,575,711 $4,435,232 $4,475,517 $1,837,735 $1,654,713 =========== =========== ========== ========== ========== ========== Beginning units................. 13,278,906 15,574,177 1,671,770 1,832,332 1,305,399 1,531,675 ----------- ----------- ---------- ---------- ---------- ---------- Units issued.................... 214,953 364,774 26,178 137,917 52,117 66,946 Units redeemed.................. (2,003,259) (2,660,045) (250,324) (298,479) (118,006) (293,222) ----------- ----------- ---------- ---------- ---------- ---------- Ending units.................... 11,490,600 13,278,906 1,447,624 1,671,770 1,239,510 1,305,399 =========== =========== ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A21
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------- JANUS ASPEN JANUS JANUS ASPEN OVERSEAS T. ROWE PRICE EQUITY INVESCO V.I. CORE EQUITY PORTFOLIO - INSTITUTIONAL PORTFOLIO - INSTITUTIONAL INCOME PORTFOLIO FUND SHARES SHARES ---------------------- ------------------------ ----------------------- ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- $ 48,551 $ 23,458 $ (40,311) $ (43,837) $ (44,406) $ (45,194) $ (61,045) $ (110,342) 0 0 0 0 89,288 0 915,648 114,744 78,505 18,572 204,223 171,309 (6,820) (64,806) 203,028 799,976 819,802 (169,511) 912,898 (229,269) 780,632 (249,040) (74,237) (5,251,141) ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- 946,859 (127,481) 1,076,810 (101,797) 818,694 (359,040) 983,394 (4,446,763) ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- 25,122 6,398 44,673 8,200 23,959 1,696 31,217 14,222 (54,013) 0 (59,838) (7,426) (29,760) (28,139) (35,472) (98,634) (564,744) (644,061) (842,804) (1,004,438) (591,771) (702,937) (1,019,800) (1,673,328) (292,536) (145,301) (214,413) (236,795) (109,787) (3,890) (134,416) 5,912 (2,801) (2,986) (4,835) (5,288) (3,086) (3,302) (4,069) (5,081) ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- (888,972) (785,950) (1,077,218) (1,245,747) (710,446) (736,572) (1,162,540) (1,756,909) ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- 57,887 (913,431) (407) (1,347,544) 108,248 (1,095,612) (179,146) (6,203,672) 6,386,979 7,300,410 9,075,105 10,422,649 4,977,112 6,072,724 8,735,377 14,939,049 ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- $6,444,866 $6,386,979 $ 9,074,698 $ 9,075,105 $5,085,360 $ 4,977,112 $ 8,556,231 $ 8,735,377 ========== ========== =========== =========== ========== =========== =========== =========== 3,092,160 3,462,271 5,089,195 5,770,912 3,289,365 3,767,484 2,903,952 3,325,293 ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- 51,954 51,035 71,550 43,731 27,405 116,004 126,827 128,634 (446,076) (421,146) (629,862) (725,448) (444,015) (594,123) (492,506) (549,975) ---------- ---------- ----------- ----------- ---------- ----------- ----------- ----------- 2,698,038 3,092,160 4,530,883 5,089,195 2,872,755 3,289,365 2,538,273 2,903,952 ========== ========== =========== =========== ========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A22 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ---------------------------------------------------------------------- MFS(R) RESEARCH SERIES - MFS(R) GROWTH SERIES - AMERICAN CENTURY VP INITIAL CLASS INITIAL CLASS VALUE FUND ---------------------- ---------------------- ---------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss).... $ (9,985) $ (9,407) $ (83,026) $ (75,971) $ 12,388 $ 15,473 Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... 45,260 24,336 129,543 60,900 (25,601) (41,939) Net change in unrealized gain (loss) on investments.......... 206,058 (45,278) 834,252 (74,274) 303,551 22,732 ---------- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 241,332 (30,349) 880,770 (89,345) 290,339 (3,734) ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 499 3,791 25,286 10,683 1,345 3,623 Annuity Payments................ (38,028) 0 (26,097) (16,581) (9,957) 0 Surrenders, withdrawals and death benefits................. (165,889) (197,731) (651,393) (616,480) (254,891) (203,523) Net transfers between other subaccounts or fixed rate option......................... (44,870) (67,083) (117,948) (171,257) (115,773) (36,850) Withdrawal and other charges.... (857) (940) (3,231) (3,438) (902) (978) ---------- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (249,146) (261,963) (773,382) (797,073) (380,177) (237,728) ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (7,814) (292,312) 107,388 (886,418) (89,839) (241,462) NET ASSETS Beginning of period............. 1,609,260 1,901,572 5,790,361 6,676,779 2,407,512 2,648,974 ---------- ---------- ---------- ---------- ---------- ---------- End of period................... $1,601,446 $1,609,260 $5,897,749 $5,790,361 $2,317,673 $2,407,512 ========== ========== ========== ========== ========== ========== Beginning units................. 990,180 1,148,688 3,507,477 3,974,850 1,221,358 1,337,254 ---------- ---------- ---------- ---------- ---------- ---------- Units issued.................... 4,638 8,059 43,936 44,551 23,004 55,148 Units redeemed.................. (142,758) (166,567) (470,327) (511,924) (202,894) (171,044) ---------- ---------- ---------- ---------- ---------- ---------- Ending units.................... 852,060 990,180 3,081,086 3,507,477 1,041,468 1,221,358 ========== ========== ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A23
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------- FTVIP FRANKLIN SMALL-MID CAP ALLIANCEBERNSTEIN VPS GROWTH SECURITIES PRUDENTIAL JENNISON 20/20 DAVIS VALUE LARGE CAP GROWTH FUND - CLASS 2 FOCUS PORTFOLIO PORTFOLIO PORTFOLIO CLASS B --------------------------- ------------------------ ---------------------- -------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ (38,481) $ (40,894) $ (57,052) $ (59,023) $ 4,823 $ (13,965) $ (6,703) $ (6,775) 198,220 0 142,038 0 128,020 170,802 0 0 7,673 29,089 82,708 135,768 5,966 20,762 4,568 (4,784) 75,483 (162,699) 204,349 (291,919) 97,350 (319,761) 69,422 (16,901) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 242,895 (174,504) 372,042 (215,174) 236,159 (142,162) 67,287 (28,460) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 12,591 2,986 17,694 3,248 23,037 4,657 0 2,336 (8,993) 0 (15,943) (53,940) (21,283) 0 0 0 (225,427) (298,676) (394,793) (602,712) (234,844) (237,379) (69,009) (50,417) 25,705 129,317 11,429 90,954 (52,766) 58,067 (7,573) 48,194 (1,223) (1,384) (1,620) (1,718) (726) (823) (123) (187) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- (197,347) (167,757) (383,233) (564,168) (286,582) (175,478) (76,705) (74) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 45,548 (342,261) (11,191) (779,342) (50,423) (317,640) (9,418) (28,534) 2,657,379 2,999,640 4,027,325 4,806,667 2,181,362 2,499,002 466,570 495,104 ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- $2,702,927 $2,657,379 $4,016,134 $4,027,325 $2,130,939 $2,181,362 $ 457,152 $ 466,570 ========== ========== ========== ========== ========== ========== ========= ========= 1,511,453 1,608,281 2,433,178 2,744,426 2,104,144 2,277,948 785,087 794,616 ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 65,256 142,782 82,183 133,797 38,639 159,264 41,588 137,262 (174,702) (239,610) (300,318) (445,045) (300,250) (333,068) (155,528) (146,791) ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- 1,402,007 1,511,453 2,215,043 2,433,178 1,842,533 2,104,144 671,147 785,087 ========== ========== ========== ========== ========== ========== ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A24 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ------------------------------------------------------------------------------------ PRUDENTIAL SP SMALL CAP JANUS ASPEN JANUS PORTFOLIO - PRUDENTIAL SP PRUDENTIAL U.S. VALUE PORTFOLIO SERVICE SHARES EMERGING GROWTH PORTFOLIO ------------------------ ---------------------------- ---------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ---------- ---------- ----------- ----------- OPERATIONS Net investment income (loss).... $ (105,994) $ (97,941) $ (5,221) $ (6,247) $ (104,785) $ (98,620) Capital gains distributions received....................... 0 0 7,934 0 654,025 86,893 Realized gain (loss) on shares redeemed....................... 77,414 (91,016) 24,779 45,906 319,389 290,994 Net change in unrealized gain (loss) on investments.......... 1,310,579 (192,952) 38,273 (64,047) 445,233 (175,094) ----------- ----------- -------- --------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 1,281,999 (381,909) 65,765 (24,388) 1,313,862 104,173 ----------- ----------- -------- --------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 30,032 11,683 3,677 431 22,137 15,909 Annuity Payments................ (8,453) (16,710) 0 0 (9,411) 0 Surrenders, withdrawals and death benefits................. (1,402,415) (1,407,904) (34,276) (124,939) (1,502,543) (1,585,027) Net transfers between other subaccounts or fixed rate option......................... (379,451) (2,553,192) (68,194) (95,065) (490,741) (202,395) Withdrawal and other charges.... (26,175) (28,141) (691) (814) (22,454) (23,760) ----------- ----------- -------- --------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (1,786,461) (3,994,264) (99,484) (220,387) (2,003,012) (1,795,273) ----------- ----------- -------- --------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (504,462) (4,376,173) (33,719) (244,775) (689,150) (1,691,100) NET ASSETS Beginning of period............. 9,693,716 14,069,889 422,958 667,733 9,167,959 10,859,059 ----------- ----------- -------- --------- ----------- ----------- End of period................... $ 9,189,254 $ 9,693,716 $389,239 $ 422,958 $ 8,478,809 $ 9,167,959 =========== =========== ======== ========= =========== =========== Beginning units................. 5,635,542 7,783,323 428,077 679,019 4,764,169 5,711,766 ----------- ----------- -------- --------- ----------- ----------- Units issued.................... 130,535 218,571 22,814 21,611 98,067 441,164 Units redeemed.................. (1,084,545) (2,366,352) (96,712) (272,553) (1,020,320) (1,388,761) ----------- ----------- -------- --------- ----------- ----------- Ending units.................... 4,681,532 5,635,542 354,179 428,077 3,841,916 4,764,169 =========== =========== ======== ========= =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A25
SUBACCOUNTS (CONTINUED) ----------------------------------------------------------------------------------------------------------- PRUDENTIAL SP INTERNATIONAL PRUDENTIAL SP INTERNATIONAL AST GOLDMAN SACHS AST AMERICAN CENTURY GROWTH PORTFOLIO VALUE PORTFOLIO LARGE-CAP VALUE PORTFOLIO INCOME & GROWTH PORTFOLIO -------------------------- -------------------------- ------------------------ ------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 05/04/2012** 12/31/2011 ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- $ (24,673) $ (8,300) $ 28,036 $ 26,707 $ (70,264) $ (49,501) $ (85,753) $ (61,643) 0 0 0 0 0 0 0 0 (172,428) (191,568) (250,350) (136,178) 207,666 (653,090) 1,719,868 (269,379) 695,469 (329,966) 577,066 (326,788) 1,644,817 (554,749) (604,836) (139,033) ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- 498,369 (529,834) 354,752 (436,259) 1,782,220 (1,257,340) 1,029,280 (470,055) ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- 5,652 4,968 1,398 24,408 2,844,015 5,343,435 2,744,549 6,263,169 (8,681) 0 0 0 0 0 0 0 (366,654) (539,931) (644,116) (588,596) (284,923) (98,151) (67,401) (391,179) (129,624) (151,614) 30,184 35,069 2,041,671 (2,583,179) (14,838,280) (1,914,870) (6,366) (6,878) (5,568) (6,217) (109,002) (57,870) (44,059) (74,321) ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- (505,673) (693,455) (618,101) (535,336) 4,491,760 2,604,235 (12,205,191) 3,882,799 ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- (7,305) (1,223,289) (263,349) (971,595) 6,273,980 1,346,895 (11,175,911) 3,412,744 2,649,644 3,872,933 2,637,567 3,609,162 8,530,502 7,183,607 11,175,911 7,763,167 ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- $2,642,339 $ 2,649,644 $2,374,218 $2,637,567 $14,804,482 $ 8,530,502 $ (0) $11,175,911 ========== =========== ========== ========== =========== =========== ============ =========== 2,217,408 2,752,691 1,944,492 2,287,701 906,605 721,811 1,060,852 767,043 ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- 59,139 107,559 122,797 117,961 993,076 1,199,167 554,112 1,307,129 (425,786) (642,842) (533,795) (461,170) (586,982) (1,014,373) (1,614,964) (1,013,320) ---------- ----------- ---------- ---------- ----------- ----------- ------------ ----------- 1,850,761 2,217,408 1,533,494 1,944,492 1,312,699 906,605 0 1,060,852 ========== =========== ========== ========== =========== =========== ============ ===========
** Date subaccount was no longer available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A26 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS -------------------------------------------------------------------------------- AST SCHRODERS MULTI-ASSET AST COHEN & STEERS AST J.P. MORGAN STRATEGIC WORLD STRATEGIES PORTFOLIO REALTY PORTFOLIO OPPORTUNITIES PORTFOLIO -------------------------- ------------------------ -------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ------------ ------------ ----------- ----------- ------------ ------------ OPERATIONS Net investment income (loss).... $ 404,876 $ (101,547) $ (55,904) $ (85,685) $ (243,621) $ (623,603) Capital gains distributions received....................... 0 979,487 0 0 0 0 Realized gain (loss) on shares redeemed....................... 649,719 (2,016,922) 351,957 (235,309) 952,250 417,664 Net change in unrealized gain (loss) on investments.......... 9,970,290 (7,873,818) 1,237,297 79,302 8,423,788 (2,330,731) ------------ ------------ ----------- ----------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 11,024,886 (9,012,800) 1,533,349 (241,692) 9,132,418 (2,536,670) ------------ ------------ ----------- ----------- ------------ ------------ CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 37,276,063 60,348,216 4,816,165 5,729,775 44,166,088 36,420,477 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (1,495,720) (1,052,475) (249,888) (197,722) (2,054,688) (1,759,666) Net transfers between other subaccounts or fixed rate option......................... 13,008,868 (20,658,177) 3,291,874 (1,936,649) 8,968,274 (14,711,557) Withdrawal and other charges.... (1,285,710) (761,692) (116,674) (52,078) (929,387) (509,960) ------------ ------------ ----------- ----------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 47,503,500 37,875,872 7,741,478 3,543,326 50,150,287 19,439,294 ------------ ------------ ----------- ----------- ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 58,528,386 28,863,072 9,274,827 3,301,634 59,282,705 16,902,624 NET ASSETS Beginning of period............. 105,293,592 76,430,520 9,555,425 6,253,791 85,179,205 68,276,581 ------------ ------------ ----------- ----------- ------------ ------------ End of period................... $163,821,978 $105,293,592 $18,830,252 $ 9,555,425 $144,461,910 $ 85,179,205 ============ ============ =========== =========== ============ ============ Beginning units................. 10,204,353 7,044,852 780,293 542,367 8,024,460 6,294,008 ------------ ------------ ----------- ----------- ------------ ------------ Units issued.................... 9,652,968 11,330,820 1,081,053 1,038,140 6,923,305 6,101,049 Units redeemed.................. (5,308,689) (8,171,319) (510,408) (800,214) (2,396,347) (4,370,597) ------------ ------------ ----------- ----------- ------------ ------------ Ending units.................... 14,548,632 10,204,353 1,350,938 780,293 12,551,418 8,024,460 ============ ============ =========== =========== ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A27
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------------- AST FEDERATED AST BLACKROCK VALUE AST HIGH YIELD AGGRESSIVE GROWTH AST MID-CAP VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------------- ------------------------ ------------------------ ----------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- $ (70,782) $ (57,433) $ 736,594 $ 520,629 $ (212,143) $ (120,111) $ (107,332) $ (70,121) 0 0 0 0 0 0 32,967 0 80,094 (427,702) 198,589 (156,595) 297,998 (1,802,400) 217,403 (275,890) 907,248 (196,127) 970,177 (336,919) 1,502,577 (1,242,562) 959,471 (586,466) ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- 916,560 (681,262) 1,905,360 27,115 1,588,431 (3,165,073) 1,102,509 (932,477) ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- 5,643,379 3,275,428 7,074,932 5,235,872 2,989,729 3,475,193 1,744,830 2,723,023 0 0 0 0 0 0 0 0 (254,233) (82,293) (381,666) (387,782) (225,401) (224,026) (143,938) (108,091) 1,425,213 (217,672) 1,718,258 (2,447,600) 1,648,669 3,649,330 1,253,242 (1,146,512) (91,110) (30,120) (136,094) (61,966) (109,089) (63,894) (69,515) (42,808) ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- 6,723,248 2,945,343 8,275,429 2,338,524 4,303,908 6,836,603 2,784,620 1,425,612 ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- 7,639,807 2,264,081 10,180,790 2,365,639 5,892,340 3,671,530 3,887,130 493,135 6,050,008 3,785,927 11,409,719 9,044,080 8,661,558 4,990,028 5,953,093 5,459,958 ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- $13,689,815 $6,050,008 $21,590,509 $11,409,719 $14,553,898 $ 8,661,558 $9,840,223 $ 5,953,093 =========== ========== =========== =========== =========== =========== ========== =========== 595,589 369,225 1,019,827 811,608 859,377 423,446 549,671 480,961 ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- 1,160,030 980,364 1,420,063 953,794 1,165,100 1,783,808 630,666 786,129 (561,841) (754,000) (702,733) (745,575) (801,422) (1,347,877) (402,263) (717,419) ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- 1,193,778 595,589 1,737,157 1,019,827 1,223,055 859,377 778,074 549,671 =========== ========== =========== =========== =========== =========== ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A28 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS -------------------------------------------------------------------------- AST GOLDMAN SACHS AST SMALL-CAP VALUE CONCENTRATED GROWTH AST GOLDMAN SACHS PORTFOLIO PORTFOLIO MID-CAP GROWTH PORTFOLIO ---------------------- ------------------------ ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ----------- ----------- ----------- ----------- OPERATIONS Net investment income (loss).... $ (98,616) $ (70,152) $ (181,799) $ (149,862) $ (288,568) $ (207,851) Capital gains distributions received....................... 0 0 0 0 1,788,797 741,248 Realized gain (loss) on shares redeemed....................... 186,176 (361,914) 394,306 (116,211) 288,440 (824,237) Net change in unrealized gain (loss) on investments.......... 877,635 (565,184) 1,585,979 (915,576) 535,464 (1,344,424) ---------- ---------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 965,195 (997,250) 1,798,487 (1,181,649) 2,324,133 (1,635,264) ---------- ---------- ----------- ----------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 1,777,347 1,942,517 2,952,834 5,288,197 5,508,334 6,626,317 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (184,699) (200,487) (168,124) (727,377) (292,132) (514,525) Net transfers between other subaccounts or fixed rate option......................... 881,883 (487,086) 2,431,162 (3,382,134) 3,006,718 (4,211,860) Withdrawal and other charges.... (57,402) (35,081) (105,228) (66,657) (145,060) (82,650) ---------- ---------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 2,417,128 1,219,863 5,110,645 1,112,029 8,077,860 1,817,282 ---------- ---------- ----------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 3,382,323 222,613 6,909,132 (69,620) 10,401,992 182,018 NET ASSETS Beginning of period............. 5,461,308 5,238,695 8,999,026 9,068,646 11,358,598 11,176,580 ---------- ---------- ----------- ----------- ----------- ----------- End of period................... $8,843,631 $5,461,308 $15,908,158 $ 8,999,026 $21,760,590 $11,358,598 ========== ========== =========== =========== =========== =========== Beginning units................. 521,742 463,947 872,417 824,975 1,007,755 933,653 ---------- ---------- ----------- ----------- ----------- ----------- Units issued.................... 593,744 742,343 1,028,879 1,136,403 1,401,054 1,397,818 Units redeemed.................. (388,493) (684,548) (588,331) (1,088,961) (749,621) (1,323,716) ---------- ---------- ----------- ----------- ----------- ----------- Ending units.................... 726,993 521,742 1,312,965 872,417 1,659,188 1,007,755 ========== ========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A29
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------ AST LORD ABBETT AST LARGE-CAP VALUE CORE FIXED INCOME AST MARSICO CAPITAL GROWTH AST MFS GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ------------------------ ------------------------ ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 185,440 $ (22,121) $ (152,258) $ (11,283) $ (352,155) $ (284,183) $ (134,732) $ (60,226) 0 0 851,791 0 0 0 0 0 (56,104) (450,623) 218,595 311,717 673,619 (313,211) 203,666 (2,894) 1,321,717 (100,386) 321,933 534,735 1,569,539 (1,384,872) 890,109 (277,215) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 1,451,053 (573,130) 1,240,062 835,169 1,891,002 (1,982,266) 959,043 (340,335) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,815,944 3,021,721 19,015,635 10,038,354 7,357,094 10,131,331 2,752,709 2,714,326 (3,162) 0 0 0 0 0 0 0 (364,054) (668,652) (729,647) (825,159) (804,069) (306,361) (123,992) (86,834) 585,699 (1,100,770) 2,948,375 1,764,030 3,500,918 (5,973,079) 2,468,415 (1,554,871) (87,661) (29,588) (264,759) (60,975) (226,628) (133,581) (68,163) (33,371) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,946,765 1,222,711 20,969,603 10,916,250 9,827,316 3,718,310 5,028,970 1,039,250 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 7,397,818 649,581 22,209,665 11,751,419 11,718,318 1,736,044 5,988,013 698,915 7,376,737 6,727,156 18,984,628 7,233,209 18,293,433 16,557,389 4,779,596 4,080,681 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $14,774,555 $ 7,376,737 $41,194,293 $18,984,628 $30,011,751 $18,293,433 $10,767,609 $ 4,779,596 =========== =========== =========== =========== =========== =========== =========== =========== 840,825 748,300 1,575,997 612,139 1,718,281 1,533,930 455,535 382,342 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 931,282 598,324 3,018,361 1,562,949 2,053,244 2,296,032 754,551 518,096 (354,684) (505,799) (1,241,846) (599,091) (1,228,269) (2,111,681) (316,091) (444,903) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 1,417,423 840,825 3,352,512 1,575,997 2,543,256 1,718,281 893,995 455,535 =========== =========== =========== =========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A30 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ---------------------------------------------------------------------------- AST NEUBERGER BERMAN AST NEUBERGER BERMAN / LSV AST PIMCO LIMITED MATURITY MID-CAP GROWTH PORTFOLIO MID-CAP VALUE PORTFOLIO BOND PORTFOLIO ------------------------ ------------------------ ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ----------- ----------- ----------- ----------- OPERATIONS Net investment income (loss).... $ (270,677) $ (177,994) $ (99,298) $ (66,570) $ (70,868) $ (99,497) Capital gains distributions received....................... 0 0 0 0 633,956 241,403 Realized gain (loss) on shares redeemed....................... 384,771 (47,566) 227,472 (531,932) (8,495) (37,787) Net change in unrealized gain (loss) on investments.......... 1,045,463 (609,919) 1,438,918 (584,289) 44,946 (23,378) ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 1,159,558 (835,479) 1,567,091 (1,182,791) 599,540 80,741 ----------- ----------- ----------- ----------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 5,440,294 7,444,595 3,987,738 6,071,614 5,519,365 5,251,205 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (314,385) (249,444) (158,864) (182,710) (663,167) (421,133) Net transfers between other subaccounts or fixed rate option......................... 3,183,156 (4,334,035) 1,863,335 (3,165,526) 889,017 (1,772,728) Withdrawal and other charges.... (144,182) (67,889) (114,489) (60,982) (153,241) (92,132) ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 8,164,882 2,793,227 5,577,720 2,662,396 5,591,973 2,965,212 ----------- ----------- ----------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 9,324,440 1,957,748 7,144,811 1,479,605 6,191,512 3,045,953 NET ASSETS Beginning of period............. 10,192,969 8,235,221 8,617,159 7,137,554 15,100,283 12,054,330 ----------- ----------- ----------- ----------- ----------- ----------- End of period................... $19,517,409 $10,192,969 $15,761,970 $ 8,617,159 $21,291,795 $15,100,283 =========== =========== =========== =========== =========== =========== Beginning units................. 862,295 693,749 816,821 658,507 1,418,816 1,124,091 ----------- ----------- ----------- ----------- ----------- ----------- Units issued.................... 1,337,855 1,308,598 1,096,010 1,207,025 1,616,173 1,062,393 Units redeemed.................. (689,455) (1,140,052) (624,134) (1,048,711) (1,074,032) (767,668) ----------- ----------- ----------- ----------- ----------- ----------- Ending units.................... 1,510,695 862,295 1,288,697 816,821 1,960,957 1,418,816 =========== =========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A31
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------ AST T. ROWE PRICE EQUITY AST QMA US EQUITY ALPHA AST T. ROWE PRICE NATURAL AST T. ROWE PRICE ASSET INCOME PORTFOLIO PORTFOLIO RESOURCES PORTFOLIO ALLOCATION PORTFOLIO ------------------------ ---------------------- ------------------------ -------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ $ (219,492) $ (44,498) $ (53,984) $ (26,663) $ (337,592) $ (256,436) $ (1,817,234) $ (1,322,347) 0 0 0 0 0 0 3,244,064 0 272,418 (527,438) 210,908 (89,648) (938,086) (1,798,291) 3,780,200 (1,970,220) 1,711,409 (281,119) 534,982 (41,070) 1,295,662 (4,185,345) 34,237,999 (5,886,549) ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ 1,764,335 (853,055) 691,906 (157,381) 19,984 (6,240,072) 39,445,029 (9,179,116) ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ 8,624,956 4,032,977 1,332,704 1,840,607 6,210,183 11,103,654 214,432,893 155,649,906 0 0 0 0 0 0 (47,765) 0 (310,353) (337,801) (101,406) (44,525) (807,838) (1,006,363) (6,278,599) (3,334,779) 3,750,355 (2,541,219) 2,217,682 (840,694) 4,381,151 (4,234,588) 42,569,080 (56,199,920) (133,663) (50,937) (45,713) (15,761) (219,845) (155,135) (3,593,349) (1,551,070) ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ 11,931,296 1,103,020 3,403,267 939,627 9,563,652 5,707,568 247,082,261 94,564,137 ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ 13,695,630 249,965 4,095,173 782,246 9,583,636 (532,504) 286,527,290 85,385,021 7,093,624 6,843,659 3,025,276 2,243,030 20,366,272 20,898,776 264,164,701 178,779,680 ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ $20,789,254 $ 7,093,624 $7,120,449 $3,025,276 $29,949,908 $20,366,272 $550,691,991 $264,164,701 =========== =========== ========== ========== =========== =========== ============ ============ 750,360 718,108 293,943 231,238 2,023,534 1,711,435 24,391,241 16,475,879 ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ 1,774,359 931,581 625,878 348,921 2,695,125 2,914,961 31,324,650 25,775,367 (666,433) (899,329) (353,178) (286,216) (1,754,320) (2,602,862) (10,054,069) (17,860,005) ----------- ----------- ---------- ---------- ----------- ----------- ------------ ------------ 1,858,286 750,360 566,643 293,943 2,964,339 2,023,534 45,661,822 24,391,241 =========== =========== ========== ========== =========== =========== ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A32 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ---------------------------------------------------------------------------- AST MFS GLOBAL EQUITY AST JPMORGAN INTERNATIONAL AST T. ROWE PRICE GLOBAL PORTFOLIO EQUITY PORTFOLIO BOND PORTFOLIO ------------------------ ------------------------ ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ----------- ----------- ----------- ----------- OPERATIONS Net investment income (loss).... $ (69,267) $ (96,593) $ 4,158 $ (33,371) $ 113,393 $ 122,197 Capital gains distributions received....................... 0 0 0 0 251,729 85,984 Realized gain (loss) on shares redeemed....................... 243,678 (202,245) 47,047 (989,607) 31,346 132,783 Net change in unrealized gain (loss) on investments.......... 1,903,728 (669,993) 2,750,619 (1,560,593) 118,159 (58,783) ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 2,078,139 (968,831) 2,801,824 (2,583,571) 514,628 282,181 ----------- ----------- ----------- ----------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 3,825,529 4,493,172 2,964,945 6,305,033 4,433,992 4,731,334 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (212,833) (160,572) (297,787) (201,509) (366,680) (457,696) Net transfers between other subaccounts or fixed rate option......................... 1,392,047 (2,253,663) 2,387,662 (4,053,547) 1,803,030 (2,150,494) Withdrawal and other charges.... (102,160) (61,181) (151,038) (102,857) (129,720) (71,963) ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 4,902,583 2,017,756 4,903,783 1,947,120 5,740,622 2,051,181 ----------- ----------- ----------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 6,980,722 1,048,925 7,705,607 (636,451) 6,255,249 2,333,362 NET ASSETS Beginning of period............. 7,785,786 6,736,861 12,053,672 12,690,123 11,416,125 9,082,763 ----------- ----------- ----------- ----------- ----------- ----------- End of period................... $14,766,508 $ 7,785,786 $19,759,279 $12,053,672 $17,671,374 $11,416,125 =========== =========== =========== =========== =========== =========== Beginning units................. 738,448 600,071 1,313,564 1,247,253 1,035,375 830,176 ----------- ----------- ----------- ----------- ----------- ----------- Units issued.................... 952,255 1,010,799 1,468,296 1,623,775 1,064,529 1,096,729 Units redeemed.................. (522,146) (872,422) (993,889) (1,557,464) (528,441) (891,530) ----------- ----------- ----------- ----------- ----------- ----------- Ending units.................... 1,168,557 738,448 1,787,971 1,313,564 1,571,463 1,035,375 =========== =========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A33
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------ AST WELLINGTON MANAGEMENT AST CAPITAL GROWTH ASSET AST ACADEMIC STRATEGIES AST BALANCED ASSET HEDGED EQUITY PORTFOLIO ALLOCATION PORTFOLIO ASSET ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ------------------------ -------------------------- -------------------------- -------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ $ (406,446) $ (152,571) $ (2,740,809) $ (3,000,937) $ (2,483,084) $ (3,129,060) $ (3,559,473) $ (3,849,946) 0 0 0 0 0 0 13,537,034 0 256,583 26,689 4,530,791 (2,357,253) 3,262,162 (1,423,314) 5,104,906 2,153,974 2,226,379 (630,011) 25,645,314 (14,290,332) 27,729,344 (13,767,759) 26,157,340 (17,882,809) ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ 2,076,516 (755,893) 27,435,296 (19,648,522) 28,508,422 (18,320,133) 41,239,807 (19,578,781) ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ 20,838,896 8,089,423 72,208,643 93,007,685 55,680,594 84,558,699 119,037,626 135,261,534 0 0 0 0 0 0 (290,287) 0 (804,594) (627,606) (5,788,675) (4,423,529) (7,387,563) (4,974,573) (12,798,215) (11,305,561) 1,630,113 (35,642) 29,001,937 (67,834,244) 24,725,926 (42,666,476) 35,715,392 (79,705,786) (205,755) (34,483) (2,111,004) (1,306,210) (2,100,596) (1,340,353) (3,503,930) (2,095,358) ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ 21,458,660 7,391,692 93,310,901 19,443,702 70,918,360 35,577,297 138,160,586 42,154,829 ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ 23,535,176 6,635,799 120,746,197 (204,820) 99,426,783 17,257,164 179,400,393 22,576,048 16,414,783 9,778,984 216,804,339 217,009,159 249,345,914 232,088,750 352,781,945 330,205,897 ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ $39,949,959 $16,414,783 $337,550,536 $216,804,339 $348,772,697 $249,345,914 $532,182,338 $352,781,945 =========== =========== ============ ============ ============ ============ ============ ============ 1,819,065 1,007,356 21,420,963 20,678,461 24,615,273 22,015,759 33,653,172 30,549,180 ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ 3,077,000 1,506,674 19,557,007 19,760,641 15,687,528 17,796,492 24,461,209 25,446,956 (796,004) (694,965) (11,330,180) (19,018,139) (9,310,172) (15,196,978) (12,191,054) (22,342,964) ----------- ----------- ------------ ------------ ------------ ------------ ------------ ------------ 4,100,061 1,819,065 29,647,790 21,420,963 30,992,629 24,615,273 45,923,327 33,653,172 =========== =========== ============ ============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A34 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ------------------------------------------------------------------------------------ AST PRESERVATION ASSET AST FIRST TRUST BALANCED AST FIRST TRUST CAPITAL ALLOCATION PORTFOLIO TARGET PORTFOLIO APPRECIATION TARGET PORTFOLIO -------------------------- -------------------------- ---------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ------------ ------------ ------------ ------------ ------------ ------------ OPERATIONS Net investment income (loss).... $ (2,136,461) $ (1,871,297) $ 375,149 $ 53,875 $ (741,403) $ (625,646) Capital gains distributions received....................... 19,769,310 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... 1,988,511 2,465,464 1,121,650 (3,011,507) 1,325,613 (5,279,801) Net change in unrealized gain (loss) on investments.......... 6,895,289 (3,977,122) 12,984,047 (6,154,694) 13,624,196 (11,932,967) ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 26,516,649 (3,382,955) 14,480,847 (9,112,326) 14,208,406 (17,838,414) ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 144,317,246 116,740,663 84,911,024 81,273,329 73,832,500 84,854,477 Annuity Payments................ 0 0 (17,014) 0 0 0 Surrenders, withdrawals and death benefits................. (10,106,230) (7,602,615) (3,229,994) (1,935,981) (2,120,772) (1,236,721) Net transfers between other subaccounts or fixed rate option......................... 2,449,967 (42,561,992) 15,264,086 (30,458,071) 24,654,609 (49,562,091) Withdrawal and other charges.... (2,638,158) (1,391,361) (1,693,589) (812,420) (1,540,896) (814,608) ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 134,022,826 65,184,695 95,234,511 48,066,857 94,825,441 33,241,057 ------------ ------------ ------------ ------------ ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 160,539,474 61,801,740 109,715,359 38,954,531 109,033,847 15,402,643 NET ASSETS Beginning of period............. 266,300,550 204,498,810 138,312,744 99,358,213 113,082,406 97,679,763 ------------ ------------ ------------ ------------ ------------ ------------ End of period................... $426,840,024 $266,300,550 $248,028,103 $138,312,744 $222,116,253 $113,082,406 ============ ============ ============ ============ ============ ============ Beginning units................. 24,615,353 18,568,295 13,265,213 9,356,812 11,105,442 9,120,677 ------------ ------------ ------------ ------------ ------------ ------------ Units issued.................... 18,123,219 16,496,730 14,709,530 13,675,653 16,010,851 15,611,746 Units redeemed.................. (6,083,299) (10,449,672) (6,304,900) (9,767,252) (7,710,037) (13,626,981) ------------ ------------ ------------ ------------ ------------ ------------ Ending units.................... 36,655,273 24,615,353 21,669,843 13,265,213 19,406,256 11,105,442 ============ ============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A35
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------------------------------------ AST ADVANCED AST T. ROWE PRICE LARGE-CAP AST MONEY MARKET AST SMALL-CAP GROWTH STRATEGIES PORTFOLIO GROWTH PORTFOLIO PORTFOLIO PORTFOLIO -------------------------- -------------------------- -------------------------- ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- $ (1,125,737) $ (1,109,068) $ (450,257) $ (277,130) $ (331,816) $ (284,412) $ (200,792) $ (124,005) 978,632 0 0 0 0 0 0 0 2,685,004 (2,073,998) 595,258 (119,297) 0 0 232,825 43,373 25,417,674 (6,404,600) 2,690,050 (1,259,418) 0 0 828,600 (609,710) ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- 27,955,573 (9,587,666) 2,835,051 (1,655,845) (331,816) (284,412) 860,633 (690,342) ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- 145,489,069 114,822,906 9,462,528 9,316,934 9,847,041 23,134,838 3,444,336 4,035,279 (35,236) 0 (3,126) 0 0 0 (3,992) 0 (4,458,320) (2,259,599) (604,612) (385,324) (21,332,031) (11,068,116) (457,867) (269,956) 30,640,009 (48,268,209) 6,954,363 (4,702,726) 9,993,186 (2,642,568) 2,353,980 (1,452,427) (2,447,999) (1,068,296) (226,310) (107,883) (141,855) (99,847) (92,306) (38,817) ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- 169,187,523 63,226,802 15,582,842 4,121,001 (1,633,659) 9,324,307 5,244,151 2,274,079 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- 197,143,096 53,639,136 18,417,893 2,465,156 (1,965,475) 9,039,895 6,104,784 1,583,737 182,811,037 129,171,901 16,199,304 13,734,148 21,882,063 12,842,168 7,766,322 6,182,585 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- $379,954,133 $182,811,037 $34,617,197 $16,199,304 $ 19,916,588 $ 21,882,063 $13,871,106 $ 7,766,322 ============ ============ =========== =========== ============ ============ =========== =========== 17,018,736 11,836,902 1,502,529 1,232,550 2,221,281 1,273,760 646,526 507,079 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- 22,776,358 19,064,231 2,333,677 1,850,572 4,261,909 5,570,243 849,316 770,237 (8,172,654) (13,882,397) (1,062,847) (1,580,593) (4,427,038) (4,622,722) (460,220) (630,790) ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- 31,622,440 17,018,736 2,773,359 1,502,529 2,056,152 2,221,281 1,035,622 646,526 ============ ============ =========== =========== ============ ============ =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A36 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ----------------------------------------------------------------------------- AST PIMCO TOTAL RETURN AST INTERNATIONAL VALUE AST INTERNATIONAL GROWTH BOND PORTFOLIO PORTFOLIO PORTFOLIO -------------------------- ----------------------- ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ------------ ------------ ---------- ----------- ----------- ----------- OPERATIONS Net investment income (loss).... $ 1,844,475 $ 350,620 $ 26,624 $ (10,049) $ (63,501) $ (81,061) Capital gains distributions received....................... 2,122,034 5,614,561 0 0 0 0 Realized gain (loss) on shares redeemed....................... 1,368,839 (984,745) (88,699) (507,100) 46,543 (773,683) Net change in unrealized gain (loss) on investments.......... 9,112,176 (2,390,884) 833,703 (628,081) 1,639,718 (972,097) ------------ ------------ ---------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 14,447,524 2,589,552 771,628 (1,145,230) 1,622,760 (1,826,841) ------------ ------------ ---------- ----------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 57,662,141 68,227,812 1,533,076 3,175,404 3,985,388 4,376,264 Annuity Payments................ (79,548) (36,580) 0 0 0 0 Surrenders, withdrawals and death benefits................. (6,778,735) (7,624,810) (164,835) (67,398) (120,987) (92,634) Net transfers between other subaccounts or fixed rate option......................... 29,400,681 (42,240,369) 819,994 (1,727,225) 280,466 (1,576,773) Withdrawal and other charges.... (1,621,879) (944,155) (52,636) (31,704) (99,214) (46,956) ------------ ------------ ---------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 78,582,661 17,381,898 2,135,599 1,349,077 4,045,654 2,659,901 ------------ ------------ ---------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 93,030,185 19,971,450 2,907,227 203,847 5,668,414 833,060 NET ASSETS Beginning of period............. 154,437,971 134,466,521 4,480,177 4,276,330 7,164,025 6,330,965 ------------ ------------ ---------- ----------- ----------- ----------- End of period................... $247,468,156 $154,437,971 $7,387,404 $ 4,480,177 $12,832,439 $ 7,164,025 ============ ============ ========== =========== =========== =========== Beginning units................. 14,092,072 12,278,400 494,113 408,114 784,260 592,727 ------------ ------------ ---------- ----------- ----------- ----------- Units issued.................... 13,551,715 12,896,311 581,282 677,919 1,092,732 1,177,939 Units redeemed.................. (6,418,981) (11,082,639) (369,855) (591,920) (671,935) (986,406) ------------ ------------ ---------- ----------- ----------- ----------- Ending units.................... 21,224,806 14,092,072 705,540 494,113 1,205,057 784,260 ============ ============ ========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A37
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------------- NVIT DEVELOPING MARKETS AST INVESTMENT GRADE BOND AST WESTERN ASSET CORE PLUS FUND PORTFOLIO BOND PORTFOLIO AST BOND PORTFOLIO 2018 ---------------------- --------------------------- -------------------------- ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- $ (9,963) $ (13,199) $ (1,181,495) $ (3,849,425) $ 605,183 $ 334,164 $ (363,913) $ (177,515) 0 0 5,700,628 2,420,829 1,333,248 462,908 110,842 307,854 (74,592) (855,034) 35,842,163 1,521,101 345,313 364,517 344,006 50,058 177,614 622,061 (9,733,697) 14,626,636 (19,061) 187,065 622,643 612,200 -------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- 93,059 (246,172) 30,627,599 14,719,141 2,264,684 1,348,654 713,578 792,597 -------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- 798 22,594 31,057 0 10,203,138 12,310,969 53 27 0 0 (14,459) 0 0 0 0 0 (98,746) (79,141) (5,486,824) (3,531,108) (566,897) (495,273) (565,155) (294,102) 1,421 (1,611,156) (437,054,915) 673,290,519 5,144,620 (7,292,557) 700,571 20,339,006 (1,694) (1,890) (4,055,949) (2,276,880) (343,412) (204,784) (3,435) (127) -------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- (98,220) (1,669,593) (446,581,089) 667,482,531 14,437,448 4,318,355 132,034 20,044,804 -------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- (5,161) (1,915,765) (415,953,490) 682,201,672 16,702,132 5,667,009 845,612 20,837,401 670,330 2,586,095 688,204,214 6,002,542 28,879,973 23,212,964 21,048,746 211,345 -------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- $665,169 $ 670,330 $ 272,250,724 $688,204,214 $45,582,105 $28,879,973 $21,894,358 $21,048,746 ======== =========== ============= ============ =========== =========== =========== =========== 51,346 150,777 56,740,197 468,830 2,627,749 2,191,615 1,787,276 17,593 -------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- 4,021 10,159 81,569,601 152,585,942 3,231,760 3,084,733 632,036 2,632,927 (11,010) (109,590) (117,381,032) (96,314,575) (1,939,931) (2,648,599) (619,836) (863,244) -------- ----------- ------------- ------------ ----------- ----------- ----------- ----------- 44,357 51,346 20,928,766 56,740,197 3,919,578 2,627,749 1,799,476 1,787,276 ======== =========== ============= ============ =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A38 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ------------------------------------------------------------------------ AST GLOBAL REAL ESTATE AST PARAMETRIC EMERGING AST BOND PORTFOLIO 2019 PORTFOLIO MARKETS EQUITY PORTFOLIO --------------------- ----------------------- ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ----------- ----------- ----------- OPERATIONS Net investment income (loss).... $ (13,650) $ (112) $ (11,410) $ 24,590 $ (121,976) $ (142,835) Capital gains distributions received....................... 29,557 2,092 0 0 339,838 0 Realized gain (loss) on shares redeemed....................... (1,419) (610) 134,049 (179,409) (336,541) (1,900,072) Net change in unrealized gain (loss) on investments.......... (3,809) (579) 993,606 (375,870) 2,880,354 (3,298,453) ---------- -------- ---------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 10,679 791 1,116,245 (530,689) 2,761,675 (5,341,360) ---------- -------- ---------- ----------- ----------- ----------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 0 4 1,819,904 2,284,934 5,355,572 11,227,397 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (21,627) (34,272) (81,702) (60,381) (186,213) (194,829) Net transfers between other subaccounts or fixed rate option......................... 2,294,154 0 892,920 (1,360,284) 3,811,729 (8,133,173) Withdrawal and other charges.... (67) 0 (48,481) (28,356) (210,466) (145,512) ---------- -------- ---------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 2,272,460 (34,268) 2,582,641 835,913 8,770,622 2,753,883 ---------- -------- ---------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 2,283,139 (33,477) 3,698,887 305,224 11,532,297 (2,587,477) NET ASSETS Beginning of period............. 1 33,478 3,471,548 3,166,324 14,498,653 17,086,130 ---------- -------- ---------- ----------- ----------- ----------- End of period................... $2,283,140 $ 1 $7,170,435 $ 3,471,548 $26,030,950 $14,498,653 ========== ======== ========== =========== =========== =========== Beginning units................. 0 2,796 333,835 289,148 1,592,487 1,468,373 ---------- -------- ---------- ----------- ----------- ----------- Units issued.................... 205,143 0 456,643 487,444 2,517,714 2,635,611 Units redeemed.................. (22,048) (2,796) (243,345) (442,757) (1,651,706) (2,511,497) ---------- -------- ---------- ----------- ----------- ----------- Ending units.................... 183,095 0 547,133 333,835 2,458,495 1,592,487 ========== ======== ========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A39
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------------------------- FRANKLIN TEMPLETON VIP FOUNDING AST GOLDMAN SACHS AST SCHRODERS GLOBAL AST CLS MODERATE ASSET FUNDS ALLOCATION FUND SMALL-CAP VALUE PORTFOLIO TACTICAL PORTFOLIO ALLOCATION PORTFOLIO ------------------------------ ------------------------ -------------------------- -------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 09/21/2012** 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ $ 2,728,206 $ (2,144,536) $ (195,213) $ (140,819) $ (1,637,928) $ (1,158,523) $ (1,992,949) $ (1,321,347) 0 0 0 0 602,053 832,012 4,402,813 1,704,048 15,394,586 (4,030,882) 409,844 (340,918) 2,099,981 (3,191,974) 984,445 (2,260,018) (2,097,431) (5,447,041) 1,514,979 (608,211) 13,523,798 (5,453,108) 8,685,465 (5,736,625) ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ 16,025,361 (11,622,459) 1,729,610 (1,089,948) 14,587,904 (8,971,593) 12,079,775 (7,613,942) ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ 27,761,082 78,999,146 4,932,365 7,710,555 62,692,682 63,448,734 97,934,845 70,249,625 0 0 0 0 0 0 (17,098) 0 (1,374,046) (1,461,462) (237,214) (419,088) (1,410,365) (710,074) (2,895,888) (1,596,833) (161,076,921) (51,674,178) 2,572,375 (4,276,518) 23,691,131 (34,037,183) 16,047,217 (28,090,529) (1,028,148) (891,924) (144,647) (81,803) (1,264,387) (593,984) (1,598,741) (733,121) ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ (135,718,033) 24,971,582 7,122,878 2,933,146 83,709,061 28,107,493 109,470,334 39,829,142 ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ (119,692,672) 13,349,123 8,852,488 1,843,198 98,296,964 19,135,900 121,550,109 32,215,200 119,692,672 106,343,549 11,039,742 9,196,544 81,483,863 62,347,963 114,175,261 81,960,061 ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ $ 0 $119,692,672 $19,892,230 $11,039,742 $179,780,827 $ 81,483,863 $235,725,370 $114,175,261 ============= ============ =========== =========== ============ ============ ============ ============ 11,945,693 10,403,163 959,394 790,640 7,911,117 5,917,097 11,121,340 7,792,325 ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ 10,141,973 15,190,291 1,339,815 1,506,789 12,393,694 11,456,791 15,152,387 11,864,728 (22,087,666) (13,647,761) (774,517) (1,338,035) (5,114,569) (9,462,771) (5,270,204) (8,535,713) ------------- ------------ ----------- ----------- ------------ ------------ ------------ ------------ 0 11,945,693 1,524,692 959,394 15,190,242 7,911,117 21,003,523 11,121,340 ============= ============ =========== =========== ============ ============ ============ ============
** Date subaccount was no longer available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A40 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ---------------------------------------------------------------------------------- AST J.P. MORGAN GLOBAL AST HORIZON MODERATE ASSET AST FI PYRAMIS(R) ASSET THEMATIC PORTFOLIO ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO -------------------------- -------------------------- -------------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ------------ ------------ ------------ ------------ ------------ ------------ OPERATIONS Net investment income (loss).... $ (1,037,698) $ (664,728) $ (1,263,976) $ (933,786) $ (1,086,065) $ (769,247) Capital gains distributions received....................... 496,390 2,205,561 2,879,907 3,870,248 0 1,983,750 Realized gain (loss) on shares redeemed....................... 818,542 (2,206,377) 627,204 (1,431,415) 716,635 (3,104,763) Net change in unrealized gain (loss) on investments.......... 7,800,617 (3,293,153) 5,821,376 (5,382,931) 8,675,694 (3,444,372) ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 8,077,851 (3,958,697) 8,064,511 (3,877,884) 8,306,264 (5,334,632) ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 45,685,662 36,999,463 39,016,866 41,333,962 47,335,757 43,253,820 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (704,287) (535,161) (1,737,598) (916,157) (843,643) (493,695) Net transfers between other subaccounts or fixed rate option......................... 6,957,370 (15,405,961) 9,185,338 (16,290,239) 13,178,625 (19,482,671) Withdrawal and other charges.... (773,763) (361,713) (1,056,667) (586,636) (816,214) (355,134) ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... 51,164,981 20,696,628 45,407,939 23,540,930 58,854,525 22,922,320 ------------ ------------ ------------ ------------ ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 59,242,832 16,737,931 53,472,449 19,663,046 67,160,789 17,587,688 NET ASSETS Beginning of period............. 52,173,792 35,435,861 86,340,779 66,677,733 53,096,580 35,508,892 ------------ ------------ ------------ ------------ ------------ ------------ End of period................... $111,416,624 $ 52,173,792 $139,813,228 $ 86,340,779 $120,257,369 $ 53,096,580 ============ ============ ============ ============ ============ ============ Beginning units................. 4,964,168 3,330,108 8,325,112 6,330,222 5,117,071 3,298,104 ------------ ------------ ------------ ------------ ------------ ------------ Units issued.................... 7,846,389 6,509,643 7,240,381 7,441,727 8,641,888 7,313,785 Units redeemed.................. (3,352,372) (4,875,583) (3,153,496) (5,446,837) (3,415,021) (5,494,818) ------------ ------------ ------------ ------------ ------------ ------------ Ending units.................... 9,458,185 4,964,168 12,411,997 8,325,112 10,343,938 5,117,071 ============ ============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A41
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------- PROFUND VP PROFUND VP CONSUMER PROFUND VP PROFUND VP CONSUMER SERVICES GOODS PORTFOLIO FINANCIALS HEALTH CARE -------------------- -------------------- -------------------- -------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ (5,515) $ (4,782) $ (2,177) $ (650) $ (6,939) $ (7,239) $ (4,666) $ (4,595) 1,660 0 0 0 0 0 0 0 28,512 28,940 17,887 24,821 24,480 (18,867) 28,837 25,471 41,779 (23,814) 14,842 (17,033) 83,373 (78,387) 35,071 (2,293) -------- -------- -------- -------- -------- --------- -------- -------- 66,436 344 30,553 7,138 100,913 (104,493) 59,242 18,583 -------- -------- -------- -------- -------- --------- -------- -------- 18,419 49,505 19,569 45,585 21,716 65,530 15,913 50,988 0 0 0 0 0 0 0 0 (1,555) (876) (1,602) (933) (46,935) (889) (1,487) (849) (68,696) (49,456) (45,427) (53,434) (62,933) 1,062 (62,329) (71,762) (3,182) (2,686) (3,017) (2,629) (4,219) (3,528) (3,563) (3,128) -------- -------- -------- -------- -------- --------- -------- -------- (55,014) (3,513) (30,477) (11,411) (92,371) 62,175 (51,467) (24,751) -------- -------- -------- -------- -------- --------- -------- -------- 11,422 (3,169) 76 (4,273) 8,543 (42,318) 7,776 (6,168) 318,360 321,529 309,464 313,737 460,756 503,074 367,076 373,244 -------- -------- -------- -------- -------- --------- -------- -------- $329,782 $318,360 $309,540 $309,464 $469,299 $ 460,756 $374,852 $367,076 ======== ======== ======== ======== ======== ========= ======== ======== 28,187 29,590 27,614 29,498 83,052 76,969 33,986 37,474 -------- -------- -------- -------- -------- --------- -------- -------- 6,303 19,609 7,026 17,058 26,427 63,797 10,485 24,879 (10,218) (21,012) (9,350) (18,942) (40,632) (57,714) (14,458) (28,367) -------- -------- -------- -------- -------- --------- -------- -------- 24,772 28,187 25,290 27,614 68,847 83,052 30,013 33,986 ======== ======== ======== ======== ======== ========= ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A42 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ---------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP INDUSTRIALS MID-CAP GROWTH MID-CAP VALUE -------------------- -------------------- -------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss).... $ (4,171) $ (4,048) $ (1,591) $ (1,427) $ (1,216) $ (984) Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... 20,490 22,262 3,168 5,612 7,323 1,664 Net change in unrealized gain (loss) on investments.......... 25,260 (48,784) 10,667 (15,105) 6,156 (9,053) -------- -------- -------- -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 41,578 (30,570) 12,245 (10,920) 12,263 (8,373) -------- -------- -------- -------- -------- ------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 11,308 40,222 5,672 16,804 6,321 18,364 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (1,463) (281) (285) (92) (11,063) (2,192) Net transfers between other subaccounts or fixed rate option......................... (22,679) (80,591) 15,477 (6,856) (18,049) 3,080 Withdrawal and other charges.... (3,065) (2,868) (935) (788) (749) (633) -------- -------- -------- -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (15,900) (43,518) 19,928 9,068 (23,539) 18,619 -------- -------- -------- -------- -------- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. 25,678 (74,088) 32,173 (1,852) (11,277) 10,246 NET ASSETS Beginning of period............. 289,434 363,522 87,030 88,882 80,928 70,682 -------- -------- -------- -------- -------- ------- End of period................... $315,112 $289,434 $119,203 $ 87,030 $ 69,651 $80,928 ======== ======== ======== ======== ======== ======= Beginning units................. 32,874 39,954 8,510 8,315 8,634 7,138 -------- -------- -------- -------- -------- ------- Units issued.................... 15,432 28,222 5,159 8,878 2,447 8,089 Units redeemed.................. (16,934) (35,302) (3,414) (8,683) (4,610) (6,593) -------- -------- -------- -------- -------- ------- Ending units.................... 31,372 32,874 10,255 8,510 6,471 8,634 ======== ======== ======== ======== ======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A43
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP PROFUND VP REAL ESTATE SMALL-CAP GROWTH SMALL-CAP VALUE TELECOMMUNICATIONS -------------------- -------------------- -------------------- -------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 1,440 $ (1,951) $ (497) $ (383) $ (294) $ (342) $ 7,533 $ 3,833 0 0 0 43 0 0 0 0 8,170 20,887 1,488 3,513 955 2,484 14,768 1,355 7,362 (21,958) 1,969 (4,807) 2,160 (4,269) 18,321 (17,520) -------- -------- ------- ------- ------- ------- -------- -------- 16,972 (3,022) 2,960 (1,634) 2,821 (2,127) 40,622 (12,332) -------- -------- ------- ------- ------- ------- -------- -------- 4,267 13,703 1,282 1,958 648 2,175 11,451 39,282 0 0 0 0 0 0 0 0 (208) (171) (8,057) (2,091) 0 0 (1,511) (1,380) 14,616 (32,886) 9,776 (21) (2,071) (5,194) (56,167) (13,680) (1,150) (1,059) (240) (209) (174) (196) (2,536) (2,212) -------- -------- ------- ------- ------- ------- -------- -------- 17,524 (20,413) 2,761 (363) (1,597) (3,215) (48,763) 22,010 -------- -------- ------- ------- ------- ------- -------- -------- 34,496 (23,435) 5,721 (1,997) 1,224 (5,342) (8,142) 9,678 109,609 133,044 26,096 28,093 19,259 24,601 254,740 245,062 -------- -------- ------- ------- ------- ------- -------- -------- $144,105 $109,609 $31,817 $26,096 $20,483 $19,259 $246,598 $254,740 ======== ======== ======= ======= ======= ======= ======== ======== 12,429 15,569 2,491 2,676 1,988 2,399 28,944 27,946 -------- -------- ------- ------- ------- ------- -------- -------- 7,343 11,942 1,912 3,176 381 1,982 8,977 26,328 (5,612) (15,082) (1,662) (3,361) (522) (2,393) (13,512) (25,330) -------- -------- ------- ------- ------- ------- -------- -------- 14,160 12,429 2,741 2,491 1,847 1,988 24,409 28,944 ======== ======== ======= ======= ======= ======= ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A44 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ---------------------------------------------------------------- PROFUND VP PROFUND VP PROFUND VP UTILITIES LARGE-CAP GROWTH LARGE-CAP VALUE -------------------- -------------------- -------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss).... $ 3,243 $ 2,653 $ (816) $ (824) $ (743) $ (1,028) Capital gains distributions received....................... 0 0 0 0 0 0 Realized gain (loss) on shares redeemed....................... 11,656 14,234 3,326 5,278 13,261 856 Net change in unrealized gain (loss) on investments.......... (17,498) 14,867 1,514 (6,626) 2,978 (8,180) -------- -------- ------- ------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ (2,599) 31,754 4,024 (2,172) 15,497 (8,352) -------- -------- ------- ------- -------- -------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 13,971 49,250 238 572 1,905 23,502 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (1,313) (1,708) 0 (2,016) (53,942) (93) Net transfers between other subaccounts or fixed rate option......................... (54,756) (62,123) 8,331 (4,708) (27,699) (13,093) Withdrawal and other charges.... (2,424) (2,276) (351) (281) (944) (831) -------- -------- ------- ------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (44,522) (16,857) 8,218 (6,433) (80,680) 9,485 -------- -------- ------- ------- -------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (47,121) 14,897 12,242 (8,605) (65,183) 1,133 NET ASSETS Beginning of period............. 258,742 243,845 36,943 45,548 140,580 139,447 -------- -------- ------- ------- -------- -------- End of period................... $211,621 $258,742 $49,185 $36,943 $ 75,397 $140,580 ======== ======== ======= ======= ======== ======== Beginning units................. 27,191 29,660 3,831 4,793 17,584 16,965 -------- -------- ------- ------- -------- -------- Units issued.................... 13,353 23,495 4,972 4,644 3,334 9,971 Units redeemed.................. (17,985) (25,964) (4,218) (5,606) (12,624) (9,352) -------- -------- ------- ------- -------- -------- Ending units.................... 22,559 27,191 4,585 3,831 8,294 17,584 ======== ======== ======= ======= ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A45
SUBACCOUNTS (CONTINUED) --------------------------------------------------------------------------------------------------- AST JENNISON LARGE-CAP AST JENNISON LARGE-CAP AST BOND PORTFOLIO 2020 VALUE PORTFOLIO GROWTH PORTFOLIO AST BOND PORTFOLIO 2017 ---------------------- ----------------------- ------------------------ ------------------------ 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- $ (2,275) $ (15,192) $ (63,185) $ (50,441) $ (144,628) $ (67,085) $ (349,585) $ (162,337) 12,074 317,874 0 14,020 0 0 0 23,155 34,556 (10,202) 15,087 (334,662) 132,373 (137,141) 366,417 83,003 (34,325) 32,756 485,373 (267,112) 678,640 (158,484) 572,745 403,543 --------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- 10,030 325,236 437,274 (638,195) 666,386 (362,710) 589,577 347,364 --------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- 5 4 1,487,841 2,749,806 3,894,362 4,398,143 0 85 0 0 0 0 0 0 0 0 (2,456) (29,615) (22,975) (10,522) (64,564) (10,000) (427,854) (253,355) (618,483) (2,748,369) 909,265 (1,421,000) 1,532,209 (1,439,620) 558,404 20,837,042 (44) (442) (46,956) (28,224) (75,898) (24,802) (5,591) (3,919) --------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- (620,979) (2,778,422) 2,327,175 1,290,060 5,286,109 2,923,721 124,958 20,579,853 --------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- (610,949) (2,453,186) 2,764,449 651,865 5,952,495 2,561,011 714,535 20,927,217 745,887 3,199,073 3,336,250 2,684,385 4,657,450 2,096,439 21,132,370 205,153 --------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- $ 134,938 $ 745,887 $6,100,699 $ 3,336,250 $10,609,945 $ 4,657,450 $21,846,905 $21,132,370 ========= =========== ========== =========== =========== =========== =========== =========== 65,882 331,074 338,692 251,015 435,071 193,445 1,835,904 19,412 --------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- 9,721 242,070 530,942 561,052 766,099 724,888 878,207 2,884,171 (64,922) (507,262) (312,920) (473,375) (325,370) (483,262) (867,215) (1,067,679) --------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- 10,681 65,882 556,714 338,692 875,800 435,071 1,846,896 1,835,904 ========= =========== ========== =========== =========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A46 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS -------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY OMEGA GROWTH PORTFOLIO AST BOND PORTFOLIO 2021 PORTFOLIO SHARE CLASS 1 SHARE CLASS 1 ------------------------ ----------------------- ----------------------- 01/01/2012 01/01/2011 01/01/2012 01/01/2011 01/01/2012 01/01/2011 TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ----------- ----------- ---------- ---------- ---------- ---------- OPERATIONS Net investment income (loss).... $ (435,040) $ (350,851) $ (190) $ (2,527) $ (6,125) $ (6,228) Capital gains distributions received....................... 622,481 0 13,810 10,094 23,469 3,129 Realized gain (loss) on shares redeemed....................... 1,311,773 1,239,362 1,218 1,817 7,982 5,466 Net change in unrealized gain (loss) on investments.......... (4,266) 2,052,415 9,950 (43,492) 34,762 (27,460) ----------- ----------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 1,494,948 2,940,926 24,788 (34,108) 60,089 (25,093) ----------- ----------- -------- -------- -------- -------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 0 0 0 0 0 1 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (667,214) (367,153) (15,107) (5,488) (14,243) (4,972) Net transfers between other subaccounts or fixed rate option......................... (6,182,916) 26,606,619 4,499 3,005 (6,498) (12,340) Withdrawal and other charges.... (10,362) (7,377) (22) (23) (5) (12) ----------- ----------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (6,860,492) 26,232,089 (10,630) (2,506) (20,746) (17,323) ----------- ----------- -------- -------- -------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (5,365,544) 29,173,015 14,158 (36,614) 39,343 (42,416) NET ASSETS Beginning of period............. 33,532,170 4,359,155 205,566 242,180 325,918 368,334 ----------- ----------- -------- -------- -------- -------- End of period................... $28,166,626 $33,532,170 $219,724 $205,566 $365,261 $325,918 =========== =========== ======== ======== ======== ======== Beginning units................. 2,641,568 395,858 16,691 16,854 178,914 188,089 ----------- ----------- -------- -------- -------- -------- Units issued.................... 1,013,425 4,630,709 896 1,211 1,977 3,130 Units redeemed.................. (1,525,615) (2,384,999) (1,618) (1,374) (11,955) (12,305) ----------- ----------- -------- -------- -------- -------- Ending units.................... 2,129,378 2,641,568 15,969 16,691 168,936 178,914 =========== =========== ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A47
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP VALUE AST QUANTITATIVE AST BLACKROCK GLOBAL PORTFOLIO SHARE CLASS 1 AST BOND PORTFOLIO 2022 MODELING PORTFOLIO STRATEGIES PORTFOLIO ----------------------- ------------------------ ------------------ ------------------------ 01/01/2012 01/01/2011 01/01/2012 1/3/2011* 01/01/2012 01/01/2012 4/29/2011* TO TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2012 12/31/2011 ---------- ---------- ----------- ----------- ------------------ ----------- ----------- $ (323) $ (512) $ (379,427) $ (94,888) $ (834) $ (807,088) $ (412,731) 0 0 36,319 0 0 0 0 1,216 888 531,946 133,351 (25) 36,625 (384,884) 6,451 (6,272) 605,205 597,720 4,378 6,636,996 (2,193,000) ------- -------- ----------- ----------- ------- ----------- ----------- 7,344 (5,896) 794,042 636,183 3,519 5,866,533 (2,990,615) ------- -------- ----------- ----------- ------- ----------- ----------- 0 0 16 0 11,472 38,492,837 17,654,025 0 0 0 0 0 0 (144,021) (5,183) (4,411) (430,356) (95,379) (5,000) (3,027,458) (2,217,275) 0 0 5,596,043 15,063,006 63,714 1,493,989 32,082,198 (190) (199) (4,707) (23) (45) (425,649) (70,539) ------- -------- ----------- ----------- ------- ----------- ----------- (5,374) (4,610) 5,160,997 14,967,604 70,142 36,533,719 47,304,388 ------- -------- ----------- ----------- ------- ----------- ----------- 1,970 (10,506) 5,955,039 15,603,787 73,661 42,400,252 44,313,773 60,792 71,298 15,603,787 0 0 44,313,773 0 ------- -------- ----------- ----------- ------- ----------- ----------- $62,762 $ 60,792 $21,558,826 $15,603,787 $73,661 $86,714,025 $44,313,773 ======= ======== =========== =========== ======= =========== =========== 5,634 6,040 1,301,756 0 0 4,834,702 0 ------- -------- ----------- ----------- ------- ----------- ----------- 47 0 1,322,912 2,159,107 8,093 4,842,479 5,650,666 (508) (406) (888,141) (857,351) (677) (1,083,168) (815,964) ------- -------- ----------- ----------- ------- ----------- ----------- 5,173 5,634 1,736,527 1,301,756 7,416 8,594,013 4,834,702 ======= ======== =========== =========== ======= =========== ===========
* Date subaccount became available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A48 PRELIMINARY UNAUDITED FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2012 and 2011
SUBACCOUNTS ------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT AST PRUDENTIAL CORE BOND AST NEUBERGER BERMAN OPPORTUNITY FUND - CLASS 1 PORTFOLIO CORE BOND PORTFOLIO ------------------------- ---------------------- ---------------------- 01/01/2012 8/26/2011* 01/01/2012 10/31/2011* 01/01/2012 10/31/2011* TO TO TO TO TO TO 12/31/2012 12/31/2011 12/31/2012 12/31/2011 12/31/2012 12/31/2011 ---------- ---------- ---------- ----------- ---------- ----------- OPERATIONS Net investment income (loss).... $ (2,561) $ (1,571) $ (53,632) $ (370) $ (31,297) $ (518) Capital gains distributions received....................... 71 0 6,348 0 1,317 0 Realized gain (loss) on shares redeemed....................... 14,141 80 44,175 18 5,928 2 Net change in unrealized gain (loss) on investments.......... 22,873 13,571 175,383 2,915 77,269 3,106 -------- -------- ---------- -------- ---------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 34,524 12,080 172,275 2,563 53,217 2,590 -------- -------- ---------- -------- ---------- -------- CONTRACT OWNER TRANSACTIONS Contract owner net payments..... 0 0 5,253,420 270,483 2,430,686 333,800 Annuity Payments................ 0 0 0 0 0 0 Surrenders, withdrawals and death benefits................. (91,868) (2,734) (26,732) 0 (19,376) 0 Net transfers between other subaccounts or fixed rate option......................... (1,008) 258,727 1,100,495 87,261 730,285 108,042 Withdrawal and other charges.... (29) 0 (24,447) (3) (17,869) (143) -------- -------- ---------- -------- ---------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS................... (92,905) 255,993 6,302,736 357,741 3,123,726 441,699 -------- -------- ---------- -------- ---------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (58,381) 268,073 6,475,010 360,304 3,176,943 444,289 NET ASSETS Beginning of period............. 268,073 0 360,304 0 444,289 0 -------- -------- ---------- -------- ---------- -------- End of period................... $209,692 $268,073 $6,835,314 $360,304 $3,621,232 $444,289 ======== ======== ========== ======== ========== ======== Beginning units................. 25,046 0 35,775 0 44,118 0 -------- -------- ---------- -------- ---------- -------- Units issued.................... 60 26,209 937,632 37,586 388,938 46,069 Units redeemed.................. (7,898) (1,163) (330,257) (1,811) (84,543) (1,951) -------- -------- ---------- -------- ---------- -------- Ending units.................... 17,208 25,046 643,150 35,775 348,513 44,118 ======== ======== ========== ======== ========== ========
* Date subaccount became available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A49
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------- AST FRANKLIN TEMPLETON AST NEW DISCOVERY AST WESTERN ASSET AST MFS AST BOND FOUNDING FUNDS ASSET ALLOCATION EMERGING MARKETS LARGE-CAP PORTFOLIO 2023 ALLOCATION PORTFOLIO PORTFOLIO DEBT PORTFOLIO VALUE PORTFOLIO -------------- ---------------------- ----------------- ----------------- --------------- 1/3/2012* 4/30/2012* 4/30/2012* 8/20/2012* 8/20/2012* TO TO TO TO TO 12/31/2012 12/31/2012 12/31/2012 12/31/2012 12/31/2012 -------------- ---------------------- ----------------- ----------------- --------------- $ (24,877) $ (981,950) $ (29,116) $ (80) $ (98) 0 0 0 0 0 7,752 (464,899) (116,623) (14) (57) 34,932 3,799,884 835,954 575 232 ---------- ------------ ----------- ------- ------- 17,806 2,353,035 690,215 481 78 ---------- ------------ ----------- ------- ------- 0 26,496,095 7,175,938 67,353 184 0 0 0 0 0 (73,375) (678,968) (167,655) 0 0 3,964,015 182,098,416 16,016,273 (137) 39,974 0 (540,950) (114,215) 0 (39) ---------- ------------ ----------- ------- ------- 3,890,641 207,374,594 22,910,342 67,215 40,119 ---------- ------------ ----------- ------- ------- 3,908,447 209,727,629 23,600,557 67,696 40,197 0 0 0 0 0 ---------- ------------ ----------- ------- ------- $3,908,447 $209,727,629 $23,600,557 $67,696 $40,197 ========== ============ =========== ======= ======= 0 0 0 0 0 ---------- ------------ ----------- ------- ------- 414,532 22,006,729 2,936,117 8,144 4,154 (38,366) (2,495,985) (650,876) (1,634) (211) ---------- ------------ ----------- ------- ------- 376,166 19,510,744 2,285,241 6,510 3,943 ========== ============ =========== ======= =======
* Date subaccount became available for investment THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRELIMINARY UNAUDITED FINANCIAL DATA. A50 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 1: GENERAL Pruco Life of New Jersey Flexible Premium Variable Annuity Account (the "Account") was established on May 20, 1996 under New Jersey law as a separate investment account of Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), which is a wholly-owned subsidiary of Pruco Life Insurance Company (an Arizona domiciled company) and is indirectly wholly-owned by The Prudential Insurance Company of America ("Prudential"), a wholly-owned subsidiary of Prudential Financial, Inc. ("PFI"). Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from Pruco Life of New Jersey's other assets and liabilities. The portion of the Account's assets applicable to the variable annuity contracts is not chargeable with liabilities arising out of any other business Pruco Life of New Jersey may conduct. Proceeds from purchases of Strategic Partners Variable Annuity One, Strategic Partners Variable Annuity One 3, Strategic Partners Select, Strategic Partners Advisor, Strategic Partners Plus, Strategic Partners FlexElite, Discovery Select and Discovery Choice Variable Annuity Contracts, and Prudential Premier B, L, X Series, Prudential Premier Bb Series, Prudential Premier Retirement, X, B, L, C Series, Prudential Premier Advisor Series and Prudential Premier Retirement Variable Annuity contracts are invested in the Account. The Account is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. The Account is a funding vehicle for individual variable annuity contracts. There are one hundred and fifteen subaccounts within the Account. Each contract offers the option to invest in various subaccounts, each of which invests in either a corresponding portfolio of The Prudential Series Fund, Advanced Series Trust, (collectively the "Series Fund") or one of the non-Prudential administered funds (collectively, the "Portfolios"). Investment options vary by contract. The name of each Portfolio and the corresponding subaccount name are as follows: Invesco V.I. Core Equity Fund AllianceBernstein VPS Large Cap Growth Portfolio Class B American Century VP Value Fund AST Goldman Sachs Large-Cap Value Portfolio AST T. Rowe Price Large-Cap Growth Portfolio AST American Century Income & Growth Portfolio** AST Schroders Multi-Asset World Strategies Portfolio AST Money Market Portfolio AST Cohen & Steers Realty Portfolio AST J.P. Morgan Strategic Opportunities Portfolio AST BlackRock Value Portfolio AST High Yield Portfolio AST Federated Aggressive Growth Portfolio AST Mid-Cap Value Portfolio AST Small-Cap Value Portfolio AST Goldman Sachs Concentrated Growth Portfolio AST Goldman Sachs Mid-Cap Growth Portfolio AST Goldman Sachs Small-Cap Value Portfolio AST Large-Cap Value Portfolio AST Lord Abbett Core Fixed Income Portfolio AST Marsico Capital Growth Portfolio AST MFS Growth Portfolio AST Neuberger Berman Mid-Cap Growth Portfolio AST Neuberger Berman / LSV Mid-Cap Value Portfolio AST Small-Cap Growth Portfolio AST PIMCO Limited Maturity Bond Portfolio AST PIMCO Total Return Bond Portfolio AST T. Rowe Price Equity Income Portfolio AST QMA US Equity Alpha Portfolio AST T. Rowe Price Natural Resources Portfolio AST T. Rowe Price Asset Allocation Portfolio AST International Value Portfolio AST MFS Global Equity Portfolio AST JPMorgan International Equity Portfolio AST T. Rowe Price Global Bond Portfolio AST International Growth Portfolio AST Wellington Management Hedged Equity Portfolio AST Capital Growth Asset Allocation Portfolio AST Academic Strategies Asset Allocation Portfolio AST Balanced Asset Allocation Portfolio AST Preservation Asset Allocation Portfolio AST First Trust Balanced Target Portfolio AST First Trust Capital Appreciation Target Portfolio AST Advanced Strategies Portfolio AST Schroders Global Tactical Portfolio AST CLS Moderate Asset Allocation Portfolio AST J.P. Morgan Global Thematic Portfolio A51 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 1: GENERAL (CONTINUED) AST Horizon Moderate Asset Allocation Portfolio AST FI Pyramis(R) Asset Allocation Portfolio AST Investment Grade Bond Portfolio AST Western Asset Core Plus Bond Portfolio AST Bond Portfolio 2016* AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Global Real Estate Portfolio AST Parametric Emerging Markets Equity Portfolio AST Bond Portfolio 2020 AST Jennison Large-Cap Value Portfolio AST Jennison Large-Cap Growth Portfolio AST Bond Portfolio 2017 AST Bond Portfolio 2021 AST Bond Portfolio 2022 AST Quantitative Modeling Portfolio AST BlackRock Global Strategies Portfolio AST Prudential Core Bond Portfolio AST Neuberger Berman Core Bond Portfolio AST Bond Portfolio 2023 AST Franklin Templeton Founding Funds Allocation Portfolio AST New Discovery Asset Allocation Portfolio AST Western Asset Emerging Markets Debt Portfolio AST MFS Large-Cap Value Portfolio Davis Value Portfolio Prudential SP International Value Portfolio Prudential Diversified Bond Portfolio Prudential SP Prudential U.S. Emerging Growth Portfolio Prudential Value Portfolio Prudential Equity Portfolio Prudential Jennison 20/20 Focus Portfolio Franklin Templeton VIP Founding Funds Allocation Fund** FTVIP Franklin Small-Mid Cap Growth Securities Fund - Class 2 Prudential Global Portfolio Prudential High Yield Bond Portfolio Janus Aspen Janus Portfolio - Service Shares Prudential SP International Growth Portfolio Prudential Jennison Portfolio Janus Aspen Janus Portfolio - Institutional Shares Janus Aspen Overseas Portfolio - Institutional Shares NVIT Developing Markets Fund MFS(R) Growth Series - Initial Class MFS(R) Research Series - Initial Class Prudential Money Market Portfolio ProFund VP Consumer Services ProFund VP Consumer Goods Portfolio ProFund VP Financials ProFund VP Health Care ProFund VP Industrials ProFund VP Mid-Cap Growth ProFund VP Mid-Cap Value ProFund VP Real Estate ProFund VP Small-Cap Growth ProFund VP Small-Cap Value ProFund VP Telecommunications ProFund VP Utilities ProFund VP Large-Cap Growth ProFund VP Large-Cap Value Prudential Small Capitalization Stock Portfolio Prudential SP Small Cap Value Portfolio Prudential Stock Index Portfolio T. Rowe Price Equity Income Portfolio T. Rowe Price International Stock Portfolio Wells Fargo Advantage VT International Equity Portfolio Share Class 1 Wells Fargo Advantage VT Omega Growth Portfolio Share Class 1 Wells Fargo Advantage VT Opportunity Fund - Class 1 Wells Fargo Advantage VT Small Cap Value Portfolio Share Class 1 Wells Fargo Advantage VT Small Cap Growth Portfolio Share Class 1* -------- * Subaccount available for investment, but had no assets as of December 31, 2012 ** Subaccount no longer available for investment as of December 31, 2012 The Series Funds are diversified open-ended management investment companies, and each portfolio of the Series Funds is managed by affiliates of Prudential. Each of the variable investment options of the Account indirectly bears exposure to the market, credit and liquidity risks of the portfolio in which it invests. These financial statements should be read in conjunction with the financial statements and footnotes of the Series Funds and externally managed portfolios. Additional information on these subaccounts is available upon request to the appropriate companies. A52 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 1: GENERAL (CONTINUED) The following table sets forth the dates on which mergers took place in the Account along with relevant information pertaining to each merger. The transfers from the old subaccounts to the new subaccounts are reflected in the Statement of Changes in Net Assets for the year ended December 31, 2012 as net transfers between subaccounts. The transfers occurred as follows:
PRELIMINARY UNAUDITED --------------------------------------------- REMOVED PORTFOLIO SURVIVING PORTFOLIO MAY 04, 2012 ---------------------- ---------------------- AST AMERICAN CENTURY AST NEW DISCOVERY INCOME & GROWTH ASSET ALLOCATION PORTFOLIO PORTFOLIO ---------------------- ---------------------- Shares Outstanding....... 1,223,842 1,744,114 Value.................... $ 14.25 $ 10.00 Net assets before merger. $ 17,439,741 $ 87,519 Net assets after merger.. $ 0 $ 17,527,259 PRELIMINARY UNAUDITED --------------------------------------------- REMOVED PORTFOLIO SURVIVING PORTFOLIO SEPTEMBER 21, 2012 ---------------------- ---------------------- FRANKLIN TEMPLETON VIP AST FRANKLIN TEMPLETON FOUNDING FUNDS FOUNDING FUNDS ALLOCATION FUND ALLOCATION PORTFOLIO ---------------------- ---------------------- Shares Outstanding....... 22,385,254 17,422,772 Value.................... $ 8.36 $ 10.74 Net assets before merger. $187,120,575 $ 18,552,141 Net assets after merger.. $ 0 $205,672,716
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and the reported amounts of increases and decreases in net assets resulting from operations during the reporting period. Actual results could differ from those estimates. Investments--The investments in shares of the portfolios are stated at the net asset value of the respective portfolios, which is obtained from the custodian and is based on the fair value of the underlying securities in the respective portfolios. All changes in fair value are recorded as changes in unrealized gains (losses) on investments in the statements of operations of the applicable subaccount. Security Transactions--Realized gains and losses on security transactions are determined based upon an average cost of the investment sold. Purchase and sale transactions are recorded as of the trade date of the security being purchased or sold. Dividend Income and Distributions Received--Dividend and capital gain distributions received are reinvested in additional shares of the portfolios and are recorded on the ex-distribution date. NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 2012, the Account adopted, prospectively, updated guidance regarding the fair value measurements and disclosure requirements. The updated guidance clarifies existing guidance related to the application of fair value measurement methods and requires expanded disclosures. The expanded disclosures required by this guidance are included in Note 3. Adoption of this guidance did not have a material effect on the Account's net assets or results of operations. A53 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 3: FAIR VALUE Fair Value Measurement--Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance around fair value established a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows: Level 1--Fair value is based on unadjusted quoted prices in active markets that are accessible to the Account for identical assets or liabilities. These generally provide the most reliable evidence and are used to measure fair value whenever available. Active markets are defined as having the following characteristics for the measured asset/liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information publicly available. Investments which have a net asset value which is readily available to the public are classified as Level 1. Level 2--Fair value is based on significant inputs, other than Level 1 inputs, that are observable for the asset, either directly or indirectly, for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. Investments which have a net asset value which is only available to institutional clients are classified as Level 2. Level 3--Fair value is based on at least one or more significant unobservable inputs for the asset or liability. These inputs reflect the Account's assumptions about the inputs market participants would use in pricing the asset or liability. As of December 31, 2012, the Account did not have any Level 3 assets or liabilities. As of December 31, 2012, all funds have been classified as Level 1 with the exception of proprietary funds, consisting of Series Fund, and any non-proprietary funds not available for public investment, which are classified as Level 2. The Level 2 fund balances of assets and liabilities measured at fair value on a recurring basis, as of December 31, 2012, are presented below.
PRELIMINARY UNAUDITED --------------------- Proprietary Funds (AST & PruSeries)...................... $5,675,147,971 AllianceBernstein VPS Large Cap Growth Portfolio Class B. $ 457,152 Davis Value Portfolio.................................... $ 2,130,939 Janus Aspen Janus Portfolio - Service Shares............. $ 389,239 Janus Aspen Janus Portfolio - Institutional Shares....... $ 5,085,360 Janus Aspen Overseas Portfolio - Institutional Shares.... $ 8,556,231 NVIT Developing Markets Fund............................. $ 665,169 ProFund VP Consumer Services............................. $ 329,782 ProFund VP Consumer Goods Portfolio...................... $ 309,540 ProFund VP Financials.................................... $ 469,299 ProFund VP Health Care................................... $ 374,852 ProFund VP Industrials................................... $ 315,112 ProFund VP Mid-Cap Growth................................ $ 119,203 ProFund VP Mid-Cap Value................................. $ 69,651 ProFund VP Real Estate................................... $ 144,105 ProFund VP Small-Cap Growth.............................. $ 31,817
A54 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 3: FAIR VALUE (CONTINUED)
PRELIMINARY UNAUDITED --------------------- ProFund VP Small-Cap Value............................................ $ 20,483 ProFund VP Telecommunications......................................... $246,598 ProFund VP Utilities.................................................. $211,621 ProFund VP Large-Cap Growth........................................... $ 49,185 ProFund VP Large-Cap Value............................................ $ 75,397 Wells Fargo Advantage VT International Equity Portfolio Share Class 1. $219,724 Wells Fargo Advantage VT Omega Growth Portfolio Share Class 1......... $365,261 Wells Fargo Advantage VT Opportunity Fund - Class 1................... $209,692 Wells Fargo Advantage VT Small Cap Value Portfolio Share Class 1...... $ 62,762
During the twelve months ended December 31, 2012, there were no transfers between Level 1 and Level 2. NOTE 4: TAXES Pruco Life of New Jersey is taxed as a "life insurance company" as defined by the Internal Revenue Code. The results of operations of the Account form a part of PFI's consolidated federal tax return. No federal, state or local income taxes are payable by the Account. As such, no provision for tax liability has been recorded in these financial statements. Prudential management will review periodically the status of the policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the contracts. NOTE 5: PURCHASES AND SALES OF INVESTMENTS The aggregate costs of purchases and proceeds from sales, excluding distributions received and reinvested, of investments in the portfolios for the year ended December 31, 2012 were as follows:
PRELIMINARY UNAUDITED ----------------------- PURCHASES SALES ----------- ----------- Invesco V.I. Core Equity Fund............................ $ 71,449 $ 1,277,570 AllianceBernstein VPS Large Cap Growth Portfolio Class B. $ 21,865 $ 105,419 American Century VP Value Fund........................... $ 42,420 $ 456,170 AST Goldman Sachs Large-Cap Value Portfolio.............. $ 8,725,710 $ 4,433,279 AST T. Rowe Price Large-Cap Growth Portfolio............. $23,762,298 $ 8,629,713 AST American Century Income & Growth Portfolio........... $ 5,680,369 $17,971,313 AST Schroders Multi-Asset World Strategies Portfolio..... $89,939,851 $44,846,041 AST Money Market Portfolio............................... $26,425,402 $28,392,768 AST Cohen & Steers Realty Portfolio...................... $11,808,430 $ 4,318,515 AST J.P. Morgan Strategic Opportunities Portfolio........ $67,107,923 $18,917,412 AST BlackRock Value Portfolio............................ $10,761,326 $ 4,225,851 AST High Yield Portfolio................................. $13,787,466 $ 5,808,873 AST Federated Aggressive Growth Portfolio................ $11,125,237 $ 7,033,472 AST Mid-Cap Value Portfolio.............................. $ 6,258,251 $ 3,618,022 AST Small-Cap Value Portfolio............................ $ 5,588,603 $ 3,300,888 AST Goldman Sachs Concentrated Growth Portfolio.......... $ 9,799,562 $ 4,901,500 AST Goldman Sachs Mid-Cap Growth Portfolio............... $14,369,805 $ 6,580,513 AST Goldman Sachs Small-Cap Value Portfolio.............. $13,292,139 $ 6,442,850 AST Large-Cap Value Portfolio............................ $ 8,249,364 $ 2,470,621 AST Lord Abbett Core Fixed Income Portfolio.............. $27,580,755 $ 7,121,502 AST Marsico Capital Growth Portfolio..................... $20,213,896 $10,836,464 AST MFS Growth Portfolio................................. $ 7,702,637 $ 2,808,399 AST Neuberger Berman Mid-Cap Growth Portfolio............ $14,486,391 $ 6,592,186
A55 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 5: PURCHASES AND SALES OF INVESTMENTS (CONTINUED)
PRELIMINARY UNAUDITED --------------------------- PURCHASES SALES ------------ -------------- AST Neuberger Berman / LSV Mid-Cap Value Portfolio......... $ 10,373,511 $ 5,019,573 AST Small-Cap Growth Portfolio............................. $ 9,221,964 $ 4,178,605 AST PIMCO Limited Maturity Bond Portfolio.................. $ 14,645,917 $ 9,383,297 AST PIMCO Total Return Bond Portfolio...................... $118,470,059 $ 43,344,911 AST T. Rowe Price Equity Income Portfolio.................. $ 16,383,336 $ 4,696,607 AST QMA US Equity Alpha Portfolio.......................... $ 6,781,988 $ 3,474,052 AST T. Rowe Price Natural Resources Portfolio.............. $ 20,411,517 $ 11,293,669 AST T. Rowe Price Asset Allocation Portfolio............... $316,720,327 $ 76,571,698 AST International Value Portfolio.......................... $ 4,627,129 $ 2,598,234 AST MFS Global Equity Portfolio............................ $ 8,908,651 $ 4,196,392 AST JPMorgan International Equity Portfolio................ $ 11,754,146 $ 7,127,204 AST T. Rowe Price Global Bond Portfolio.................... $ 9,635,799 $ 4,143,565 AST International Growth Portfolio......................... $ 8,798,644 $ 4,922,623 AST Wellington Management Hedged Equity Portfolio.......... $ 26,770,358 $ 5,792,605 AST Capital Growth Asset Allocation Portfolio.............. $190,563,235 $ 102,293,562 AST Academic Strategies Asset Allocation Portfolio......... $145,152,253 $ 79,786,279 AST Balanced Asset Allocation Portfolio.................... $234,714,613 $ 104,342,495 AST Preservation Asset Allocation Portfolio................ $162,339,286 $ 34,266,824 AST First Trust Balanced Target Portfolio.................. $141,115,036 $ 49,268,223 AST First Trust Capital Appreciation Target Portfolio...... $155,858,950 $ 63,987,449 AST Advanced Strategies Portfolio.......................... $228,645,784 $ 64,282,716 AST Schroders Global Tactical Portfolio.................... $125,307,798 $ 43,843,613 AST CLS Moderate Asset Allocation Portfolio................ $144,968,657 $ 38,426,116 AST J.P. Morgan Global Thematic Portfolio.................. $ 77,036,464 $ 27,281,983 AST Horizon Moderate Asset Allocation Portfolio............ $ 69,955,075 $ 26,475,860 AST FI Pyramis(R) Asset Allocation Portfolio............... $ 84,056,580 $ 26,722,575 AST Investment Grade Bond Portfolio........................ $932,831,372 $1,385,602,531 AST Western Asset Core Plus Bond Portfolio................. $ 28,748,378 $ 15,008,594 AST Bond Portfolio 2018.................................... $ 7,331,308 $ 7,664,054 AST Bond Portfolio 2019.................................... $ 2,528,043 $ 271,583 AST Global Real Estate Portfolio........................... $ 4,566,667 $ 2,077,237 AST Parametric Emerging Markets Equity Portfolio........... $ 20,731,809 $ 12,330,400 AST Bond Portfolio 2020.................................... $ 124,049 $ 748,375 AST Jennison Large-Cap Value Portfolio..................... $ 4,554,470 $ 2,311,787 AST Jennison Large-Cap Growth Portfolio.................... $ 7,823,626 $ 2,682,144 AST Bond Portfolio 2017.................................... $ 9,869,836 $ 10,199,839 AST Bond Portfolio 2021.................................... $ 11,105,051 $ 18,634,927 AST Bond Portfolio 2022.................................... $ 14,850,364 $ 10,074,030 AST Quantitative Modeling Portfolio........................ $ 76,307 $ 7,024 AST BlackRock Global Strategies Portfolio.................. $ 43,427,082 $ 8,012,071 AST Prudential Core Bond Portfolio......................... $ 8,963,340 $ 2,720,558 AST Neuberger Berman Core Bond Portfolio................... $ 3,444,864 $ 357,511 AST Bond Portfolio 2023.................................... $ 4,225,471 $ 359,708 AST Franklin Templeton Founding Funds Allocation Portfolio. $227,085,047 $ 20,692,403 AST New Discovery Asset Allocation Portfolio............... $ 27,498,355 $ 4,797,438 AST Western Asset Emerging Markets Debt Portfolio.......... $ 83,933 $ 16,798 AST MFS Large-Cap Value Portfolio.......................... $ 42,200 $ 2,179 Davis Value Portfolio...................................... $ 33,723 $ 350,398 Prudential SP International Value Portfolio................ $ 149,286 $ 806,935 Prudential Diversified Bond Portfolio...................... $ 198,542 $ 3,786,185 Prudential SP Prudential U.S. Emerging Growth Portfolio.... $ 129,335 $ 2,275,093 Prudential Value Portfolio................................. $ 293,081 $ 4,654,650 Prudential Equity Portfolio................................ $ 315,505 $ 2,992,968 Prudential Jennison 20/20 Focus Portfolio.................. $ 124,855 $ 565,140 Franklin Templeton VIP Founding Funds Allocation Fund...... $ 94,960,979 $ 232,585,350
A56 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 5: PURCHASES AND SALES OF INVESTMENTS (CONTINUED)
PRELIMINARY UNAUDITED ----------------------- PURCHASES SALES ---------- ------------ FTVIP Franklin Small-Mid Cap Growth Securities Fund - Class 2......... $ 101,081 $ 336,909 Prudential Global Portfolio........................................... $ 44,166 $ 731,672 Prudential High Yield Bond Portfolio.................................. $ 654,597 $ 3,923,801 Janus Aspen Janus Portfolio - Service Shares.......................... $ 17,644 $ 124,235 Prudential SP International Growth Portfolio.......................... $ 63,173 $ 611,357 Prudential Jennison Portfolio......................................... $ 117,403 $ 3,738,579 Janus Aspen Janus Portfolio - Institutional Shares.................... $ 22,333 $ 805,837 Janus Aspen Overseas Portfolio - Institutional Shares................. $ 154,473 $ 1,437,826 NVIT Developing Markets Fund.......................................... $ 45,901 $ 154,752 MFS(R) Growth Series - Initial Class.................................. $ 31,348 $ 887,755 MFS(R) Research Series - Initial Class................................ $ 3,876 $ 275,902 Prudential Money Market Portfolio..................................... $4,226,615 $ 7,710,705 ProFund VP Consumer Services.......................................... $ 49,172 $ 109,701 ProFund VP Consumer Goods Portfolio................................... $ 58,144 $ 93,890 ProFund VP Financials................................................. $ 103,357 $ 203,182 ProFund VP Health Care................................................ $ 84,235 $ 142,026 ProFund VP Industrials................................................ $ 106,404 $ 127,367 ProFund VP Mid-Cap Growth............................................. $ 47,191 $ 28,854 ProFund VP Mid-Cap Value.............................................. $ 16,365 $ 41,255 ProFund VP Real Estate................................................ $ 60,955 $ 45,482 ProFund VP Small-Cap Growth........................................... $ 14,320 $ 12,056 ProFund VP Small-Cap Value............................................ $ 3,018 $ 4,909 ProFund VP Telecommunications......................................... $ 54,031 $ 107,062 ProFund VP Utilities.................................................. $ 78,652 $ 127,291 ProFund VP Large-Cap Growth........................................... $ 38,005 $ 30,640 ProFund VP Large-Cap Value............................................ $ 16,488 $ 98,683 Prudential Small Capitalization Stock Portfolio....................... $ 42,407 $ 753,400 Prudential SP Small Cap Value Portfolio............................... $ 392,146 $ 2,328,600 Prudential Stock Index Portfolio...................................... $1,664,422 $ 5,845,635 T. Rowe Price Equity Income Portfolio................................. $ 83,572 $ 1,063,971 T. Rowe Price International Stock Portfolio........................... $ 57,454 $ 171,767 Wells Fargo Advantage VT International Equity Portfolio Share Class 1. $ 10,802 $ 25,030 Wells Fargo Advantage VT Omega Growth Portfolio Share Class 1......... $ 4,186 $ 31,057 Wells Fargo Advantage VT Opportunity Fund - Class 1................... $ 682 $ 97,338 Wells Fargo Advantage VT Small Cap Value Portfolio Share Class 1...... $ 247 $ 6,670
NOTE 6: RELATED PARTY TRANSACTIONS PFI and its affiliates perform various services on behalf of the portfolios of the Series Fund in which the Account invests and may receive fees for the services performed. These services include, among other things, investment management, subadvisory, shareholder communications, preparation, postage, fund transfer agency and various other record keeping, administrative and customer service functions. The Prudential Series Fund has entered into a management agreement with Prudential Investments LLC ("PI") and the Advanced Series Trust has entered into an agreement with PI and AST Investment Services, Inc, both indirect, wholly-owned subsidiaries of PFI (together the "Investment Managers"). Pursuant to these agreements, the Investment Managers have responsibility for all investment advisory services and supervise the subadvisors' performance of such services with respect to each portfolio. The Investment Managers entered into subadvisory agreements with several subadvisors, including Prudential Investment Management, Inc. and Jennison Associates LLC, which are indirect, wholly-owned subsidiaries of PFI. A57 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 6: RELATED PARTY TRANSACTIONS (CONTINUED) The Series Fund has distribution agreements with Prudential Investment Management Services LLC ("PIMS"), an indirect, wholly-owned subsidiary of PFI, which acts as the distributor of the Class I and Class II shares of the Series Fund. No distribution or service fees are paid to PIMS as distributor of the Class I shares of the portfolios of the Series Fund. However, service fees are paid to PIMS as distributor of the Class II shares of the portfolios of the Series Fund. The Investment Managers have agreed to reimburse certain portfolios of the Series Fund the portion of the management fee for that Portfolio equal to the amount that the aggregate annual ordinary operating expenses (excluding interest, taxes, brokerage commissions, and acquired fund expenses, as applicable) exceeds various agreed upon percentages of the portfolio's average daily net assets. PI has voluntarily agreed to waive a portion of its management fee equal to an annual rate of 0.05% of the average daily net assets of the Stock Index Portfolio. The waiver is voluntary and may be modified or terminated by PI at any time without notice. Prudential Mutual Fund Services LLC, an affiliate of the Investment Managers and an indirect, wholly-owned subsidiary of PFI, serves as the transfer agent of each portfolio of the Series Fund. The Account has extensive transactions and relationships with Prudential and other affiliates. Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among wholly unrelated parties. NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS Pruco Life of New Jersey sells a number of variable annuity products that are funded by the Account. These products have unique combinations of features and fees that are charged against the contract owner's account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. The following table was developed by determining which products offered by Pruco Life of New Jersey and funded by the Account have the lowest and highest expense ratio. Only product designs within each subaccount that had units outstanding throughout the respective periods were considered when determining the lowest and highest expense ratio. The summary may not reflect the minimum and maximum contract charges offered by Pruco Life of New Jersey as contract owners may not have selected all available and applicable contract options.
PRELIMINARY UNAUDITED ---------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED ------------------------------------ --------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ --------------------- ------- ---------- ----------------- ---------------- PRUDENTIAL MONEY MARKET PORTFOLIO ---------------------------------------------------------------------------------- December 31, 2012 12,369 $0.99202 to $10.12341 $15,401 0.01% 1.00% to 1.80% -1.80% to -0.98% December 31, 2011 15,082 $1.01024 to $10.22387 $18,883 0.02% 1.00% to 1.80% -1.77% to -0.96% December 31, 2010 18,414 $1.02843 to $10.32322 $22,913 0.03% 1.00% to 1.80% -1.73% to -0.96% December 31, 2009 15,430 $1.04657 to $10.42341 $18,850 0.43% 1.00% to 1.80% -1.40% to -0.60% December 31, 2008 23,300 $1.06138 to $ 1.37270 $28,397 2.59% 1.35% to 1.80% 0.82% to 1.30% PRUDENTIAL DIVERSIFIED BOND PORTFOLIO ---------------------------------------------------------------------------------- December 31, 2012 10,433 $2.02539 to $ 2.45301 $25,550 4.37% 1.35% to 1.65% 8.88% to 9.20% December 31, 2011 11,805 $1.86014 to $ 2.24741 $26,479 4.28% 1.35% to 1.65% 5.78% to 6.08% December 31, 2010 13,115 $1.75857 to $ 2.11964 $27,736 4.18% 1.35% to 1.65% 8.78% to 9.10% December 31, 2009 15,202 $1.61669 to $ 1.94392 $29,488 4.69% 1.35% to 1.65% 18.56% to 18.91% December 31, 2008 17,358 $1.36361 to $ 1.63556 $28,332 5.12% 1.35% to 1.65% -5.02% to -4.74%
A58 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED ------------------------------------------------------------------------------------ AT YEAR ENDED FOR YEAR ENDED ------------------------------------ ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ --------------------- ------- ---------- ----------------- ------------------ PRUDENTIAL EQUITY PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 9,808 $1.28661 to $ 2.19998 $20,375 0.59% 1.35% to 1.80% 11.67% to 12.17% December 31, 2011 11,025 $1.15047 to $ 1.96226 $20,353 0.68% 1.35% to 1.80% -5.17% to -4.75% December 31, 2010 12,475 $1.21137 to $ 2.06117 $24,170 0.80% 1.35% to 1.80% 9.93% to 10.41% December 31, 2009 14,144 $1.10036 to $ 1.86775 $24,855 1.61% 1.35% to 1.80% 35.71% to 36.32% December 31, 2008 15,829 $0.80955 to $ 1.37073 $20,459 1.45% 1.35% to 1.80% -39.25% to -38.98% PRUDENTIAL VALUE PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 12,843 $1.44440 to $ 2.83999 $28,402 0.98% 1.35% to 1.80% 12.59% to 13.09% December 31, 2011 14,821 $1.28292 to $ 2.51241 $28,787 1.02% 1.35% to 1.80% -7.24% to -6.83% December 31, 2010 16,908 $1.38306 to $ 2.69800 $34,989 0.96% 1.35% to 1.80% 11.85% to 12.34% December 31, 2009 11,984 $1.23652 to $ 2.40272 $25,088 2.06% 1.35% to 1.80% 39.42% to 40.04% December 31, 2008 13,276 $0.88692 to $ 1.71665 $19,943 1.88% 1.35% to 1.80% -43.32% to -43.07% PRUDENTIAL HIGH YIELD BOND PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 5,737 $1.95903 to $13.63244 $21,224 6.93% 1.35% to 1.80% 12.40% to 12.90% December 31, 2011 6,482 $1.74036 to $12.08103 $21,605 7.44% 1.35% to 2.10% 2.94% to 3.69% December 31, 2010 7,412 $1.68340 to $11.65524 $24,396 8.33% 1.35% to 2.10% 11.70% to 12.53% December 31, 2009 8,610 $1.50037 to $10.36252 $25,112 6.10% 1.35% to 1.80% 3.16% to 45.21% December 31, 2008 9,067 $1.03639 to $ 1.28867 $11,670 8.56% 1.35% to 1.65% -23.54% to -23.32% PRUDENTIAL STOCK INDEX PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 12,164 $0.99473 to $ 2.24908 $23,537 1.70% 1.35% to 1.75% 13.69% to 14.14% December 31, 2011 14,344 $0.87367 to $ 1.97156 $24,118 1.61% 1.35% to 1.75% 0.20% to 0.60% December 31, 2010 16,877 $0.87059 to $ 1.96089 $27,983 1.76% 1.35% to 1.75% 12.61% to 13.06% December 31, 2009 19,203 $0.77191 to $ 1.73514 $28,276 2.83% 1.35% to 1.75% 23.91% to 24.41% December 31, 2008 21,057 $0.62211 to $ 1.39552 $25,023 2.27% 1.35% to 1.75% -38.03% to -37.77% PRUDENTIAL GLOBAL PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 3,127 $0.93051 to $ 2.00744 $ 5,575 1.61% 1.35% to 1.80% 15.44% to 15.95% December 31, 2011 3,495 $0.80450 to $ 1.73216 $ 5,368 1.57% 1.35% to 1.80% -8.62% to -8.21% December 31, 2010 4,002 $0.87862 to $ 1.88807 $ 6,685 1.58% 1.35% to 1.80% 10.75% to 11.24% December 31, 2009 4,460 $0.79182 to $ 1.69810 $ 6,679 2.91% 1.35% to 1.80% 29.07% to 29.63% December 31, 2008 4,837 $0.61228 to $ 1.31055 $ 5,626 1.83% 1.35% to 1.80% -43.93% to -43.68% PRUDENTIAL JENNISON PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 11,491 $0.83026 to $ 2.39067 $23,688 0.16% 1.35% to 1.80% 14.12% to 14.63% December 31, 2011 13,279 $0.72609 to $ 2.08665 $23,576 0.30% 1.35% to 1.80% -1.46% to -1.03% December 31, 2010 15,574 $0.73544 to $ 2.10942 $27,512 0.44% 1.35% to 1.80% 9.97% to 10.46% December 31, 2009 16,183 $0.66747 to $ 1.91072 $26,409 0.68% 1.35% to 1.80% 40.50% to 41.12% December 31, 2008 18,563 $0.47423 to $ 1.35460 $21,442 0.53% 1.35% to 1.80% -38.39% to -38.11% PRUDENTIAL SMALL CAPITALIZATION STOCK PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 1,448 $2.40521 to $ 3.08419 $ 4,435 0.61% 1.35% to 1.65% 14.14% to 14.48% December 31, 2011 1,672 $2.10724 to $ 2.69556 $ 4,476 0.81% 1.35% to 1.65% -1.07% to -0.78% December 31, 2010 1,832 $2.13000 to $ 2.71805 $ 4,950 0.83% 1.35% to 1.65% 23.89% to 24.25% December 31, 2009 2,118 $1.71932 to $ 2.18866 $ 4,611 1.86% 1.35% to 1.65% 23.15% to 23.51% December 31, 2008 2,399 $1.39606 to $ 1.77290 $ 4,234 1.17% 1.35% to 1.65% -32.16% to -31.96% T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 1,240 $1.08327 to $ 1.48263 $ 1,838 1.28% 1.35% to 1.65% 16.51% to 16.86% December 31, 2011 1,305 $0.92976 to $ 1.26936 $ 1,655 1.44% 1.35% to 1.65% -14.25% to -14.00% December 31, 2010 1,532 $1.08424 to $ 1.47671 $ 2,254 0.90% 1.35% to 1.65% 12.60% to 12.92% December 31, 2009 1,706 $1.30828 to $ 1.30828 $ 2,232 2.70% 1.40% to 1.40% 50.29% to 50.37% December 31, 2008 1,818 $0.65977 to $ 0.87049 $ 1,582 1.84% 1.35% to 1.40% -49.42% to -49.39%
A59 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED ----------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED ----------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ -------------------- ------- ---------- ----------------- ------------------ T. ROWE PRICE EQUITY INCOME PORTFOLIO ----------------------------------------------------------------------------------- December 31, 2012 2,698 $1.55020 to $2.40943 $ 6,445 2.14% 1.35% to 1.65% 15.24% to 15.58% December 31, 2011 3,092 $1.34518 to $2.08566 $ 6,387 1.73% 1.35% to 1.65% -2.32% to -2.03% December 31, 2010 3,462 $1.37716 to $2.13003 $ 7,300 1.89% 1.35% to 1.65% 13.16% to 13.49% December 31, 2009 3,901 $1.21705 to $1.87780 $ 7,273 2.00% 1.35% to 1.65% 23.55% to 23.93% December 31, 2008 4,460 $0.98503 to $1.51606 $ 6,720 2.32% 1.35% to 1.65% -37.15% to -36.96% INVESCO V.I. CORE EQUITY FUND ----------------------------------------------------------------------------------- December 31, 2012 4,531 $1.05048 to $2.00552 $ 9,075 0.96% 1.35% to 1.65% 12.02% to 12.36% December 31, 2011 5,089 $0.93773 to $1.78573 $ 9,075 0.95% 1.35% to 1.65% -1.68% to -1.40% December 31, 2010 5,771 $0.95379 to $1.81190 $10,423 0.96% 1.35% to 1.65% 7.77% to 8.09% December 31, 2009 6,508 $0.88500 to $1.67706 $10,854 1.83% 1.35% to 1.65% 26.20% to 26.61% December 31, 2008 7,327 $0.70126 to $1.32547 $ 9,665 2.00% 1.35% to 1.65% -31.28% to -31.08% JANUS ASPEN JANUS PORTFOLIO -- INSTITUTIONAL SHARES ----------------------------------------------------------------------------------- December 31, 2012 2,873 $0.85244 to $1.77801 $ 5,085 0.55% 1.35% to 1.65% 16.66% to 17.01% December 31, 2011 3,289 $0.73068 to $1.52032 $ 4,977 0.58% 1.35% to 1.65% -6.83% to -6.57% December 31, 2010 3,767 $0.78421 to $1.62786 $ 6,073 1.09% 1.35% to 1.65% 12.67% to 12.99% December 31, 2009 4,393 $0.69604 to $1.44140 $ 6,265 0.54% 1.35% to 1.65% 34.14% to 34.54% December 31, 2008 4,794 $0.51888 to $1.07198 $ 5,101 0.72% 1.35% to 1.65% -40.70% to -40.53% JANUS ASPEN OVERSEAS PORTFOLIO -- INSTITUTIONAL SHARES ----------------------------------------------------------------------------------- December 31, 2012 2,538 $1.88205 to $3.40535 $ 8,556 0.69% 1.35% to 1.65% 11.62% to 11.96% December 31, 2011 2,904 $1.68615 to $3.04341 $ 8,735 0.46% 1.35% to 1.65% -33.27% to -33.07% December 31, 2010 3,325 $2.52677 to $4.54962 $14,939 0.68% 1.35% to 1.65% 23.28% to 23.64% December 31, 2009 3,937 $2.04970 to $3.68158 $14,332 0.56% 1.35% to 1.65% 76.64% to 77.17% December 31, 2008 4,558 $1.16037 to $2.07911 $ 9,376 1.19% 1.35% to 1.65% -52.89% to -52.75% MFS(R) RESEARCH SERIES -- INITIAL CLASS ----------------------------------------------------------------------------------- December 31, 2012 852 $1.87950 to $1.87950 $ 1,601 0.79% 1.40% to 1.40% 15.65% to 15.65% December 31, 2011 990 $1.62522 to $1.62522 $ 1,609 0.86% 1.40% to 1.40% -1.82% to -1.82% December 31, 2010 1,149 $1.65543 to $1.65543 $ 1,902 0.93% 1.40% to 1.40% 14.29% to 14.29% December 31, 2009 1,248 $1.44843 to $1.44843 $ 1,808 1.45% 1.40% to 1.40% 28.75% to 28.75% December 31, 2008 1,367 $1.12501 to $1.12501 $ 1,538 0.56% 1.40% to 1.40% -36.97% to -36.97% MFS(R) GROWTH SERIES -- INITIAL CLASS ----------------------------------------------------------------------------------- December 31, 2012 3,081 $1.02455 to $1.91698 $ 5,898 0.00% 1.35% to 1.65% 15.47% to 15.81% December 31, 2011 3,507 $0.88728 to $1.65595 $ 5,790 0.19% 1.35% to 1.65% -1.95% to -1.65% December 31, 2010 3,975 $0.90488 to $1.68460 $ 6,677 0.12% 1.35% to 1.65% 13.46% to 13.80% December 31, 2009 4,435 $0.79756 to $1.48114 $ 6,551 0.32% 1.35% to 1.65% 35.43% to 35.83% December 31, 2008 4,986 $0.58889 to $1.09086 $ 5,426 0.24% 1.35% to 1.65% -38.43% to -38.25% AMERICAN CENTURY VP VALUE FUND ----------------------------------------------------------------------------------- December 31, 2012 1,041 $1.84301 to $2.23925 $ 2,318 1.91% 1.35% to 1.65% 12.71% to 13.05% December 31, 2011 1,221 $1.63512 to $1.98177 $ 2,408 2.02% 1.35% to 1.65% -0.62% to -0.33% December 31, 2010 1,337 $1.64535 to $1.98934 $ 2,649 2.20% 1.35% to 1.65% 11.58% to 11.91% December 31, 2009 1,481 $1.47454 to $1.77852 $ 2,621 5.79% 1.35% to 1.65% 17.92% to 18.27% December 31, 2008 1,667 $1.25041 to $1.50461 $ 2,499 2.52% 1.35% to 1.65% -27.97% to -27.75% FTVIP FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND -- CLASS 2 ----------------------------------------------------------------------------------- December 31, 2012 1,402 $1.11808 to $1.94109 $ 2,703 0.00% 1.35% to 1.65% 9.04% to 9.37% December 31, 2011 1,511 $1.02535 to $1.77574 $ 2,657 0.00% 1.35% to 1.65% -6.37% to -6.09% December 31, 2010 1,608 $1.09508 to $1.89197 $ 3,000 0.00% 1.35% to 1.65% 25.55% to 25.93% December 31, 2009 1,702 $0.87224 to $1.50320 $ 2,523 0.00% 1.35% to 1.65% 41.25% to 41.68% December 31, 2008 1,856 $0.61753 to $1.06167 $ 1,943 0.00% 1.35% to 1.65% -43.43% to -43.26%
A60 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED ------------------------------------------------------------------------------------ AT YEAR ENDED FOR YEAR ENDED ------------------------------------ ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ --------------------- ------- ---------- ----------------- ------------------ PRUDENTIAL JENNISON 20/20 FOCUS PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 2,215 $1.70567 to $ 1.81563 $ 4,016 0.00% 1.35% to 1.65% 9.23% to 9.55% December 31, 2011 2,433 $1.56151 to $ 1.65810 $ 4,027 0.08% 1.35% to 1.65% -5.72% to -5.44% December 31, 2010 2,744 $1.65622 to $ 1.75443 $ 4,807 0.00% 1.35% to 1.65% 6.08% to 6.40% December 31, 2009 2,995 $1.56131 to $ 1.64969 $ 4,934 0.49% 1.35% to 1.65% 55.28% to 55.73% December 31, 2008 3,327 $1.00550 to $ 1.05981 $ 3,523 0.55% 1.35% to 1.65% -40.14% to -39.96% DAVIS VALUE PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 1,843 $1.12101 to $ 1.16370 $ 2,131 1.62% 1.35% to 1.65% 11.23% to 11.57% December 31, 2011 2,104 $1.00779 to $ 1.04304 $ 2,181 0.81% 1.35% to 1.65% -5.73% to -5.45% December 31, 2010 2,278 $1.06904 to $ 1.10314 $ 2,499 1.31% 1.35% to 1.65% 10.93% to 11.25% December 31, 2009 2,563 $0.96368 to $ 0.99157 $ 2,528 0.88% 1.35% to 1.65% 29.03% to 29.41% December 31, 2008 3,060 $0.74684 to $ 0.76620 $ 2,334 0.91% 1.35% to 1.65% -41.30% to -41.12% ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO CLASS B ------------------------------------------------------------------------------------ December 31, 2012 671 $0.66012 to $ 0.68115 $ 457 0.03% 1.40% to 1.65% 14.23% to 14.52% December 31, 2011 785 $0.57787 to $ 0.59481 $ 467 0.09% 1.40% to 1.65% -4.83% to -4.61% December 31, 2010 795 $0.60717 to $ 0.62731 $ 495 0.27% 1.35% to 1.65% 8.05% to 8.37% December 31, 2009 852 $0.56193 to $ 0.57885 $ 490 0.00% 1.35% to 1.65% 34.87% to 35.31% December 31, 2008 980 $0.41663 to $ 0.42781 $ 417 0.00% 1.35% to 1.65% -40.80% to -40.62% PRUDENTIAL SP SMALL CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 4,682 $1.56511 to $12.71248 $ 9,189 0.46% 1.35% to 2.35% 13.39% to 14.51% December 31, 2011 5,636 $1.37284 to $ 1.79660 $ 9,694 0.66% 1.35% to 1.80% -4.49% to -4.06% December 31, 2010 7,783 $1.43734 to $ 1.87355 $14,070 0.65% 1.35% to 1.80% 24.03% to 24.59% December 31, 2009 8,611 $1.15887 to $ 1.50448 $12,502 1.50% 1.35% to 1.80% 28.50% to 29.05% December 31, 2008 9,556 $0.90185 to $ 1.16633 $10,785 1.11% 1.35% to 1.80% -31.74% to -31.43% JANUS ASPEN JANUS PORTFOLIO -- SERVICE SHARES ------------------------------------------------------------------------------------ December 31, 2012 354 $0.71657 to $ 1.58757 $ 389 0.42% 1.40% to 1.75% 16.24% to 16.65% December 31, 2011 428 $0.61555 to $ 1.36100 $ 423 0.40% 1.40% to 1.75% -7.16% to -6.84% December 31, 2010 679 $0.66210 to $ 1.46090 $ 668 0.37% 1.40% to 1.75% 12.30% to 12.68% December 31, 2009 566 $0.58877 to $ 1.29652 $ 533 0.38% 1.40% to 1.75% 33.67% to 34.14% December 31, 2008 662 $0.43971 to $ 0.96655 $ 479 0.58% 1.40% to 1.75% -40.91% to -40.70% PRUDENTIAL SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 3,842 $1.30516 to $ 2.87251 $ 8,479 0.41% 1.35% to 1.80% 14.81% to 15.32% December 31, 2011 4,764 $1.13467 to $ 2.49218 $ 9,168 0.59% 1.35% to 1.80% 0.42% to 0.86% December 31, 2010 5,712 $1.12786 to $ 2.47225 $10,859 0.40% 1.35% to 1.80% 18.30% to 18.82% December 31, 2009 3,805 $0.95142 to $ 2.08159 $ 6,160 0.74% 1.35% to 1.80% 39.39% to 40.00% December 31, 2008 4,497 $0.68135 to $ 1.48767 $ 5,091 0.30% 1.35% to 1.80% -37.36% to -37.08% PRUDENTIAL SP INTERNATIONAL GROWTH PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 1,851 $0.77310 to $ 1.89389 $ 2,642 0.65% 1.35% to 1.80% 20.23% to 20.77% December 31, 2011 2,217 $0.64172 to $ 1.56912 $ 2,650 1.29% 1.35% to 1.80% -16.42% to -16.04% December 31, 2010 2,753 $0.76618 to $ 1.86993 $ 3,873 1.53% 1.40% to 1.80% 11.98% to 12.44% December 31, 2009 2,842 $0.68282 to $ 1.66303 $ 3,568 2.18% 1.40% to 1.80% 34.72% to 35.26% December 31, 2008 3,161 $0.50582 to $ 1.22951 $ 2,916 1.64% 1.35% to 1.80% -51.18% to -50.96% PRUDENTIAL SP INTERNATIONAL VALUE PORTFOLIO ------------------------------------------------------------------------------------ December 31, 2012 1,533 $1.07395 to $ 1.82277 $ 2,374 2.70% 1.40% to 1.75% 14.91% to 15.31% December 31, 2011 1,944 $0.93318 to $ 1.58079 $ 2,638 2.42% 1.40% to 1.75% -14.59% to -14.29% December 31, 2010 2,288 $1.09095 to $ 1.84445 $ 3,609 2.19% 1.40% to 1.80% 8.85% to 9.28% December 31, 2009 2,567 $1.00020 to $ 1.68786 $ 3,658 3.13% 1.40% to 1.80% 30.01% to 30.52% December 31, 2008 2,902 $0.76784 to $ 1.29318 $ 3,162 2.81% 1.40% to 1.80% -45.05% to -44.83%
A61 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED --------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 1,313 $ 9.11684 to $14.71569 $ 14,804 1.02% 0.85% to 2.45% 16.73% to 18.65% December 31, 2011 907 $ 7.84754 to $12.53734 $ 8,531 1.07% 0.85% to 2.45% -15.50% to -6.59% December 31, 2010 722 $ 8.41375 to $13.52811 $ 7,184 1.22% 1.15% to 2.45% 7.31% to 11.60% December 31, 2009 254 $ 7.55020 to $12.21751 $ 2,033 2.52% 1.15% to 2.05% 16.79% to 20.67% December 31, 2008 70 $ 6.59044 to $ 7.21408 $ 477 1.69% 1.15% to 2.05% -41.88% to -41.36% AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO (EXPIRED MAY 04, 2012) --------------------------------------------------------------------------------------- December 31, 2012 0 $ 9.65752 to $15.36293 $ (0) 0.00% 0.55% to 2.85% 8.20% to 9.07% December 31, 2011 1,061 $ 9.12113 to $14.15216 $ 11,176 1.04% 1.15% to 2.85% 0.62% to 2.40% December 31, 2010 767 $ 8.96487 to $13.93020 $ 7,763 1.09% 1.15% to 2.70% 7.22% to 12.55% December 31, 2009 301 $ 8.01628 to $12.47459 $ 2,505 1.82% 1.15% to 2.50% 14.90% to 23.81% December 31, 2008 82 $ 6.92900 to $ 7.53614 $ 605 2.14% 1.15% to 1.80% -35.90% to -35.49% AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 14,549 $10.68267 to $14.04822 $163,822 1.95% 0.55% to 2.85% 7.97% to 10.53% December 31, 2011 10,204 $ 9.73713 to $12.88722 $105,294 1.58% 0.55% to 2.85% -6.13% to -3.91% December 31, 2010 7,045 $ 9.72815 to $13.59785 $ 76,431 0.54% 0.55% to 2.85% 7.06% to 10.54% December 31, 2009 1,392 $ 9.24887 to $12.39836 $ 13,894 1.08% 1.15% to 2.55% 22.51% to 26.21% December 31, 2008 262 $ 7.35331 to $ 8.26716 $ 2,074 2.23% 1.15% to 2.40% -31.83% to -27.07% AST COHEN & STEERS REALTY PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 1,351 $10.07765 to $21.69183 $ 18,830 1.30% 0.55% to 2.85% 12.06% to 14.71% December 31, 2011 780 $ 9.38275 to $19.17281 $ 9,555 0.73% 0.85% to 2.85% -6.17% to 5.38% December 31, 2010 542 $ 8.36127 to $18.33755 $ 6,254 1.23% 1.00% to 2.85% 17.47% to 27.42% December 31, 2009 149 $ 7.87308 to $14.52687 $ 1,281 2.78% 1.15% to 2.10% 29.15% to 51.09% December 31, 2008 70 $ 6.07516 to $ 8.21151 $ 495 4.81% 1.15% to 1.80% -36.20% to -35.79% AST J.P. MORGAN STRATEGIC OPPORTUNITIES PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 12,551 $11.00927 to $13.12718 $144,462 1.46% 0.55% to 2.85% 7.56% to 10.11% December 31, 2011 8,024 $10.15261 to $12.08786 $ 85,179 0.89% 0.55% to 2.85% -2.62% to -0.32% December 31, 2010 6,294 $10.26045 to $12.29454 $ 68,277 0.36% 0.55% to 2.85% 4.70% to 7.11% December 31, 2009 2,802 $ 9.68501 to $11.67943 $ 29,570 0.83% 1.15% to 2.50% 15.87% to 20.87% December 31, 2008 1,404 $ 8.04051 to $ 9.52935 $ 12,483 0.29% 1.15% to 2.40% -20.61% to -18.55% AST BLACKROCK VALUE PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 1,194 $ 9.12709 to $15.29152 $ 13,690 1.06% 0.55% to 2.85% 10.16% to 12.78% December 31, 2011 596 $ 8.45207 to $13.74775 $ 6,050 0.76% 0.55% to 2.85% -10.70% to -1.04% December 31, 2010 369 $ 8.25078 to $14.08474 $ 3,786 0.98% 1.00% to 2.85% 6.06% to 11.33% December 31, 2009 113 $ 7.82812 to $12.77034 $ 939 0.79% 1.15% to 2.10% 15.83% to 26.46% December 31, 2008 86 $ 6.73868 to $ 7.95205 $ 608 2.50% 1.15% to 1.80% -38.41% to -38.01% AST HIGH YIELD PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 1,737 $11.01858 to $15.76773 $ 21,591 5.83% 0.85% to 2.85% 10.62% to 12.91% December 31, 2011 1,020 $10.70991 to $14.11698 $ 11,410 6.50% 1.15% to 2.85% 0.24% to 2.00% December 31, 2010 812 $10.68442 to $13.94919 $ 9,044 3.48% 1.00% to 2.85% 7.02% to 12.38% December 31, 2009 295 $ 9.93381 to $12.52966 $ 3,095 4.14% 1.15% to 2.50% 25.08% to 34.28% December 31, 2008 158 $ 7.42367 to $ 7.97763 $ 1,243 9.02% 1.15% to 1.80% -26.86% to -25.76% AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 1,223 $ 9.51449 to $16.96161 $ 14,554 0.00% 0.55% to 2.85% 16.65% to 19.41% December 31, 2011 859 $ 8.63723 to $14.40189 $ 8,662 0.47% 1.00% to 2.85% -15.59% to -13.97% December 31, 2010 423 $10.11934 to $16.89809 $ 4,990 0.03% 1.00% to 2.85% 21.04% to 31.23% December 31, 2009 140 $ 7.77201 to $12.99734 $ 1,164 0.15% 1.15% to 2.10% 29.87% to 31.41% December 31, 2008 69 $ 5.96393 to $ 7.39352 $ 465 0.00% 1.15% to 1.90% -45.14% to -44.73%
A62 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED ------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED ------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- ------- ---------- ----------------- ------------------ AST MID-CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 778 $11.65476 to $17.66406 $ 9,840 0.44% 0.55% to 2.85% 15.03% to 17.76% December 31, 2011 550 $10.02005 to $15.20886 $ 5,953 0.69% 1.15% to 2.85% -6.20% to -4.55% December 31, 2010 481 $10.56476 to $16.05923 $ 5,460 0.39% 1.15% to 2.85% 14.32% to 22.20% December 31, 2009 135 $ 8.70075 to $13.24524 $ 1,225 1.57% 1.15% to 2.15% 32.64% to 37.31% December 31, 2008 63 $ 6.37746 to $ 7.22665 $ 423 1.11% 1.15% to 2.15% -39.43% to -38.83% AST SMALL-CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 727 $10.03524 to $17.11423 $ 8,844 0.41% 0.55% to 2.85% 14.79% to 17.51% December 31, 2011 522 $ 9.54341 to $14.76666 $ 5,461 0.63% 0.55% to 2.85% -8.65% to -6.49% December 31, 2010 464 $10.30053 to $16.01106 $ 5,239 0.35% 1.00% to 2.85% 14.25% to 24.75% December 31, 2009 180 $ 8.34836 to $10.20589 $ 1,610 1.65% 1.15% to 2.15% 24.33% to 25.56% December 31, 2008 137 $ 6.69183 to $ 8.14863 $ 977 1.14% 1.15% to 1.90% -31.03% to -30.52% AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 1,313 $11.66838 to $15.38733 $15,908 0.23% 0.55% to 2.70% 16.53% to 19.11% December 31, 2011 872 $10.01355 to $13.09897 $ 8,999 0.16% 1.15% to 2.70% -6.55% to -5.05% December 31, 2010 825 $10.70162 to $13.90429 $ 9,069 0.07% 1.15% to 2.70% 6.96% to 9.03% December 31, 2009 376 $ 9.87807 to $12.85313 $ 3,872 0.00% 1.15% to 2.55% 27.43% to 47.70% December 31, 2008 116 $ 6.73082 to $ 7.74360 $ 833 0.15% 1.15% to 1.90% -41.38% to -40.95% AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 1,659 $10.46013 to $17.71525 $21,761 0.00% 0.55% to 2.50% 16.68% to 18.96% December 31, 2011 1,008 $10.76129 to $15.09953 $11,359 0.00% 0.55% to 2.50% -5.35% to -3.51% December 31, 2010 934 $11.36976 to $15.86600 $11,177 0.00% 1.00% to 2.50% 13.48% to 18.64% December 31, 2009 352 $10.37465 to $13.49906 $ 3,793 0.00% 1.15% to 2.50% 34.19% to 55.61% December 31, 2008 91 $ 6.72291 to $ 7.63476 $ 638 0.00% 1.15% to 1.90% -41.90% to -41.47% AST LARGE-CAP VALUE PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 1,417 $ 8.29561 to $15.24503 $14,775 3.11% 0.85% to 2.45% 14.02% to 15.89% December 31, 2011 841 $ 7.39857 to $13.29726 $ 7,377 1.30% 0.85% to 2.45% -10.31% to -5.27% December 31, 2010 748 $ 7.86044 to $14.14819 $ 6,727 0.97% 1.15% to 2.45% 5.87% to 11.87% December 31, 2009 629 $ 7.07131 to $12.74667 $ 4,841 2.80% 1.15% to 1.95% 17.21% to 26.67% December 31, 2008 594 $ 6.02732 to $ 6.82177 $ 3,908 2.14% 1.15% to 1.90% -42.58% to -39.90% AST LORD ABBETT CORE FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 3,353 $10.94845 to $15.11073 $41,194 1.11% 0.55% to 2.85% 2.91% to 5.35% December 31, 2011 1,576 $10.42419 to $14.54337 $18,985 1.50% 0.85% to 2.85% 4.25% to 8.92% December 31, 2010 612 $10.74306 to $13.45763 $ 7,233 6.06% 1.15% to 2.85% 7.56% to 12.13% December 31, 2009 348 $10.30711 to $12.09710 $ 3,865 7.45% 1.15% to 2.00% 20.56% to 33.07% December 31, 2008 187 $ 7.75694 to $ 8.54833 $ 1,586 7.72% 1.15% to 1.80% -24.61% to -22.56% AST MARSICO CAPITAL GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 2,543 $10.10909 to $16.00178 $30,012 0.37% 0.85% to 2.85% 9.06% to 11.31% December 31, 2011 1,718 $ 9.08180 to $14.53184 $18,293 0.32% 0.85% to 2.85% -8.96% to -1.89% December 31, 2010 1,534 $ 9.48403 to $14.95140 $16,557 0.54% 1.15% to 2.85% 12.33% to 18.39% December 31, 2009 614 $ 8.02264 to $12.72864 $ 5,313 0.77% 1.15% to 2.15% 27.03% to 28.28% December 31, 2008 338 $ 6.26305 to $ 7.27809 $ 2,337 0.51% 1.15% to 1.80% -44.66% to -39.89% AST MFS GROWTH PORTFOLIO ------------------------------------------------------------------------------------- December 31, 2012 894 $10.71705 to $15.06982 $10,768 0.00% 0.55% to 2.85% 13.74% to 16.44% December 31, 2011 456 $ 9.23171 to $13.12223 $ 4,780 0.38% 0.55% to 2.45% -7.50% to -1.14% December 31, 2010 382 $ 9.93078 to $13.45761 $ 4,081 0.10% 1.15% to 2.45% 8.30% to 11.50% December 31, 2009 138 $ 8.96358 to $12.16473 $ 1,297 0.15% 1.15% to 2.10% 21.30% to 23.13% December 31, 2008 57 $ 7.34079 to $ 8.28286 $ 449 0.30% 1.15% to 1.80% -37.43% to -37.03%
A63 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED -------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,511 $10.25722 to $17.17555 $ 19,517 0.00% 0.55% to 2.85% 9.17% to 11.77% December 31, 2011 862 $ 9.20532 to $15.58152 $ 10,193 0.00% 0.55% to 2.70% -7.23% to 1.13% December 31, 2010 694 $10.47140 to $15.62143 $ 8,235 0.00% 1.00% to 2.70% 19.02% to 27.40% December 31, 2009 181 $ 8.24353 to $12.37664 $ 1,685 0.00% 1.15% to 2.15% 24.05% to 28.31% December 31, 2008 109 $ 6.83068 to $ 8.62745 $ 836 0.00% 1.15% to 2.15% -44.38% to -43.83% AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,289 $10.77542 to $18.27003 $ 15,762 0.94% 1.00% to 2.85% 13.78% to 15.97% December 31, 2011 817 $ 9.36543 to $15.90297 $ 8,617 0.95% 1.15% to 2.85% -5.26% to -3.59% December 31, 2010 659 $ 9.77667 to $16.62562 $ 7,138 0.89% 1.15% to 2.70% 11.77% to 22.03% December 31, 2009 252 $ 8.06289 to $13.73161 $ 2,160 1.69% 1.15% to 2.00% 35.54% to 39.05% December 31, 2008 143 $ 5.83598 to $ 6.90162 $ 900 1.73% 1.15% to 1.80% -43.28% to -42.92% AST PIMCO LIMITED MATURITY BOND PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,961 $10.11087 to $12.61643 $ 21,292 1.30% 0.55% to 2.85% 1.71% to 4.12% December 31, 2011 1,419 $ 9.94129 to $12.18917 $ 15,100 0.94% 1.00% to 2.85% -0.66% to 1.24% December 31, 2010 1,124 $10.00728 to $12.07057 $ 12,054 1.91% 1.15% to 2.85% 0.00% to 2.72% December 31, 2009 419 $10.49444 to $11.78015 $ 4,866 4.82% 1.15% to 2.10% 5.04% to 9.19% December 31, 2008 270 $ 9.71676 to $10.83660 $ 2,892 5.62% 1.15% to 1.80% -2.91% to -0.03% AST T. ROWE PRICE EQUITY INCOME PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,858 $ 9.00517 to $15.92130 $ 20,789 0.17% 0.55% to 2.85% 13.90% to 16.61% December 31, 2011 750 $ 7.81876 to $13.84402 $ 7,094 1.17% 0.85% to 2.85% -10.17% to -2.76% December 31, 2010 718 $ 8.09199 to $14.34884 $ 6,844 1.08% 1.15% to 2.85% 4.77% to 11.96% December 31, 2009 291 $ 7.27422 to $12.91774 $ 2,229 3.24% 1.15% to 2.15% 21.19% to 27.90% December 31, 2008 78 $ 5.98171 to $ 6.73924 $ 501 3.24% 1.15% to 1.80% -42.91% to -42.55% AST QMA US EQUITY ALPHA PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 567 $10.38147 to $17.10866 $ 7,120 0.71% 1.00% to 2.45% 15.89% to 17.63% December 31, 2011 294 $ 8.85664 to $14.68191 $ 3,025 0.76% 1.00% to 2.85% 0.51% to 2.43% December 31, 2010 231 $ 8.64622 to $14.46757 $ 2,243 0.58% 1.00% to 2.85% 8.14% to 13.91% December 31, 2009 125 $ 7.59041 to $12.82018 $ 982 1.80% 1.00% to 1.95% 19.67% to 27.22% December 31, 2008 100 $ 6.29304 to $ 7.04101 $ 652 2.27% 1.00% to 1.80% -39.80% to -39.32% AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 2,964 $ 7.88745 to $13.79902 $ 29,950 0.40% 0.85% to 2.85% 0.66% to 2.74% December 31, 2011 2,024 $ 7.67745 to $13.57744 $ 20,366 0.61% 0.85% to 2.85% -22.38% to -15.76% December 31, 2010 1,711 $11.39318 to $16.26883 $ 20,899 0.39% 1.00% to 2.85% 15.56% to 19.26% December 31, 2009 704 $ 9.76890 to $13.76951 $ 7,797 1.19% 1.15% to 2.55% 33.15% to 47.95% December 31, 2008 333 $ 6.65868 to $ 9.18555 $ 2,681 0.61% 1.15% to 1.90% -50.92% to -50.55% AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 45,662 $10.69535 to $14.81356 $550,692 1.21% 0.55% to 2.85% 10.26% to 12.87% December 31, 2011 24,391 $ 9.50439 to $13.30691 $264,165 1.11% 0.55% to 2.85% -4.90% to 1.42% December 31, 2010 16,476 $10.44562 to $13.30202 $178,780 0.79% 0.95% to 2.85% 6.24% to 10.43% December 31, 2009 4,962 $ 9.48714 to $12.15888 $ 50,136 1.94% 1.15% to 2.55% 20.65% to 22.97% December 31, 2008 1,437 $ 7.74163 to $ 8.78196 $ 11,921 1.95% 1.15% to 2.40% -27.68% to -23.34% AST MFS GLOBAL EQUITY PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,169 $10.68753 to $16.86736 $ 14,767 1.03% 0.55% to 2.55% 20.01% to 22.40% December 31, 2011 738 $ 9.90992 to $13.97222 $ 7,786 0.50% 0.55% to 2.55% -5.54% to -3.66% December 31, 2010 600 $10.33903 to $14.70491 $ 6,737 0.40% 0.55% to 2.55% 8.66% to 10.94% December 31, 2009 157 $ 9.36927 to $13.37974 $ 1,625 1.58% 1.15% to 2.55% 29.06% to 32.83% December 31, 2008 46 $ 7.73203 to $ 9.03881 $ 374 1.20% 1.15% to 1.90% -35.22% to -34.74%
A64 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED -------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST -- HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,788 $ 9.83010 to $15.23803 $ 19,759 1.65% 0.55% to 2.70% 18.61% to 21.24% December 31, 2011 1,314 $ 8.17393 to $12.74350 $ 12,054 1.38% 0.55% to 2.70% -11.60% to -9.65% December 31, 2010 1,247 $ 9.19808 to $14.30022 $ 12,690 0.94% 0.55% to 2.70% 4.51% to 7.63% December 31, 2009 446 $ 8.73715 to $13.60349 $ 4,142 3.19% 1.15% to 2.55% 33.02% to 34.60% December 31, 2008 119 $ 6.54565 to $ 8.06508 $ 847 2.58% 1.15% to 1.90% -42.48% to -42.05% AST T. ROWE PRICE GLOBAL BOND PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,571 $10.32374 to $13.40697 $ 17,671 2.33% 0.55% to 2.85% 2.22% to 4.65% December 31, 2011 1,035 $ 9.89515 to $12.88781 $ 11,416 2.75% 0.85% to 2.85% -1.04% to 2.94% December 31, 2010 830 $10.23639 to $12.51967 $ 9,083 2.31% 1.00% to 2.85% 2.58% to 4.70% December 31, 2009 245 $10.44910 to $11.97584 $ 2,848 7.36% 1.15% to 2.15% 9.75% to 11.06% December 31, 2008 160 $ 9.44110 to $10.80461 $ 1,667 4.52% 1.15% to 1.80% -5.95% to -3.54% AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 4,100 $ 9.51705 to $14.81394 $ 39,950 0.26% 0.55% to 2.55% 8.24% to 10.40% December 31, 2011 1,819 $ 8.69622 to $13.60557 $ 16,415 0.27% 0.55% to 2.55% -12.00% to -4.55% December 31, 2010 1,007 $ 9.12442 to $14.22692 $ 9,779 0.47% 1.15% to 2.55% 11.79% to 13.33% December 31, 2009 1,080 $ 8.06289 to $12.72682 $ 9,291 1.01% 1.15% to 2.55% -0.05% to 26.97% December 31, 2008 296 $ 6.48888 to $ 7.01024 $ 1,988 0.72% 1.15% to 2.15% -43.54% to -42.98% AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 29,648 $10.23320 to $14.63036 $337,551 0.79% 0.55% to 2.85% 10.48% to 13.10% December 31, 2011 21,421 $ 9.07555 to $13.11625 $216,804 0.51% 0.55% to 2.85% -9.16% to -2.96% December 31, 2010 20,678 $ 9.65397 to $13.70422 $217,009 1.00% 0.95% to 2.85% 7.78% to 12.25% December 31, 2009 12,118 $ 8.62574 to $12.32315 $112,363 1.89% 1.15% to 2.55% 22.27% to 23.91% December 31, 2008 7,656 $ 6.97189 to $ 7.79077 $ 57,872 0.96% 1.15% to 2.65% -36.62% to -31.11% AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 30,993 $10.16034 to $14.15903 $348,773 0.98% 0.55% to 2.85% 9.35% to 11.95% December 31, 2011 24,615 $ 9.17759 to $12.82397 $249,346 0.61% 0.55% to 2.85% -5.43% to -3.20% December 31, 2010 22,016 $ 9.28559 to $13.43083 $232,089 0.84% 0.55% to 2.85% 7.50% to 10.91% December 31, 2009 14,229 $ 8.58144 to $12.22943 $134,688 2.36% 0.95% to 2.50% 21.32% to 23.19% December 31, 2008 10,411 $ 7.20298 to $ 7.99594 $ 80,836 1.14% 1.00% to 2.40% -33.43% to -28.71% AST BALANCED ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 45,923 $10.33901 to $14.19558 $532,182 0.91% 0.55% to 2.85% 9.26% to 11.86% December 31, 2011 33,653 $ 9.27105 to $12.86748 $352,782 0.64% 0.55% to 2.85% -7.28% to -1.76% December 31, 2010 30,549 $ 9.68344 to $13.27946 $330,206 0.76% 0.95% to 2.85% 6.86% to 11.26% December 31, 2009 17,628 $ 8.92139 to $12.05401 $173,025 1.32% 0.95% to 2.55% -0.30% to 22.14% December 31, 2008 6,523 $ 7.42670 to $ 8.27064 $ 52,641 1.01% 1.15% to 2.40% -30.37% to -26.37% AST PRESERVATION ASSET ALLOCATION PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 36,655 $10.51490 to $13.51575 $426,840 1.09% 0.85% to 2.85% 7.22% to 9.44% December 31, 2011 24,615 $ 9.60825 to $12.48452 $266,301 0.90% 0.85% to 2.85% -3.91% to 0.04% December 31, 2010 18,568 $10.51978 to $12.60207 $204,499 1.18% 0.95% to 2.85% 5.32% to 9.48% December 31, 2009 8,321 $ 9.68149 to $11.61945 $ 87,353 1.01% 1.00% to 2.50% -0.26% to 18.91% December 31, 2008 2,403 $ 8.57497 to $ 9.09941 $ 21,353 0.78% 1.00% to 2.40% -21.37% to -20.28% AST FIRST TRUST BALANCED TARGET PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 21,670 $ 9.81278 to $14.47747 $248,028 1.87% 0.85% to 2.85% 7.48% to 9.69% December 31, 2011 13,265 $ 9.10499 to $13.34133 $138,313 1.76% 0.85% to 2.85% -6.65% to -2.44% December 31, 2010 9,357 $ 9.46532 to $13.80890 $ 99,358 1.32% 0.95% to 2.85% 9.61% to 13.06% December 31, 2009 3,171 $ 8.51674 to $12.30994 $ 28,154 3.78% 1.15% to 2.65% 20.65% to 22.94% December 31, 2008 1,611 $ 7.05881 to $ 7.34272 $ 11,611 2.06% 1.15% to 2.65% -36.18% to -35.23%
A65 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED -------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST --HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 19,406 $ 9.17966 to $14.47559 $222,116 1.26% 0.55% to 2.85% 9.70% to 12.30% December 31, 2011 11,105 $ 8.34511 to $13.06962 $113,082 1.19% 0.55% to 2.85% -11.82% to -6.73% December 31, 2010 9,121 $ 8.66171 to $14.20708 $ 97,680 0.81% 0.55% to 2.85% 14.67% to 17.84% December 31, 2009 3,465 $ 7.87730 to $12.16947 $ 29,024 2.13% 1.00% to 2.65% 21.40% to 24.79% December 31, 2008 1,205 $ 6.41884 to $ 6.74838 $ 7,954 1.20% 1.15% to 2.65% -42.24% to -41.38% AST ADVANCED STRATEGIES PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 31,622 $10.48694 to $15.17148 $379,954 1.27% 0.55% to 2.85% 10.40% to 13.02% December 31, 2011 17,019 $ 9.30664 to $13.61010 $182,811 1.04% 0.55% to 2.85% -6.93% to -0.44% December 31, 2010 11,837 $10.05863 to $13.85960 $129,172 0.87% 0.55% to 2.85% 8.44% to 12.58% December 31, 2009 3,810 $ 9.34808 to $12.42655 $ 37,034 2.84% 1.00% to 2.65% 22.94% to 24.95% December 31, 2008 2,220 $ 7.60358 to $ 7.98587 $ 17,350 1.77% 1.15% to 2.65% -31.62% to -30.60% AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 2,773 $10.57497 to $16.64347 $ 34,617 0.00% 0.55% to 2.85% 14.23% to 16.94% December 31, 2011 1,503 $10.28972 to $14.43104 $ 16,199 0.00% 0.55% to 2.85% -4.49% to -2.24% December 31, 2010 1,233 $10.65531 to $14.96577 $ 13,734 0.00% 0.55% to 2.85% 10.89% to 14.49% December 31, 2009 478 $ 9.36618 to $13.17447 $ 4,644 0.00% 1.15% to 2.00% 31.92% to 51.63% December 31, 2008 282 $ 6.21674 to $ 6.60360 $ 1,770 0.14% 1.15% to 1.90% -41.68% to -38.77% AST MONEY MARKET PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 2,056 $ 9.12800 to $10.31714 $ 19,917 0.01% 0.85% to 2.85% -2.85% to -0.85% December 31, 2011 2,221 $ 9.36043 to $10.43487 $ 21,882 0.02% 1.00% to 2.85% -2.82% to -0.96% December 31, 2010 1,274 $ 9.59652 to $10.55197 $ 12,842 0.02% 1.15% to 2.85% -2.46% to -1.02% December 31, 2009 540 $ 9.83880 to $10.67105 $ 5,650 0.21% 1.15% to 2.55% -1.87% to -0.90% December 31, 2008 328 $10.09598 to $10.76754 $ 3,490 2.30% 1.15% to 2.30% 0.20% to 1.34% AST SMALL-CAP GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,036 $ 9.69125 to $14.02211 $ 13,871 0.00% 0.55% to 2.85% 8.97% to 11.56% December 31, 2011 647 $11.19338 to $12.39878 $ 7,766 0.00% 1.15% to 2.70% -3.65% to -2.10% December 31, 2010 507 $11.54673 to $12.68615 $ 6,183 0.20% 1.15% to 2.70% 25.91% to 34.87% December 31, 2009 313 $ 8.64603 to $ 8.96499 $ 2,783 0.05% 1.15% to 2.15% 31.09% to 32.39% December 31, 2008 259 $ 6.63894 to $ 6.77186 $ 1,750 0.00% 1.15% to 1.90% -36.21% to -33.33% AST PIMCO TOTAL RETURN BOND PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 21,225 $10.83456 to $14.46865 $247,468 2.51% 0.55% to 2.85% 6.20% to 8.72% December 31, 2011 14,092 $ 9.99564 to $13.38718 $154,438 1.86% 0.55% to 2.85% -0.04% to 2.61% December 31, 2010 12,278 $10.27781 to $13.12390 $134,467 1.50% 0.55% to 2.85% 2.72% to 6.65% December 31, 2009 5,519 $ 9.92693 to $12.32370 $ 59,184 0.89% 1.15% to 2.55% -0.63% to 15.43% December 31, 2008 377 $ 9.41587 to $10.69755 $ 3,968 3.46% 1.15% to 1.90% -5.98% to -3.37% AST INTERNATIONAL VALUE PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 706 $ 8.75042 to $14.02985 $ 7,387 2.13% 1.15% to 2.70% 13.52% to 15.35% December 31, 2011 494 $ 7.59729 to $12.25942 $ 4,480 1.51% 1.15% to 2.85% -15.04% to -13.54% December 31, 2010 408 $ 8.80034 to $14.29181 $ 4,276 0.67% 1.15% to 2.85% 7.95% to 9.82% December 31, 2009 164 $ 8.02537 to $13.11671 $ 1,466 1.96% 1.15% to 2.55% 27.75% to 29.64% December 31, 2008 72 $ 6.84949 to $ 7.03242 $ 499 2.55% 1.15% to 2.15% -45.18% to -44.64% AST INTERNATIONAL GROWTH PORTFOLIO -------------------------------------------------------------------------------------- December 31, 2012 1,205 $ 8.57742 to $15.04565 $ 12,832 0.99% 0.85% to 2.85% 16.93% to 19.34% December 31, 2011 784 $ 7.21877 to $12.74401 $ 7,164 0.71% 0.85% to 2.85% -18.51% to -13.91% December 31, 2010 593 $ 8.39779 to $14.92060 $ 6,331 0.26% 1.15% to 2.85% 11.65% to 13.98% December 31, 2009 160 $ 7.42983 to $13.28533 $ 1,308 1.40% 1.15% to 2.10% 30.98% to 33.75% December 31, 2008 76 $ 5.56317 to $ 6.16356 $ 463 1.43% 1.15% to 1.80% -51.11% to -44.91%
A66 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED --------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST --HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ NVIT DEVELOPING MARKETS FUND --------------------------------------------------------------------------------------- December 31, 2012 44 $14.77377 to $15.23556 $ 665 0.10% 1.40% to 1.80% 14.71% to 15.17% December 31, 2011 51 $12.87876 to $13.22905 $ 670 0.25% 1.40% to 1.80% -23.78% to -23.48% December 31, 2010 151 $16.89594 to $17.28741 $ 2,586 0.00% 1.40% to 1.80% 14.09% to 14.54% December 31, 2009 161 $14.80944 to $15.09299 $ 2,415 1.13% 1.40% to 1.80% 59.36% to 59.99% December 31, 2008 168 $ 9.31057 to $ 9.43370 $ 1,579 0.74% 1.40% to 1.75% -58.59% to -58.44% AST WESTERN ASSET CORE PLUS BOND PORTFOLIO --------------------------------------------------------------------------------------- December 31, 2012 3,920 $11.03135 to $12.52719 $ 45,582 3.20% 0.55% to 2.85% 4.77% to 7.26% December 31, 2011 2,628 $10.63550 to $11.84188 $ 28,880 2.89% 0.55% to 2.85% 3.01% to 5.44% December 31, 2010 2,192 $10.32483 to $11.38650 $ 23,213 1.26% 1.00% to 2.85% 3.27% to 6.73% December 31, 2009 555 $10.05881 to $10.76877 $ 5,704 2.74% 1.15% to 2.15% 7.80% to 10.36% December 31, 2008 43 $ 9.12808 to $ 9.32157 $ 399 0.13% 1.30% to 1.80% -8.80% to -6.61% AST INVESTMENT GRADE BOND PORTFOLIO (AVAILABLE JANUARY 28, 2008) --------------------------------------------------------------------------------------- December 31, 2012 20,929 $11.79750 to $15.63108 $272,251 1.38% 0.55% to 2.25% 6.94% to 8.80% December 31, 2011 56,740 $10.87605 to $14.45223 $688,204 0.20% 0.55% to 2.25% 8.68% to 11.82% December 31, 2010 469 $10.57538 to $13.00047 $ 6,003 7.78% 0.95% to 2.25% 5.69% to 9.55% December 31, 2009 1,117 $11.72128 to $11.86699 $ 13,151 1.36% 1.15% to 1.80% 9.34% to 10.04% December 31, 2008 4,157 $10.72041 to $10.78453 $ 44,675 0.00% 1.15% to 1.80% 7.22% to 7.86% AST BOND PORTFOLIO 2018 (AVAILABLE JANUARY 28, 2008) --------------------------------------------------------------------------------------- December 31, 2012 1,799 $11.95683 to $13.99125 $ 21,894 0.49% 1.90% to 2.85% 2.70% to 3.74% December 31, 2011 1,787 $11.64275 to $13.48663 $ 21,049 0.16% 1.90% to 2.85% 10.35% to 11.47% December 31, 2010 18 $12.01294 to $12.09943 $ 211 0.93% 1.90% to 2.15% 8.85% to 9.11% December 31, 2009 30 $11.03670 to $11.08899 $ 332 0.33% 1.50% to 2.15% -8.03% to -7.44% December 31, 2008 6 $12.00012 to $12.07153 $ 75 0.00% 1.50% to 2.15% 20.02% to 20.73% AST BOND PORTFOLIO 2019**** (AVAILABLE JANUARY 28, 2008) --------------------------------------------------------------------------------------- December 31, 2012 183 $12.22857 to $13.98700 $ 2,283 0.31% 1.90% to 2.85% 2.84% to 3.85% December 31, 2011 0 $13.49739 to $13.62798 $ 0 0.91% 1.90% to 2.15% 13.54% to 13.81% December 31, 2010 3 $11.88816 to $12.18296 $ 33 0.74% 1.30% to 2.15% 9.02% to 9.93% December 31, 2009 14 $10.90486 to $11.08225 $ 156 0.27% 1.30% to 2.15% -9.64% to -8.88% December 31, 2008 3 $12.06868 to $12.16291 $ 41 0.00% 1.30% to 2.15% 20.71% to 21.64% AST GLOBAL REAL ESTATE PORTFOLIO (AVAILABLE JULY 21, 2008) --------------------------------------------------------------------------------------- December 31, 2012 547 $10.79040 to $19.05468 $ 7,170 1.45% 1.00% to 2.85% 23.19% to 25.55% December 31, 2011 334 $ 8.72255 to $15.32029 $ 3,472 2.28% 1.15% to 2.85% -7.74% to -6.12% December 31, 2010 289 $ 9.41466 to $16.44739 $ 3,166 1.17% 1.15% to 2.85% 14.96% to 18.83% December 31, 2009 79 $ 8.02826 to $13.95016 $ 651 0.69% 1.15% to 2.50% 31.80% to 41.49% December 31, 2008 1 $ 6.10058 to $ 6.11016 $ 5 0.00% 1.80% to 2.15% -40.04% to -39.95% AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO (AVAILABLE JULY 21, 2008) --------------------------------------------------------------------------------------- December 31, 2012 2,458 $ 8.90982 to $16.06935 $ 26,031 1.10% 0.55% to 2.85% 14.56% to 17.28% December 31, 2011 1,592 $ 7.61998 to $13.89229 $ 14,499 0.94% 0.55% to 2.85% -23.87% to -20.71% December 31, 2010 1,468 $10.76214 to $17.76396 $ 17,086 0.28% 1.15% to 2.85% 16.62% to 20.88% December 31, 2009 303 $ 9.02175 to $14.81166 $ 2,792 0.25% 1.15% to 2.50% 47.32% to 64.95% December 31, 2008 2 $ 5.57715 to $ 5.57838 $ 11 0.00% 1.50% to 1.55% -44.79% to -44.78% FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND (EXPIRED SEPTEMBER 21, 2012) --------------------------------------------------------------------------------------- December 31, 2012 0 $ 9.67628 to $14.97302 $ (0) 2.95% 0.85% to 2.85% 11.04% to 12.69% December 31, 2011 11,946 $ 8.68157 to $13.39083 $119,693 0.02% 0.85% to 2.85% -10.47% to -2.60% December 31, 2010 10,403 $ 9.04060 to $13.88351 $106,344 3.82% 0.95% to 2.85% 5.95% to 8.99% December 31, 2009 2,729 $ 8.39751 to $12.83927 $ 23,605 4.92% 1.15% to 2.40% 27.02% to 28.84% December 31, 2008 486 $ 6.61132 to $ 6.66608 $ 3,230 3.31% 1.15% to 2.40% -34.40% to -33.86%
A67 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED -------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED -------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST --HIGHEST ------ ---------------------- -------- ---------- ----------------- ------------------ AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2012 1,525 $10.52515 to $17.90792 $ 19,892 0.48% 0.55% to 2.70% 12.56% to 15.05% December 31, 2011 959 $ 9.17568 to $15.78149 $ 11,040 0.50% 0.55% to 2.70% -7.35% to 0.75% December 31, 2010 791 $11.42102 to $15.88201 $ 9,197 0.35% 0.55% to 2.70% 14.62% to 25.51% December 31, 2009 188 $ 9.46659 to $12.77276 $ 1,808 0.58% 1.15% to 2.15% 24.18% to 28.33% December 31, 2008 4 $ 7.62336 to $ 7.64561 $ 30 0.00% 1.50% to 2.15% -24.02% to -23.80% AST SCHRODERS GLOBAL TACTICAL PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2012 15,190 $ 9.90321 to $15.08440 $179,781 0.45% 0.55% to 2.85% 12.59% to 15.27% December 31, 2011 7,911 $ 8.75838 to $13.26883 $ 81,484 0.29% 0.55% to 2.85% -8.49% to -2.93% December 31, 2010 5,917 $ 9.19665 to $13.85815 $ 62,348 0.24% 0.55% to 2.85% 9.18% to 13.04% December 31, 2009 1,375 $ 8.24406 to $12.35611 $ 11,560 0.44% 1.15% to 2.50% 22.92% to 25.66% December 31, 2008 240 $ 6.66587 to $ 6.72112 $ 1,608 0.03% 1.15% to 2.40% -34.00% to -33.45% AST CLS MODERATE ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2012 21,004 $ 9.89825 to $13.66670 $235,725 0.52% 0.55% to 2.85% 7.13% to 9.68% December 31, 2011 11,121 $ 9.20021 to $12.63456 $114,175 0.40% 0.55% to 2.85% -6.86% to -2.36% December 31, 2010 7,792 $ 9.60436 to $13.11882 $ 81,960 0.42% 0.95% to 2.85% 7.21% to 10.65% December 31, 2009 1,753 $ 8.79604 to $11.95029 $ 15,710 0.29% 1.15% to 2.50% 19.03% to 21.99% December 31, 2008 135 $ 7.31182 to $ 7.37228 $ 991 0.03% 1.15% to 2.40% -27.47% to -26.87% AST J.P. MORGAN GLOBAL THEMATIC PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2012 9,458 $10.49066 to $14.87346 $111,417 0.43% 0.55% to 2.85% 10.34% to 12.96% December 31, 2011 4,964 $ 9.31537 to $13.35045 $ 52,174 0.34% 0.55% to 2.85% -6.67% to -1.12% December 31, 2010 3,330 $ 9.76990 to $13.68833 $ 35,436 0.23% 0.95% to 2.85% 8.19% to 12.52% December 31, 2009 810 $ 8.78979 to $12.26108 $ 7,410 0.23% 1.15% to 2.40% 22.11% to 25.23% December 31, 2008 61 $ 7.11750 to $ 7.16470 $ 435 0.01% 1.15% to 2.15% -29.61% to -29.15% AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2012 12,412 $10.28497 to $13.69989 $139,813 0.56% 0.55% to 2.85% 6.99% to 9.52% December 31, 2011 8,325 $ 9.41906 to $12.68275 $ 86,341 0.47% 0.55% to 2.85% -5.72% to -1.05% December 31, 2010 6,330 $ 9.95339 to $12.99556 $ 66,678 0.38% 0.95% to 2.85% 6.37% to 10.33% December 31, 2009 2,050 $ 9.13296 to $11.87199 $ 19,145 0.20% 1.15% to 2.40% 18.43% to 22.22% December 31, 2008 238 $ 7.57974 to $ 7.64237 $ 1,815 0.01% 1.15% to 2.40% -24.87% to -24.25% AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO (AVAILABLE MAY 01, 2008) -------------------------------------------------------------------------------------- December 31, 2012 10,344 $10.36964 to $14.20334 $120,257 0.48% 0.55% to 2.85% 10.39% to 13.01% December 31, 2011 5,117 $ 9.32332 to $12.74316 $ 53,097 0.22% 0.55% to 2.85% -5.25% to -3.01% December 31, 2010 3,298 $ 9.78877 to $13.32052 $ 35,509 0.24% 0.55% to 2.85% 8.04% to 12.26% December 31, 2009 504 $ 8.84522 to $11.98361 $ 4,585 0.33% 0.95% to 2.40% 18.39% to 20.09% December 31, 2008 44 $ 7.47127 to $ 7.53310 $ 330 0.01% 1.15% to 2.40% -26.05% to -25.44% PROFUND VP CONSUMER SERVICES (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2012 24 $13.58666 to $13.58666 $ 330 0.00% 1.50% to 1.50% 20.29% to 20.29% December 31, 2011 28 $11.29470 to $11.29470 $ 318 0.00% 1.50% to 1.50% 3.94% to 3.94% December 31, 2010 30 $10.86622 to $10.86622 $ 322 0.00% 1.50% to 1.50% 19.60% to 19.60% December 31, 2009 26 $ 9.08577 to $ 9.08577 $ 238 0.00% 1.50% to 1.50% 28.87% to 28.87% PROFUND VP CONSUMER GOODS PORTFOLIO (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2012 25 $12.23984 to $12.23984 $ 310 0.87% 1.50% to 1.50% 9.22% to 9.22% December 31, 2011 28 $11.20680 to $11.20680 $ 309 1.28% 1.50% to 1.50% 5.37% to 5.37% December 31, 2010 29 $10.63581 to $10.63581 $ 314 0.54% 1.50% to 1.50% 15.63% to 15.63% December 31, 2009 26 $ 9.19832 to $ 9.19832 $ 242 1.51% 1.50% to 1.50% 19.77% to 19.77% PROFUND VP FINANCIALS (AVAILABLE MAY 01, 2009) -------------------------------------------------------------------------------------- December 31, 2012 69 $ 6.63308 to $ 6.81861 $ 469 0.10% 1.50% to 2.10% 22.16% to 22.88% December 31, 2011 83 $ 5.42982 to $ 5.54883 $ 461 0.00% 1.50% to 2.10% -15.60% to -15.10% December 31, 2010 77 $ 6.53605 to $ 6.53605 $ 503 0.29% 1.50% to 1.50% 9.29% to 9.29% December 31, 2009 62 $ 5.98047 to $ 5.98047 $ 372 2.43% 1.50% to 1.50% 13.31% to 13.31%
A68 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED ------------------------------------------------------------------------------------ AT YEAR ENDED FOR YEAR ENDED ------------------------------------ ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST --HIGHEST ------ ---------------------- ------ ---------- ----------------- ------------------ PROFUND VP HEALTH CARE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 30 $12.15913 to $12.49836 $375 0.39% 1.50% to 2.10% 14.98% to 15.67% December 31, 2011 34 $10.57454 to $10.80547 $367 0.31% 1.50% to 2.10% 7.85% to 8.49% December 31, 2010 37 $ 9.96007 to $ 9.96007 $373 0.28% 1.50% to 1.50% 1.32% to 1.32% December 31, 2009 32 $ 9.82996 to $ 9.82996 $313 0.89% 1.50% to 1.50% 17.79% to 17.79% PROFUND VP INDUSTRIALS (AVAILABLE MAY 01, 2008) ------------------------------------------------------------------------------------ December 31, 2012 31 $10.04439 to $10.04439 $315 0.26% 1.50% to 1.50% 14.09% to 14.09% December 31, 2011 33 $ 8.80429 to $ 8.80429 $289 0.28% 1.50% to 1.50% -3.23% to -3.23% December 31, 2010 40 $ 9.09853 to $11.41249 $364 0.23% 1.50% to 1.55% 14.03% to 21.92% December 31, 2009 41 $ 7.46270 to $ 7.46270 $304 1.28% 1.50% to 1.50% 22.27% to 22.27% December 31, 2008 1 $ 6.10367 to $ 6.10367 $ 6 0.16% 1.50% to 1.50% -39.96% to -39.96% PROFUND VP MID-CAP GROWTH (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 10 $11.32177 to $11.63796 $119 0.00% 1.50% to 2.10% 13.00% to 13.67% December 31, 2011 9 $10.01888 to $10.23808 $ 87 0.00% 1.50% to 2.10% -4.89% to -4.33% December 31, 2010 8 $10.53374 to $10.70104 $ 89 0.00% 1.50% to 2.10% 25.78% to 26.52% December 31, 2009 7 $ 8.37491 to $ 8.45797 $ 62 0.00% 1.50% to 2.10% 35.47% to 36.27% PROFUND VP MID-CAP VALUE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 6 $10.76386 to $10.76386 $ 70 0.15% 1.50% to 1.50% 14.84% to 14.84% December 31, 2011 9 $ 9.37296 to $ 9.44100 $ 81 0.15% 1.30% to 1.50% -5.34% to -5.16% December 31, 2010 7 $ 9.90192 to $ 9.90192 $ 71 0.29% 1.50% to 1.50% 18.67% to 18.67% December 31, 2009 10 $ 8.34400 to $ 8.34400 $ 85 1.42% 1.50% to 1.50% 28.94% to 28.94% PROFUND VP REAL ESTATE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 14 $10.00220 to $10.18798 $144 2.57% 1.50% to 1.90% 14.98% to 15.44% December 31, 2011 12 $ 8.69881 to $ 8.82559 $110 0.00% 1.50% to 1.90% 2.80% to 3.20% December 31, 2010 16 $ 8.46186 to $11.54906 $133 3.89% 1.50% to 1.90% 15.86% to 22.85% December 31, 2009 18 $ 6.91515 to $ 6.96107 $122 3.45% 1.50% to 1.90% 25.51% to 26.01% PROFUND VP SMALL-CAP GROWTH (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 3 $11.60725 to $11.60725 $ 32 0.00% 1.50% to 1.50% 10.82% to 10.82% December 31, 2011 2 $10.47427 to $10.55029 $ 26 0.00% 1.30% to 1.50% -0.21% to -0.02% December 31, 2010 3 $10.49669 to $10.49669 $ 28 0.00% 1.50% to 1.50% 23.87% to 23.87% December 31, 2009 4 $ 8.47414 to $ 8.47414 $ 35 0.00% 1.50% to 1.50% 24.31% to 24.31% PROFUND VP SMALL-CAP VALUE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 2 $11.08892 to $11.08892 $ 20 0.00% 1.50% to 1.50% 14.44% to 14.44% December 31, 2011 2 $ 9.68994 to $ 9.68994 $ 19 0.00% 1.50% to 1.50% -5.52% to -5.52% December 31, 2010 2 $10.25585 to $10.25585 $ 25 0.10% 1.50% to 1.50% 20.30% to 20.30% December 31, 2009 2 $ 8.52534 to $ 8.52534 $ 20 0.41% 1.50% to 1.50% 18.62% to 18.62% PROFUND VP TELECOMMUNICATIONS (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 24 $10.10290 to $10.10290 $247 4.12% 1.50% to 1.50% 14.79% to 14.79% December 31, 2011 29 $ 8.80105 to $ 8.80105 $255 2.96% 1.50% to 1.50% 0.36% to 0.36% December 31, 2010 28 $ 8.76916 to $12.16509 $245 2.84% 1.50% to 1.55% 13.98% to 21.09% December 31, 2009 29 $ 7.69379 to $ 7.69379 $221 11.48% 1.50% to 1.50% 5.73% to 5.73% PROFUND VP UTILITIES (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------ December 31, 2012 23 $ 9.22480 to $ 9.39609 $212 2.71% 1.50% to 1.90% -1.73% to -1.34% December 31, 2011 27 $ 9.38722 to $ 9.52393 $259 2.51% 1.50% to 1.90% 15.32% to 15.78% December 31, 2010 30 $ 8.14003 to $10.77660 $244 2.49% 1.50% to 1.90% 3.97% to 7.40% December 31, 2009 23 $ 7.82890 to $ 7.88054 $181 6.24% 1.50% to 1.90% 8.67% to 9.10%
A69 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED ------------------------------------------------------------------------------------- AT YEAR ENDED FOR YEAR ENDED ------------------------------------- ----------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST --HIGHEST ------ ---------------------- ------- ---------- ----------------- ------------------ PROFUND VP LARGE-CAP GROWTH (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2012 5 $10.52001 to $10.81361 $ 49 0.07% 1.50% to 2.10% 10.40% to 11.05% December 31, 2011 4 $ 9.52935 to $ 9.73772 $ 37 0.00% 1.50% to 2.10% 1.01% to 1.61% December 31, 2010 5 $ 9.43387 to $ 9.58358 $ 46 0.07% 1.50% to 2.10% 10.86% to 11.51% December 31, 2009 8 $ 8.51005 to $ 8.59420 $ 65 0.00% 1.50% to 2.10% 27.07% to 27.82% PROFUND VP LARGE-CAP VALUE (AVAILABLE MAY 01, 2009) ------------------------------------------------------------------------------------- December 31, 2012 8 $ 9.09087 to $ 9.09087 $ 75 0.76% 1.50% to 1.50% 13.71% to 13.71% December 31, 2011 18 $ 7.99461 to $ 7.99461 $ 141 0.76% 1.50% to 1.50% -2.74% to -2.74% December 31, 2010 17 $ 8.21947 to $ 8.21947 $ 139 0.96% 1.50% to 1.50% 11.23% to 11.23% December 31, 2009 15 $ 7.38987 to $ 7.38987 $ 111 1.33% 1.50% to 1.50% 17.70% to 17.70% AST BOND PORTFOLIO 2020**** (AVAILABLE ON JANUARY 02, 2009) ------------------------------------------------------------------------------------- December 31, 2012 11 $11.60016 to $12.95314 $ 135 0.58% 1.30% to 2.55% 3.67% to 4.95% December 31, 2011 66 $11.06416 to $12.41953 $ 746 1.13% 1.30% to 2.55% 15.73% to 17.15% December 31, 2010 331 $ 9.54633 to $10.66744 $ 3,199 0.00% 1.30% to 2.55% 6.10% to 10.41% December 31, 2009 0 $ 0.00000 to $ 0.00000 $ 0 0.00% 1.30% to 2.15% -6.43% to -5.91% AST JENNISON LARGE-CAP VALUE PORTFOLIO (AVAILABLE ON NOVEMBER 16, 2009) ------------------------------------------------------------------------------------- December 31, 2012 557 $ 9.54913 to $12.07266 $ 6,101 0.42% 0.55% to 2.45% 10.46% to 12.61% December 31, 2011 339 $ 8.50545 to $10.78439 $ 3,336 0.33% 0.55% to 2.45% -14.75% to -6.39% December 31, 2010 251 $10.51922 to $11.58869 $ 2,684 0.02% 1.15% to 2.45% 5.50% to 12.43% December 31, 2009 11 $10.29877 to $10.30741 $ 109 0.00% 1.15% to 1.80% 1.51% to 1.59% AST JENNISON LARGE-CAP GROWTH PORTFOLIO (AVAILABLE ON NOVEMBER 16, 2009) ------------------------------------------------------------------------------------- December 31, 2012 876 $10.54999 to $12.84306 $10,610 0.00% 0.55% to 2.70% 12.07% to 14.55% December 31, 2011 435 $10.49190 to $11.27814 $ 4,657 0.00% 0.55% to 2.70% -2.05% to 0.11% December 31, 2010 193 $10.71155 to $11.33263 $ 2,096 0.00% 1.15% to 2.70% 7.43% to 10.05% December 31, 2009 4 $10.29227 to $10.29766 $ 42 0.00% 1.15% to 1.55% 2.06% to 2.11% AST BOND PORTFOLIO 2017 (AVAILABLE ON JANUARY 4, 2010) ------------------------------------------------------------------------------------- December 31, 2012 1,847 $11.61498 to $11.93630 $21,847 0.52% 1.90% to 2.85% 2.12% to 3.12% December 31, 2011 1,836 $11.37404 to $11.57526 $21,132 0.04% 1.90% to 2.85% 8.24% to 9.30% December 31, 2010 19 $10.52124 to $10.59081 $ 205 0.00% 1.90% to 2.70% 5.24% to 5.92% AST BOND PORTFOLIO 2021 (AVAILABLE ON JANUARY 4, 2010) ------------------------------------------------------------------------------------- December 31, 2012 2,129 $12.95637 to $13.85470 $28,167 0.78% 1.30% to 2.85% 3.75% to 5.42% December 31, 2011 2,642 $12.48861 to $13.14210 $33,532 0.06% 1.30% to 2.85% 16.88% to 18.76% December 31, 2010 396 $10.93130 to $11.06626 $ 4,359 0.00% 1.30% to 2.55% 9.31% to 10.66% WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY PORTFOLIO SHARE CLASS 1 (AVAILABLE ON JULY 16, 2010) ------------------------------------------------------------------------------------- December 31, 2012 16 $13.75687 to $14.06753 $ 220 1.65% 1.50% to 1.75% 11.72% to 12.00% December 31, 2011 17 $12.31349 to $12.56056 $ 206 0.63% 1.50% to 1.75% -14.29% to -14.08% December 31, 2010 17 $14.36608 to $14.61842 $ 242 0.00% 1.50% to 1.75% 20.88% to 21.01% WELLS FARGO ADVANTAGE VT OMEGA GROWTH PORTFOLIO SHARE CLASS 1 (AVAILABLE ON JULY 16, 2010) ------------------------------------------------------------------------------------- December 31, 2012 169 $ 2.16078 to $ 2.21481 $ 365 0.00% 1.50% to 1.75% 18.68% to 18.97% December 31, 2011 179 $ 1.82068 to $ 1.86164 $ 326 0.00% 1.50% to 1.75% -6.99% to -6.75% December 31, 2010 188 $ 1.95742 to $ 1.99650 $ 368 0.00% 1.50% to 1.75% 26.08% to 26.21% WELLS FARGO ADVANTAGE VT SMALL CAP VALUE PORTFOLIO SHARE CLASS 1 (AVAILABLE ON JULY 16, 2010) ------------------------------------------------------------------------------------- December 31, 2012 5 $12.11133 to $12.18494 $ 63 1.15% 1.50% to 1.75% 12.36% to 12.64% December 31, 2011 6 $10.77879 to $10.81752 $ 61 0.89% 1.50% to 1.75% -8.65% to -8.43% December 31, 2010 6 $11.79975 to $11.81311 $ 71 0.00% 1.50% to 1.75% 21.84% to 21.98%
A70 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
PRELIMINARY UNAUDITED ------------------------------------------------------------------------------------ AT YEAR ENDED FOR YEAR ENDED -------------------------------------- --------------------------------------------- NET INVESTMENT UNITS UNIT VALUE ASSETS INCOME EXPENSE RATIO** TOTAL RETURN*** (000S) LOWEST -- HIGHEST (000S) RATIO* LOWEST -- HIGHEST LOWEST --HIGHEST ------ ---------------------- -------- ---------- ----------------- ---------------- AST BOND PORTFOLIO 2022 (AVAILABLE ON JANUARY 3, 2011) ------------------------------------------------------------------------------------ December 31, 2012 1,737 $12.22859 to $12.62575 $ 21,559 0.03% 1.30% to 2.85% 2.83% to 4.49% December 31, 2011 1,302 $11.89255 to $12.08351 $ 15,604 0.00% 1.30% to 2.85% 18.93% to 20.84% AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO (AVAILABLE ON APRIL 29, 2011) ------------------------------------------------------------------------------------ December 31, 2012 8,594 $ 9.95090 to $10.27765 $ 86,714 0.46% 0.55% to 2.45% 9.15% to 11.28% December 31, 2011 4,835 $ 9.12583 to $ 9.21697 $ 44,314 0.00% 0.85% to 2.35% -8.74% to -7.82% WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND -- CLASS 1 (AVAILABLE ON AUGUST 26, 2011) ------------------------------------------------------------------------------------ December 31, 2012 17 $12.18018 to $12.22072 $ 210 0.54% 1.50% to 1.75% 13.81% to 14.09% December 31, 2011 25 $10.70255 to $10.71170 $ 268 0.00% 1.50% to 1.75% 4.69% to 4.78% AST PRUDENTIAL CORE BOND PORTFOLIO (AVAILABLE ON OCTOBER 31, 2011) ------------------------------------------------------------------------------------ December 31, 2012 643 $10.50845 to $10.70984 $ 6,835 0.17% 0.85% to 2.50% 4.49% to 6.20% December 31, 2011 36 $10.06003 to $10.07683 $ 360 0.00% 1.30% to 2.25% 0.42% to 0.58% AST NEUBERGER BERMAN CORE BOND PORTFOLIO (AVAILABLE ON OCTOBER 31, 2011) ------------------------------------------------------------------------------------ December 31, 2012 349 $10.31269 to $10.48627 $ 3,621 0.23% 0.85% to 2.25% 2.51% to 3.98% December 31, 2011 44 $10.06278 to $10.07694 $ 444 0.00% 1.30% to 2.10% 0.35% to 0.48% AST BOND PORTFOLIO 2023 (AVAILABLE JANUARY 3, 2012) ------------------------------------------------------------------------------------ December 31, 2012 376 $10.28760 to $10.45376 $ 3,908 0.00% 1.30% to 2.85% 2.88% to 4.54% AST FRANKLIN TEMPLETON FOUNDING FUNDS ALLOCATION PORTFOLIO (AVAILABLE APRIL 30, 2012) ------------------------------------------------------------------------------------ December 31, 2012 19,511 $10.65915 to $10.80738 $209,728 0.00% 0.85% to 2.85% 6.62% to 8.08% AST NEW DISCOVERY ASSET ALLOCATION PORTFOLIO (AVAILABLE APRIL 30, 2012) ------------------------------------------------------------------------------------ December 31, 2012 2,285 $10.23818 to $10.40185 $ 23,601 0.95% 0.55% to 2.85% 2.41% to 4.02% AST WESTERN ASSET EMERGING MARKETS DEBT PORTFOLIO (AVAILABLE AUGUST 20, 2012) ------------------------------------------------------------------------------------ December 31, 2012 7 $10.38171 to $10.39933 $ 68 0.00% 1.30% to 1.75% 3.83% to 4.00% AST MFS LARGE-CAP VALUE PORTFOLIO (AVAILABLE AUGUST 20, 2012) ------------------------------------------------------------------------------------ December 31, 2012 4 $10.18909 to $10.21028 $ 40 0.00% 1.30% to 1.85% 1.91% to 2.11%
-------- * These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. This ratio is annualized and excludes those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded. ***These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the A71 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED) redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Product designs within a subaccount with an effective date during a period were excluded from the range of total return for that period. Contract owners may experience different total returns based on their investment options. Investment options with a date notation indicate the effective date of that investment option in the Account. Total returns for periods less than one year are not annualized. The total return is calculated for each of the five years in the period ended December 31, 2012 or from the effective date of the subaccount through the end of the reporting period. ****Represents a fund containing less than 1,000 units and/or $1,000 in net assets. A. MORTALITY RISK AND EXPENSE RISK CHARGES The mortality risk and expense risk charges are applied daily against the net assets of the separate account attributable to each of the contracts. Mortality risk is that annuitants may live longer than estimated and expense risk is that the cost of issuing and administering the contracts may exceed related charges by Pruco Life of New Jersey. The mortality risk and expense risk charges are assessed through the reduction in unit values. B. ADMINISTRATION CHARGE The administration charge is applied daily against the net assets held in each subaccount. Administration charges include costs associated with issuing the contract, establishing and maintaining records, and providing reports to contract owners. This charge is assessed through the reduction in unit values.
ASSET-BASED CHARGE LEVEL DESCRIPTION OF WHEN APPLICABLE ------------ ---------------------------------------------------------------- 0.55% Premier Retirement Advisor - No Optional Benefits 0.85% Premier Retirement Variable Annuity - No Optional Benefits 0.95% Premier Bb Series - No Optional Benefits Premier Retirement Advisor - With HAV 1.15% Premier B Series - No Optional Benefits Premier Retirement Advisor - With HD GRO II OR GRO Plus II 1.20% Premier Bb Series with HAV 1.30% Premier Bb Series - with HD GRO Premier Retirement B - No Optional Benefits 1.35% Discovery Choice Basic - No Optional Benefits Premier Bb Series - with HAV 1.40% No Optional Benefits Discovery Select Variable Annuity (0.15% Admin and 1.25% M&E) Strategic Partners Annuity One Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Strategic Partners Plus Enhanced - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor Premier B Series with HAV 1.50% No Optional Benefits Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier L Series Premier B Series with HD GRO
A72 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
ASSET-BASED CHARGE LEVEL DESCRIPTION OF WHEN APPLICABLE ------------ ------------------------------------------------------------------------------------------ 1.52% Strategic Partners Select GMDB with Step Up and Roll Up 1.55% Premier X Series - No Optional Benefits Premier B Series with HAV Premier Bb Series with LT5 or HD5 Premier Bb Series with HD GRO Premier Bb Series with HD GRO and HAV Premier Retirement Advisor - With HAV and HD GRO II OR HAV and GRO Plus II 1.60% No Optional Benefits Strategic Partners FlexElite GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Plus Strategic Partners Plus Enhanced - Non Bonus Version 1.65% Discovery Choice Enhanced - No Optional Benefit GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor with GMDB with Step Up and Roll Up 1.70% GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Plus Enhanced - Bonus Version GMDB with-Greater of Roll Up and Step Up Strategic Partners Annuity One Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Plus Enhanced - Non Bonus Version GMDB with Step Up and Roll Up Strategic Partners Plus Strategic Partners Plus Enhanced - Non Bonus Version Premier Bb Series with SLT5 and GMIB and HAV Premier Retirement B - With HAV Premier Retirement L - No Optional Benefits 1.75% Premier B Series with LT5 or HD5 or HD GRO GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier B Series with HD GRO and HAV Premier L Series with HAV Premier Retirement C - No Optional Benefits 1.80% Strategic Partners FlexElite with GMDB Annual Step Up or 5% Roll Up Strategic Partners Plus Enhanced - Bonus Version with GMDB with Step Up and Roll Up Strategic Partners Annuity One Enhanced - Bonus Version with GMDB with Greater of Roll Up and Step Up Premier X Series with HAV Premier Bb Series with LT5 or HD5 and HAV Premier Bb Series with HD GRO and HAV Premier Retirement Variable Annuity with HDI or SHDI 1.85% Premier L Series with HD GRO Premier Retirement X - No Optional Benefits 1.90% Premier B Series with SLT5 Premier L Series with HAV Strategic Partners FlexElite with GMDB with Greater of Roll Up and Step Up Premier X Series with HD GRO Premier Retirement B - With HD GRO II OR GRO Plus II
A73 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
ASSET-BASED CHARGE LEVEL DESCRIPTION OF WHEN APPLICABLE ------------ ------------------------------------------------------------------------------------------- 1.95% Premier Bb Series with GMIB and HDV or Combo Premier X Series with HAV Premier Bb Series with HD GRO and HAV 2.00% With LT5 or HD5 Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor Premier B Series with LT5 Premier B Series with HD5 and HAV Premier B Series with HD GRO and HAV 2.10% With LT5 or HD5 Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier L Series Premier L Series with HD GRO Premier L Series with HD GRO and HAV Premier Retirement L - With HAV 2.15% With SLT5 Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Premier B Series with HD GRO and HAV Premier X Series with LT5 or HD5 Premier X Series with HD GRO Premier X Series with HD GRO and HAV Premier Retirement C - With HAV 2.20% With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced - Non Bonus Version Strategic Partners Plus Enhanced - Non Bonus Version 2.25% With SLT5 Premier L Series Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Non Bonus Version Strategic Partners Plus Enhanced III - Non Bonus Version Strategic Partners Advisor with LT5 or HD5 and GMDB with Step Up and Roll Up Premier Retirement X - With HAV 2.30% Premier X Series with SLT5 Strategic Partners Plus Enhanced - Non Bonus Version with LT5 or HD5 and GMDB with Step Up and Roll Up With LT5 or HD5 and GMDB with Greater of Roll Up and Step Up Strategic Partners Annuity One Enhanced - Non Bonus Version With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced - Bonus Version Strategic Partners Plus Enhanced - Bonus Version Premier Retirement B - With HAV and HD GRO II OR HAV and GRO Plus II Premier Retirement L - With HD GRO II OR GRO Plus II 2.35% With LT5 or HD5 and GMDB Annual Step Up or 5% Roll Up Strategic Partners Annuity One Enhanced III - Bonus Version Strategic Partners Plus Enhanced III - Bonus Version Premier L Series with LT5
A74 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 7: PRELIMINARY UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED)
ASSET-BASED CHARGE LEVEL DESCRIPTION OF WHEN APPLICABLE ------------ ---------------------------------------------------------------------- Premier L Series with HD5 and HAV Premier L Series with HD GRO and HAV Premier Retirement C - With HD GRO II OR GRO Plus II 2.40% With LT5 or HD5 and GMDB with Greater of Roll Up and Step Up Strategic Partners Annuity One Enhanced - Bonus Version With LT5 or HD5 and GMDB with Step Up and Roll Up Strategic Partners Plus Enhanced - Bonus Version Premier X Series with LT5 Premier X Series with HD5 and HAV Premier X Series with HD GRO and HAV 2.45% Premier Retirement X - With HD GRO II OR GRO Plus II 2.50% Premier L Series with HD GRO and HAV 2.55% Premier X Series with HD GRO and HAV 2.70% Premier Retirement L - With HAV and HD GRO II OR HAV and GRO Plus II 2.75% Premier Retirement C - With HAV and HD GRO II OR HAV and GRO Plus II 2.85% Premier Retirement X - With HAV and HD GRO II OR HAV and GRO Plus II
C. WITHDRAWAL CHARGES A deferred sales charge may be made upon full or partial contract owner redemptions. The charge compensates Pruco Life of New Jersey for paying the expenses of selling and distributing the contracts, including sales commissions, printing of prospectuses, sales administration, preparation of sales literature, and other promotional activities. No withdrawal charge is imposed whenever earnings are withdrawn. The range for withdrawal charges is 0%-9%. The charge is assessed through the redemption of units. D. OTHER RELATED CHARGES For Highest Daily Lifetime Seven, Highest Daily Lifetime Seven with Beneficiary Income Option, Highest Daily Lifetime Seven with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven with Beneficiary Income Option, the Optional Benefit Fee is a percentage of the Protected Withdrawal Value and is deducted pro rata from the Subaccounts on a quarterly basis. For Highest Daily Lifetime Income 2.0, Highest Daily Lifetime Income 2.0 with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Income 2.0, Highest Daily Lifetime Income 2.0 with Highest Annual Death Benefit, Spousal Highest Daily Lifetime Income 2.0 with Highest Annual Death Benefit, Highest Daily Lifetime Income, Highest Daily Lifetime Income with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Income, Highest Daily Lifetime Six Plus, Highest Daily Lifetime Six Plus with Beneficiary Income Option, Highest Daily Lifetime Six Plus with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Six Plus, and Spousal Highest Daily Lifetime Six Plus with Beneficiary Income Option, Highest Daily Lifetime Seven Plus, Highest Daily Lifetime Seven Plus with Beneficiary Income Option, Highest Daily Lifetime Seven Plus with Lifetime Income Accelerator, Spousal Highest Daily Lifetime Seven Plus, and Spousal Highest Daily Lifetime Seven Plus with Beneficiary Income Option, the Optional Benefit Fee is assessed against the greater of the unadjusted account value or the Protected Withdrawal Value and is deducted pro rata from the Subaccounts on a quarterly basis. An annual Maintenance Fee is charged if purchase payments or account is less than a stated amount (varies by product). A75 PRELIMINARY UNAUDITED NOTES TO FINANCIAL DATA OF PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT DECEMBER 31, 2012 NOTE 8: OTHER Contract owner net payments--represent contract owner contributions under the Variable Annuity Policies reduced by applicable deductions, charges, and state premium taxes. Annuity payments--represent periodic payments distributed under the terms of the policy. Surrenders, withdrawals, and death benefits--are payments to contract owners and beneficiaries made under the terms of the Variable Annuity Policies, and amounts that contract owners have requested to be withdrawn or paid to them. Net transfers between other subaccounts or fixed rate options--are amounts that contract owners have directed to be moved among subaccounts, including permitted transfers to and from the Guaranteed Interest Account and Market Value Adjustment. Withdrawals and other charges--are various contract level charges as described in contract charges and features section located above. A76 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Financial Statements and Report of Independent Registered Public Accounting Firm December 31, 2011 and 2010 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY INDEX TO FINANCIAL STATEMENTS
Financial Statements Page # -------------------- ------ Management's Annual Report on Internal Control Over Financial Reporting B-2 Financial Statements: Statements of Financial Position--December 31, 2011 and 2010 B-3 Statements of Operations and Comprehensive Income Years ended December 31, 2011, 2010 and 2009 B-4 Statements of Stockholder's Equity Years ended December 31, 2011, 2010 and 2009 B-5 Statements of Cash Flows Years ended December 31, 2011, 2010 and 2009 B-6 Notes to Financial Statements B-7 Report of Independent Registered Public Accounting Firm B-73
B-1 Management's Annual Report on Internal Control Over Financial Reporting Management of Pruco Life Insurance Company of New Jersey ("the Company") is responsible for establishing and maintaining adequate internal control over financial reporting. Management conducted an assessment of the effectiveness, as of December 31, 2011, of the Company's internal control over financial reporting, based on the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment under that framework, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2011. Our internal control over financial reporting is a process designed by or under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. This Annual Report does not include an attestation report of the Company's registered public accounting firm, PricewaterhouseCoopers LLP, regarding internal control over financial reporting. Internal controls over Financial Reporting were not subject to attestation by the Company's registered public accounting firm pursuant to final rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report. March 9, 2012 B-2 PART I-FINANCIAL INFORMATION Pruco Life Insurance Company of New Jersey Statements of Financial Position As of December 31, 2011 and 2010 (in thousands, except share amounts) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
2011 2010 ---------- ---------- ASSETS Fixed maturities available for sale, at fair value (amortized cost: 2011 - $ 1,132,908; 2010 - $1,007,655) $1,219,904 $1,064,541 Equity securities available for sale, at fair value (cost: 2011 - $1,521; 2010 - $2,301) 1,420 2,074 Trading account assets, at fair value 1,569 0 Policy loans 177,162 175,514 Short-term investments 1,069 7,409 Commercial mortgage and other loans 230,201 182,437 Other long-term investments 29,075 16,913 ---------- ---------- Total investments 1,660,400 1,448,888 Cash and cash equivalents 26,723 87,961 Deferred policy acquisition costs 262,895 271,179 Accrued investment income 17,275 16,365 Reinsurance recoverables 522,762 419,858 Receivables from parents and affiliates 23,148 25,833 Deferred sales inducements 48,101 51,106 Other assets 8,830 8,293 Separate account assets 6,258,008 5,038,051 ---------- ---------- Total Assets 8,828,142 7,367,534 ========== ========== LIABILITIES AND EQUITY LIABILITIES Policyholders' account balances 1,133,080 1,054,013 Future policy benefits and other policyholder liabilities 691,967 503,354 Cash collateral for loaned securities 17,012 413 Securities sold under agreements to repurchase 3,216 2,957 Income taxes 23,178 86,999 Short-term debt to affiliates 26,000 0 Long-term debt to affiliates 44,000 0 Payables to parent and affiliates 2,267 5,837 Other liabilities 67,081 109,969 Separate account liabilities 6,258,008 5,038,051 ---------- ---------- Total Liabilities 8,265,809 6,801,593 ---------- ---------- COMMITMENTS AND CONTINGENT LIABILITIES (See Note 12) EQUITY Common stock, ($5 par value; 400,000 shares, authorized, issued and outstanding) 2,000 2,000 Additional paid-in capital 207,928 169,742 Retained earnings 305,281 365,068 Accumulated other comprehensive income 47,124 29,131 ---------- ---------- Total Equity 562,333 565,941 ---------- ---------- TOTAL LIABILITIES AND EQUITY $8,828,142 $7,367,534 ========== ==========
See Notes to Financial Statements B-3 Pruco Life Insurance Company of New Jersey Statements of Operations and Comprehensive Income (Loss) Years Ended December 31, 2011, 2010 and 2009 (in thousands) --------------------------------------------------------------------------------
2011 2010 2009 --------- -------- -------- REVENUES Premiums $ 15,305 $ 14,733 $ 17,031 Policy charges and fee income 113,472 53,611 69,199 Net investment income 77,556 77,044 69,944 Asset administration fees 21,630 11,084 7,114 Other income 3,253 4,915 4,779 Realized investment gains (losses), net: Other-than-temporary impairments on fixed maturity securities (7,483) (21,164) (14,461) Other-than-temporary impairments on fixed maturity securities transferred to Other Comprehensive Income 7,215 18,612 8,391 Other realized investment gains (losses), net (109,788) 59,567 19,584 --------- -------- -------- Total realized investment gains (losses), net (110,056) 57,015 13,514 --------- -------- -------- Total Revenues 121,160 218,402 181,581 --------- -------- -------- BENEFITS AND EXPENSES Policyholders' benefits 27,226 (198) 26,062 Interest credited to policyholders' account balances 62,222 37,125 38,735 Amortization of deferred policy acquisition costs 90,046 8,662 16,370 General, administrative and other expenses 50,061 41,997 30,157 --------- -------- -------- Total Benefits And Expenses 229,555 87,586 111,324 --------- -------- -------- INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES (108,395) 130,816 70,257 --------- -------- -------- Income Taxes: Current (715) 23,841 20,362 Deferred (47,893) 15,967 (1,376) --------- -------- -------- Income tax (benefit) expense (48,608) 39,808 18,986 --------- -------- -------- NET INCOME (LOSS) $ (59,787) $ 91,008 $ 51,271 ========= ======== ======== Other comprehensive income (loss), before tax: Foreign currency translation adjustments (32) (34) 60 Unrealized investment gains (losses) for the period 21,317 19,876 76,123 Reclassification adjustment for (gains) losses included in net income 6,397 6,670 5,436 --------- -------- -------- Net unrealized investment gains (losses) 27,714 26,546 81,559 --------- -------- -------- Other comprehensive income (loss), before tax: 27,682 26,512 81,619 Less: Income tax expense (benefit) related to: Foreign currency translation adjustment (11) (12) 21 Net unrealized investment gains 9,700 9,291 28,546 Total 9,689 9,279 28,567 --------- -------- -------- Other comprehensive income (loss), net of tax: 17,993 17,233 53,052 --------- -------- -------- COMPREHENSIVE INCOME (LOSS) $ (41,794) $108,241 $104,323 ========= ======== ========
See Notes to Financial Statements B-4 Pruco Life Insurance Company of New Jersey Statements of Stockholder's Equity Years Ended December 31, 2011, 2010 and 2009 (in thousands) --------------------------------------------------------------------------------
Accumulated Additional Other Common Paid-in Retained Comprehensive Total Stock Capital Earnings Income (Loss) Equity ------ ---------- -------- ------------- -------- Balance, December 31, 2008 $2,000 $168,998 $273,964 $(30,644) $414,318 Cumulative effect of adoption of accounting principle - - (54,908) (6,777) (61,685) Impact of adoption of new guidance for other-than- temporary impairments of debt securities, net of taxes - - 3,733 (3,733) - Comprehensive income: Net income (loss) - - 51,271 - 51,271 Other comprehensive income (loss), net of taxes - - - 53,052 53,052 -------- Total comprehensive income - - - 104,323 ------ -------- -------- -------- -------- Balance, December 31, 2009 $2,000 $168,998 $274,060 $ 11,898 $456,956 Affiliated Asset Transfers - 744 - - 744 Comprehensive income: Net income (loss) - - 91,008 - 91,008 Other comprehensive income (loss), net of taxes - - - 17,233 17,233 ------ -------- -------- -------- -------- Total comprehensive income - - - 108,241 ------ -------- -------- -------- -------- Balance, December 31, 2010 $2,000 $169,742 $365,068 $ 29,131 $565,941 Contributed Capital - 38,000 - - 38,000 Affiliated Asset Transfers - 186 - - 186 Comprehensive income: Net income (loss) - - (59,787) - (59,787) Other comprehensive income (loss), net of taxes - - - 17,993 17,993 -------- Total comprehensive income - - - (41,794) ------ -------- -------- -------- -------- Balance, December 31, 2011 $2,000 $207,928 $305,281 $ 47,124 $562,333 ====== ======== ======== ======== ========
See Notes to Financial Statements B-5 Pruco Life Insurance Company of New Jersey Statements of Cash Flows Years Ended December 31, 2011, 2010 and 2009 (in thousands) --------------------------------------------------------------------------------
2011 2010 2009 --------- --------- --------- CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES: Net income (loss) $ (59,787) $ 91,008 $ 51,271 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Policy charges and fee income (25,622) (13,636) (15,562) Interest credited to policyholders' account balances 62,222 37,125 38,735 Realized investment (gains) losses, net 110,056 (57,015) (13,514) Amortization and other non-cash items (2,359) (3,906) (271) Change in: Future policy benefits and other insurance liabilities 93,600 90,575 71,430 Reinsurance recoverables (127,939) (97,731) (65,542) Accrued investment income (910) 468 (1,809) Receivables from parent and affiliates 2,213 (6,108) 15,115 Payables to parent and affiliates (3,569) 1,643 (5,628) Deferred policy acquisition costs (25) (61,853) (28,815) Income taxes payable (73,506) 10,966 4,611 Deferred sales inducements (22,392) (21,594) (8,689) Other, net (13,260) 15,508 (8,966) --------- --------- --------- CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES $ (61,278) $ (14,550) $ 32,366 --------- --------- --------- CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: Proceeds from the sale/maturity/prepayment of: Fixed maturities, available for sale $ 171,016 $ 211,850 $ 254,335 Short-term investments 21,230 42,060 47,394 Policy loans 20,142 17,827 20,554 Commercial mortgage and other loans 27,533 28,189 10,212 Other long-term investments 1,373 1,591 846 Equity securities, available for sale 474 2,000 - Payments for the purchase/origination of: Fixed maturities, available for sale (293,216) (190,281) (412,550) Short-term investments (14,899) (21,491) (67,219) Policy loans (14,130) (15,966) (13,030) Commercial mortgage and other loans (75,298) (41,700) (31,684) Other long-term investments (7,533) (8,609) (612) Equity securities, available for sale (1,347) (158) - Notes receivable from parent and affiliates, net 1,334 13,926 2,907 Other 24 320 616 --------- --------- --------- CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES $(163,297) $ 39,558 $(188,230) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Policyholders' account deposits $ 159,318 $ 171,435 $ 335,906 Policyholders' account withdrawals (83,438) (151,600) (213,085) Net change in securities sold under agreement to repurchase and cash collateral for loaned securities 16,859 (29,304) (5,954) Dividend to parent - - - Contributed capital 38,000 10 - Affiliated asset transfers 186 - - Net change in financing arrangements (maturities 90 days or less) (11,588) 39,811 1,787 Net change in long-term borrowing 44,000 - - --------- --------- --------- CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES $ 163,337 $ 30,352 $ 118,654 --------- --------- --------- Net increase (decrease) in cash and cash equivalents (61,238) 55,360 (37,210) Cash and cash equivalents, beginning of year 87,961 32,601 69,811 --------- --------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 26,723 $ 87,961 $ 32,601 ========= ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid $ 25,000 $ 28,842 $ 14,375 Interest paid $ 98 $ 4 $ 7
See Notes to Financial Statements B-6 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 1. BUSINESS AND BASIS OF PRESENTATION Pruco Life Insurance Company of New Jersey, or the "Company," is a wholly owned subsidiary of the Pruco Life Insurance Company, or "Pruco Life," which in turn is a wholly owned subsidiary of The Prudential Insurance Company of America, or "Prudential Insurance." Prudential Insurance is an indirect wholly owned subsidiary of Prudential Financial, Inc., or "Prudential Financial." The Company sells variable annuities, universal life insurance, variable life insurance, and term life insurance, primarily through third party distributors only in New Jersey and New York, United States. Beginning in March 2010, Prudential Annuities Life Assurance Corporation ("PALAC"), an affiliate of the Company, ceased offering its existing variable annuity products (and where offered, the companion market value adjustment option) to new investors upon the launch of a new product line in Pruco Life Insurance Company of New Jersey (and Pruco Life Insurance Company for the version of the product sold outside of New York). In general, the new product line offers the same optional living benefits and optional death benefits as offered by PALAC's existing variable annuities. However, subject to applicable contractual provisions and administrative rules, PALAC will continue to accept subsequent purchase payments on in force contracts under existing annuity products. These initiatives were implemented to create operational and administrative efficiencies by offering a single product line of annuity products from a more limited group of legal entities. In addition, by limiting its variable annuity offerings to a single product line, the Prudential Annuities business unit of Prudential Financial expects to convey a more focused, cohesive image in the marketplace. Basis of Presentation The Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or "U.S. GAAP." The Company has extensive transactions and relationships with Prudential Insurance and other affiliates, (as more fully described in Note 13). Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include those used in determining deferred policy acquisition costs and related amortization; amortization of deferred sales inducements; future policy benefits including guarantees; valuation of investments including derivatives and the recognition of other-than-temporary impairments; provision for income taxes and valuation of deferred tax assets; and reserves for contingent liabilities, including reserves for losses in connection with unresolved legal matters. Reclassifications Certain amounts in prior periods have been reclassified to conform to the current period presentation. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Investments and Investment Related Liabilities The Company's investments in debt and equity securities include fixed maturities; trading account assets; equity securities; and short-term investments. The accounting policies related to these, as well as commercial mortgage and other loans, are as follows: B-7 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fixed maturities are comprised of bonds, notes and redeemable preferred stock. Fixed maturities classified as "available for sale" are carried at fair value. See Note 10 for additional information regarding the determination of fair value. Interest income, as well as the related amortization of premium and accretion of discount, is included in "Net investment income" under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to prepayment assumptions, cash flow estimates vary based on assumptions regarding the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of other-than-temporary impairments recognized in earnings and other comprehensive income. For high credit quality mortgage-backed and asset-backed securities (those rated AA or above), cash flows are provided quarterly, and the amortized cost and effective yield of the security are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. The adjustments to amortized cost are recorded as a charge or credit to net investment income in accordance with the retrospective method. For asset-backed and mortgage-backed securities rated below AA, the effective yield is adjusted prospectively for any changes in estimated cash flows. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Unrealized gains and losses on fixed maturities classified as "available for sale," net of tax, and the effect on deferred policy acquisition costs, deferred sales inducements and future policy benefits that would result from the realization of unrealized gains and losses, are included in "Accumulated other comprehensive income (loss)." Equity securities available for sale are comprised of common stock and non-redeemable preferred stock and are carried at fair value. The associated unrealized gains and losses, net of tax, and the effect on deferred policy acquisition costs, deferred sales inducements and future policy benefits that would result from the realization of unrealized gains and losses, are included in "Accumulated other comprehensive income (loss)." The cost of equity securities is written down to fair value when a decline in value is considered to be other-than-temporary. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Dividends from these investments are recognized in "Net investment income" when declared. Trading account assets at fair value are comprised of perpetual preferred stock. Realized and unrealized gains and losses for these investments are reported in "Other income." Dividend income from these investments is reported in "Net investment income." Commercial mortgage and other loans consist of commercial mortgage loans and agricultural loans. Commercial mortgage loans are broken down by class which is based on property type (industrial properties, retail, office, multi-family/apartment, hospitality, and other). Commercial mortgage and other loans originated and held for investment are generally carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses and net of an allowance for losses. Commercial mortgage and other loans acquired, including those related to the acquisition of a business, are recorded at fair value when purchased, reflecting any premiums or discounts to unpaid principal balances. Interest income, as well as prepayment fees and the amortization of the related premiums or discounts, related to commercial mortgage and other loans, are included in "Net investment income." Impaired loans include those loans for which it is probable that amounts due according to the contractual terms of the loan agreement will not all be collected. The Company defines "past due" as principal or interest not collected at least 30 days past the scheduled contractual due date. Interest received on loans that are past due, including impaired and non-impaired loans as well as loans that were previously modified in a troubled debt B-8 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) restructuring, is either applied against the principal or reported as net investment income based on the Company's assessment as to the collectability of the principal. See Note 3 for additional information about the Company's past due loans. The Company discontinues accruing interest on loans after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability. When the Company discontinues accruing interest on a loan, any accrued but uncollectible interest on the loan and other loans backed by the same collateral, if any, is charged to interest income in the same period. Generally, a loan is restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the payment of interest has been interrupted for a substantial period, or the loan has been modified, a regular payment performance has been established. The Company reviews the performance and credit quality of the commercial mortgage loan and agricultural loan portfolios on an on-going basis. Loans are placed on watch list status based on a predefined set of criteria and are assigned one of three categories. Loans are placed on "early warning" status in cases where, based on the Company's analysis of the loan's collateral, the financial situation of the borrower or tenants or other market factors, it is believed a loss of principal or interest could occur. Loans are classified as "closely monitored" when it is determined that there is a collateral deficiency or other credit events that may lead to a potential loss of principal or interest. Loans "not in good standing" are those loans where the Company has concluded that there is a high probability of loss of principal, such as when the loan is delinquent or in the process of foreclosure. As described below, in determining the allowance for losses, the Company evaluates each loan on the watch list to determine if it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. A smaller loan-to-value ratio indicates a greater excess of collateral value over the loan amount. The debt service coverage ratio compares a property's net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan's current debt payments. A larger debt service coverage ratio indicates a greater excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company's periodic review of the commercial mortgage loan and agricultural loan portfolio, which includes an internal appraisal of the underlying collateral value. The Company's periodic review also includes a quality re-rating process, whereby the internal quality rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary quality rating system. The loan-to-value ratio is the most significant of several inputs used to establish the internal credit rating of a loan which in turn drives the allowance for losses. Other key factors considered in determining the internal credit rating include debt service coverage ratios, amortization, loan term, estimated market value growth rate and volatility for the property type and region. See Note 3 for additional information related to the loan-to-value ratios and debt service coverage ratios related to the Company's commercial mortgage and agricultural loan portfolios. The allowance for loan losses includes a loan specific reserve for each impaired loan that has a specifically identified loss and a portfolio reserve for probable incurred but not specifically identified losses. For impaired commercial mortgage loans and agricultural loans, the allowances for losses are determined based on the present value of expected future cash flows discounted at the loan's effective interest rate, or based upon the fair value of B-9 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) the collateral if the loan is collateral dependent. The portfolio reserves for probable incurred but not specifically identified losses in the commercial mortgage and agricultural loan portfolio segments considers the current credit composition of the portfolio based on an internal quality rating, (as described above). The portfolio reserves are determined using past loan experience, including historical credit migration, loss probability and loss severity factors by property type. These factors are reviewed each quarter and updated as appropriate. The allowance for losses on commercial mortgage loans and agricultural loans can increase or decrease from period to period based on the factors noted above. "Realized investment gains (losses), net" includes changes in the allowance for losses. "Realized investment gains (losses), net" also includes gains and losses on sales, certain restructurings, and foreclosures. When a commercial mortgage or other loan is deemed to be uncollectible, any specific valuation allowance associated with the loan is reversed and a direct write down to the carrying amount of the loan is made. The carrying amount of the loan is not adjusted for subsequent recoveries in value. Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in "Net investment income" at the contract interest rate when earned. Securities repurchase and resale agreements and securities loaned transactions are used to earn spread income, to borrow funds, or to facilitate trading activity. Securities repurchase and resale agreements are generally short term in nature, and therefore, the carrying amounts of these instruments approximate fair value. As part of securities repurchase agreements or securities loan transactions the Company transfers U.S. government and government agency securities and receives cash as collateral. As part of securities resale agreements, the Company transfers cash as collateral and receives U.S. government securities. For securities repurchase agreements and securities loaned transactions used to earn spread income, the cash received is typically invested in cash equivalents, short term investments or fixed maturities. Securities repurchase and resale agreements that satisfy certain criteria are treated as collateralized financing arrangements. These agreements are carried at the amounts at which the securities will be subsequently resold or reacquired, as specified in the respective agreements. For securities purchased under agreements to resell, the Company's policy is to take possession or control of the securities and to value the securities daily. Securities to be resold are the same, or substantially the same, as the securities received. For securities sold under agreements to repurchase, the market value of the securities to be repurchased is monitored, and additional collateral is obtained where appropriate, to protect against credit exposure. Securities to be repurchased are the same, or substantially the same as those sold. Income and expenses related to these transactions executed within the insurance subsidiary used to earn spread income are reported as "Net investment income," however, for transactions used to borrow funds, the associated borrowing cost is reported as interest expense (included in "General, administrative and other expenses"). Securities loaned transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company's securities loaned transactions are with large brokerage firms. Income and expenses associated with securities loaned transactions used to earn spread income are generally reported as "Net investment income;" however, for securities loaned transactions used for funding purposes the associated rebate is reported as interest expense (included in "General, administrative and other expenses"). B-10 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Other long-term investments consist of the derivatives, the Company's investments in joint ventures and limited partnerships in which the Company does not exercise control, as well as investments in the Company's own separate accounts, which are carried at fair value, and investment real estate. Joint venture and partnership interests are generally accounted for using the equity method of accounting, except in instances in which the Company's interest is so minor that it exercises virtually no influence over operating and financial policies. In such instances, the Company applies the cost method of accounting. The Company's share of net income from investments in joint ventures and partnerships is generally included in "Net investment income." "Short-term investments" primarily consist of highly liquid debt instruments with a maturity of greater than three months and less than twelve months when purchased. These investments are generally carried at fair value and include certain money market investments and other highly liquid debt instruments. Realized investment gains (losses) are computed using the specific identification method. Realized investment gains and losses are generated from numerous sources, including the sale of fixed maturity securities, equity securities, investments in joint ventures and limited partnerships and other types of investments, as well as adjustments to the cost basis of investments for net other-than-temporary impairments recognized in earnings. Realized investment gains and losses are also generated from prepayment premiums received on private fixed maturity securities, allowance for losses on commercial mortgage and other loans and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment. The Company's available-for-sale securities with unrealized losses are reviewed quarterly to identify other-than-temporary impairments in value. In evaluating whether a decline in value is other-than-temporary, the Company considers several factors including, but not limited to the following: (1) the extent and the duration of the decline; (2) the reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); and (3) the financial condition of and near-term prospects of the issuer. With regard to available-for-sale equity securities, the Company also considers the ability and intent to hold the investment for a period of time to allow for a recovery of value. When it is determined that a decline in value of an equity security is other-than-temporary, the carrying value of the equity security is reduced to its fair value, with a corresponding charge to earnings. Under the authoritative guidance for the recognition and presentation of other-than-temporary impairments for debt securities, an other-than-temporary impairment must be recognized in earnings for a debt security in an unrealized loss position when an entity either (a) has the intent to sell the debt security or (b) more likely than not will be required to sell the debt security before its anticipated recovery. For all debt securities in unrealized loss positions that do not meet either of these two criteria, the guidance requires that the Company analyze its ability to recover the amortized cost by comparing the net present value of projected future cash flows with the amortized cost of the security. The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The Company may use the estimated fair value of collateral as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment, an other-than-temporary impairment is recognized. Under the authoritative guidance for the recognition and presentation of other-than-temporary impairments, when an other-than-temporary impairment of a debt security has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the debt security meets either of these two criteria, the other-than-temporary impairment recognized in earnings is equal to the entire B-11 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) difference between the security's amortized cost basis and its fair value at the impairment measurement date. For other-than-temporary impairments of debt securities that do not meet these criteria, the net amount recognized in earnings is equal to the difference between the amortized cost of the debt security and its net present value calculated as described above. Any difference between the fair value and the net present value of the debt security at the impairment measurement date is recorded in "Other comprehensive income (loss)." Unrealized gains or losses on securities for which an other-than-temporary impairment has been recognized in earnings is tracked as a separate component of "Accumulated other comprehensive income (loss)." For debt securities, the split between the amount of an other-than-temporary impairment recognized in other comprehensive income and the net amount recognized in earnings is driven principally by assumptions regarding the amount and timing of projected cash flows. For mortgage-backed and asset-backed securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including prepayment assumptions, and are based on data from widely accepted third-party data sources or internal estimates. In addition to prepayment assumptions, cash flow estimates include assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. For structured securities, the payment priority within the tranche structure is also considered. For all other debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. The Company has developed these estimates using information based on its historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security, such as the general payment terms of the security and the security's position within the capital structure of the issuer. The new cost basis of an impaired security is not adjusted for subsequent increases in estimated fair value. In periods subsequent to the recognition of an other-than-temporary impairment, the impaired security is accounted for as if it had been purchased on the measurement date of the impairment. For debt securities, the discount (or reduced premium) based on the new cost basis may be accreted into net investment income in future periods, including increases in cash flow on a prospective basis. In certain cases where there are decreased cash flow expectations, the security is reviewed for further cash flow impairments. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts due from banks, certain money market investments, and other debt issues with maturities of three months or less when purchased. The Company also engages in overnight borrowing and lending of funds with Prudential Financial and affiliates which are considered cash and cash equivalents. Deferred Policy Acquisition Costs Costs that are directly related to the production of new insurance and annuity products are deferred to the extent such costs are deemed recoverable from future profits. Such deferred policy acquisition costs ("DAC") include incremental direct costs of contract acquisition with independent third parties or employees that are essential to the contract transaction, as well as the portion of employee compensation directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts. See below under "Adoption of New Accounting Pronouncements" for a discussion of the new authoritative guidance retrospectively adopted effective January 1, 2012, which is reflected in the Financial Statements. In each reporting period, capitalized DAC is amortized to "Amortization of deferred policy acquisition costs," net of the accrual of imputed interest on DAC balances. DAC is subject to recoverability testing at the end of each B-12 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) reporting period to ensure that the capitalized amounts do not exceed the present value of anticipated gross profits or premiums less benefits and maintenance expenses, as applicable. DAC, for applicable products, is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in "Accumulated other comprehensive income (loss)." Policy acquisition costs for interest sensitive and variable life products and fixed and variable deferred annuity products are deferred and amortized over the expected life of the contracts (approximately 25 - 99 years) in proportion to gross profits arising principally from investment results, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. The Company uses a reversion to the mean approach to derive the blended future rate of return assumptions. However, if the projected future rate of return calculated using this approach is greater than the maximum future rate of return assumption, the maximum future rate of return is utilized in deriving the blended future rate of return assumption. In addition to the gross profit components previously mentioned, the impact of the embedded derivatives associated with certain optional living benefit features of the Company's variable annuity contracts and related hedging activities are also included in actual gross profits used as the basis for calculating current period amortization and, in certain instances, in management's estimate of total gross profits used for setting the amortization rate, regardless of which affiliated legal entity this activity occurs. In calculating gross profits, profits and losses related to contracts issued by the Company that are reported in affiliated legal entities other than the Company as a result of, for example, reinsurance agreements with those affiliated entities are also included. The Company is an indirect subsidiary of Prudential Financial (an SEC registrant) and has extensive transactions and relationships with other subsidiaries of Prudential Financial, including reinsurance agreements as described in Note 13. Incorporating all product-related profits and losses in gross profits, including those that are reported in affiliated legal entities, produces a DAC amortization pattern representative of the total economics of the products. The effect of changes to estimated gross profits on unamortized deferred acquisition costs is reflected in "Amortization of deferred policy acquisition costs" in the period such estimated gross profits are revised. DAC related to non-participating traditional individual life insurance is amortized in proportion to gross premiums. For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. If policyholders surrender traditional life insurance policies in exchange for life insurance policies that do not have fixed and guaranteed terms, the Company immediately charges to expense the remaining unamortized DAC on the surrendered policies. For other internal replacement transactions, except those that involve the addition of a non-integrated contract feature that does not change the existing base contract, the unamortized DAC is immediately charged to expense if the terms of the new policies are not substantially similar to those of the former policies. If the new terms are substantially similar to those of the earlier policies, the DAC is retained with respect to the new policies and amortized over the expected life of the new policies. Reinsurance recoverables Reinsurance recoverables include corresponding payables and receivables associated with reinsurance arrangements with affiliates. For additional information about these arrangements see Note 13 to the Financial Statements. Separate Account Assets and Liabilities Separate account assets are reported at fair value and represent segregated funds, which are invested for certain policyholders and other customers. The assets consist primarily of equity securities, fixed maturities, real B-13 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) estate related investments, real estate mortgage loans and short term investments and derivative instruments. The assets of each account are legally segregated and are generally not subject to claims that arise out of any other business of the Company. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities primarily represent the contractholder's account balance in separate account assets and to a lesser extent borrowings of the separate account, and will be equal and offsetting to total separate account assets. See Note 7 to the Financial Statements for additional information regarding separate account arrangements with contractual guarantees. The investment income and realized investment gains or losses from separate accounts generally accrue to the policyholders and are not included in the Statements of Operations. Mortality, policy administration and surrender charges assessed against the accounts are included in "Policy charges and fee income." Asset administration fees charged to the accounts are included in "Asset administration fees." Deferred sales inducements The Company provides sales inducements to contractholders, which primarily reflect an up-front bonus added to the contractholder's initial deposit for certain annuity contracts. These costs are deferred and recognized in "Deferred sales inducements". They are amortized using the same methodology and assumptions used to amortize DAC. Sales inducements balances are subject to recoverability testing at the end of each reporting period to ensure that the capitalized amounts do not exceed the present value of anticipated gross profits. The Company records amortization of deferred sales inducements in "Interest credited to policyholders' account balances." Other Assets and Other Liabilities Other assets consist primarily of premiums due, certain restricted assets, and receivables resulting from sales of securities that had not yet settled at the balance sheet date. Other liabilities consist primarily of accrued expenses, technical overdrafts, derivatives, and payables resulting from purchases of securities that had not yet been settled at the balance sheet date. Future Policy Benefits The Company's liability for future policy benefits is primarily comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. For life insurance and annuity products, expected mortality and morbidity is generally based on the Company's historical experience or standard industry tables including a provision for the risk of adverse deviation on our term life products. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and morbidity and interest rate assumptions are "locked-in" upon the issuance of new insurance or annuity products with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves, if required, are determined based on assumptions at the time the premium deficiency reserve is established and do not include a provision for the risk of adverse deviation. The Company's liability for future policy benefits also includes net liabilities for guarantee benefits related to certain nontraditional long-duration life and annuity contracts, which are discussed more fully in Note 7, and certain unearned revenues. Policyholders' Account Balances The Company's liability for policyholders' account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. This liability is generally equal to the accumulated B-14 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) account deposits, plus interest credited, less policyholders' withdrawals and other charges assessed against the account balance. These policyholders' account balances also include a provision for benefits under non-life contingent payout annuities and certain unearned revenues. Contingent Liabilities Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, they are included in the accrual. Insurance Revenue and Expense Recognition Premiums from individual life products, other than interest-sensitive life contracts, are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred. A liability for future policy benefits is recorded when premiums are recognized using the net premium method. Certain individual annuity contracts provide the holder a guarantee that the benefit received upon death or annuitization will be no less than a minimum prescribed amount. These benefits are accounted for as insurance contracts and are discussed in further detail in Note 7. The Company also provides contracts with certain living benefits which are accounted for as embedded derivatives. These contracts are discussed in further detail in Note 7. Amounts received as payment for interest-sensitive contracts, are reported as deposits to "Policyholders' account balances." Revenues from these contracts are reflected in "Policy charges and fee income" consisting primarily of fees assessed during the period against the policyholders' account balances for mortality charges, policy administration charges and surrender charges. In addition to fees, the Company earns investment income from the investment of policyholders' deposits in the Company's general account portfolio. Fees assessed that represent compensation to the Company for services to be provided in future periods and certain other fees are deferred and amortized into revenue over the life of the related contracts in proportion to estimated gross profits. Benefits and expenses for these products include claims in excess of related account balances, expenses of contract administration, interest credited to policyholders' account balances and amortization of DAC. Premiums, benefits and expenses are stated net of reinsurance ceded to other companies. Estimated reinsurance recoverables and the cost of reinsurance are recognized using assumptions consistent with those used to account for the underlying policies. Asset Administration Fees The Company receives asset administration fee income from policyholders' account balances invested in The Prudential Series Funds or, "PSF," which are a portfolio of mutual fund investments related to the Company's separate account products. Also, the Company receives fee income calculated on contractholder separate account balances invested in the Advanced Series Trust Funds (see Note 13). In addition, the Company receives fees from policyholders' account balances invested in funds managed by companies other than affiliates of Prudential Insurance. Asset administration fees are recognized as income when earned. B-15 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Derivative Financial Instruments Derivatives are financial instruments whose values are derived from interest rates, financial indices, or the values of securities. Derivative financial instruments generally used by the Company include swaps, futures, forwards and options which are contracted in the over-the-counter market with an affiliate. Derivative positions are carried at fair value, generally by obtaining quoted market prices or through the use of valuation models. Values can be affected by changes in interest rates, financial indices, values of securities, credit spreads, market volatility, expected returns, non-performance risks and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivatives are used to manage the characteristics of the Company's asset/liability mix to manage the interest rate and currency characteristics of assets or liabilities. Additionally, derivatives may be used to seek to reduce exposure to interest rate, credit, foreign currency and equity risks associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. Derivatives are recorded either as assets, within "Other long-term investments," or as liabilities, within "Other liabilities," except for embedded derivatives, which are recorded with the associated host contract. The Company nets the fair value of all derivative financial instruments with its affiliated counterparty for which a master netting arrangement has been executed. As discussed below and in Note 5, all realized and unrealized changes in fair value of derivatives, with the exception of the effective portion of cash flow hedges are recorded in current earnings. Cash flows from these derivatives are reported in the operating and investing activities sections in the Statements of Cash Flows based on the nature and purpose of the derivative. The Company designates derivatives as either (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge), or (2) a derivative that does not qualify for hedge accounting. To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a derivative qualifies for hedge accounting treatment, there may be an element of ineffectiveness of the hedge. Under such circumstances, the ineffective portion is recorded in "Realized investment gains (losses), net." The Company formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the balance sheet or to forecasted transactions. When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded in "Accumulated other comprehensive income (loss)" until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in the income statement line item associated with the hedged item. If it is determined that a derivative no longer qualifies as an effective cash flow hedge, or management removes the hedge designation, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in "Realized investment gains (losses), net." In this scenario, the hedged asset or liability under a fair value hedge will no longer be adjusted for changes in fair value and the B-16 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) existing basis adjustment is amortized to the income statement line associated with the asset or liability. The component of "Accumulated other comprehensive income (loss)" related to discontinued cash flow hedges is reclassified to the income statement line associated with the hedged cash flows consistent with the earnings impact of the original hedged cash flows. When hedge accounting is discontinued because it is probable that the forecasted transaction will not occur by the end of the specified time period, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in "Realized investment gains (losses), net." Gains and losses that were in "Accumulated other comprehensive income (loss)" pursuant to the hedge of a forecasted transaction are recognized immediately in "Realized investment gains (losses), net." If a derivative does not qualify for hedge accounting, all changes in its fair value, including net receipts and payments, are included in "Realized investment gains (losses), net" without considering changes in the fair value of the economically associated assets or liabilities. The Company is a party to financial instruments that contain derivative instruments that are "embedded" in the financial instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded instrument qualifies as an embedded derivative that is separated from the host contract, carried at fair value, and changes in its fair value are included in "Realized investment gains (losses), net." For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company may elect to classify the entire instrument as a trading account asset and report it within "Trading account assets, at fair value." The Company sells variable annuity contracts that include optional living benefit features that may be treated from an accounting perspective as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these embedded derivatives to an affiliate, Pruco Reinsurance Ltd. ("Pruco Re"). The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value and included in "Future policy benefits and other policyholder liabilities" and "Reinsurance recoverables," respectively. Changes in the fair value are determined using valuation models as described in Note 10, and are recorded in "Realized investment gains (losses), net." Income Taxes The Company is a member of the consolidated federal income tax return of Prudential Financial and primarily files separate company state and local tax returns. Pursuant to the tax allocation arrangement with Prudential Financial, total federal income tax expense is determined on a separate company basis. Members with losses record tax benefits to the extent such losses are recognized in the consolidated federal tax provision. Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to reduce a deferred tax asset to the amount expected to be realized. The Company's liability for income taxes includes the liability for unrecognized tax benefits and interest and penalties which relate to tax years still subject to review by the Internal Revenue Service ("IRS") or other taxing B-17 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) jurisdictions. Audit periods remain open for review until the statute of limitations has passed. Generally, for tax years which produce net operating losses, capital losses or tax credit carryforwards ("tax attributes"), the statute of limitations does not close, to the extent of these tax attributes, until the expiration of the statute of limitations for the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Company classifies all interest and penalties related to tax uncertainties as income tax expense. See Note 9 for additional information regarding income taxes. Adoption of New Accounting Pronouncements In January 2010, the FASB issued updated guidance that requires new fair value disclosures about significant transfers between Level 1 and 2 measurement categories and separate presentation of purchases, sales, issuances, and settlements within the roll forward of Level 3 activity. Also, this updated fair value guidance clarifies the disclosure requirements about level of disaggregation and valuation techniques and inputs. This new guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of Level 3 activity, which are effective for interim and annual reporting periods beginning after December 15, 2010. The Company adopted the guidance effective for interim and annual reporting periods beginning after December 15, 2009 on January 1, 2010. The Company adopted the guidance effective for interim and annual reporting periods beginning after December 15, 2010 on January 1, 2011. The required disclosures are provided in Note 4 and Note 5. In April 2010, the FASB issued authoritative guidance clarifying that an insurance entity should not consider any separate account interests in an investment held for the benefit of policyholders to be the insurer's interests, and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation, unless the separate account interests are held for a related party policyholder, whereby consolidation of such interests must be considered under applicable variable interest guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2010 and retrospectively to all prior periods upon the date of adoption, with early adoption permitted. The Company's adoption of this guidance effective January 1, 2011 did not have a material effect on the Company's financial position, results of operations, and financial statement disclosures. In July 2010, the FASB issued updated guidance that requires enhanced disclosures related to the allowance for credit losses and the credit quality of a company's financing receivable portfolio. The disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The Company adopted this guidance effective December 31, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning after December 15, 2010. The required disclosures are included above and in Note 3. In January 2011, the FASB deferred the disclosures required by this guidance related to troubled debt restructurings. These disclosures are effective for the first interim or annual reporting period beginning on or after June 15, 2011, concurrent with the effective date of guidance for determining what constitutes a troubled debt restructuring. The disclosures required by this guidance related to troubled debt restructurings were adopted in the third quarter of 2011 and are included above and in Note 3. In April 2011, the Financial Accounting Standards Board ("FASB") issued updated guidance clarifying which restructurings constitute troubled debt restructurings. It is intended to assist creditors in their evaluation of whether conditions exist that constitute a troubled debt restructuring. This new guidance is effective for the first interim or annual reporting period beginning on or after June 15, 2011 and should be applied retrospectively to B-18 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) the beginning of the annual reporting period of adoption. The Company's adoption of this guidance in the third quarter of 2011 did not have a material effect on the Company's financial position, results of operations, or financial statement disclosures. Effective January 1, 2012 the Company adopted, retrospectively, updated guidance regarding the presentation of comprehensive income. The updated guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. Under the updated guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The updated guidance does not change the items that are reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The Company opted to present the total of comprehensive income, the components of net income, and the components of other comprehensive income in a single continuous statement of comprehensive income. The Financial Statements included herein reflect the adoption of this updated guidance. Effective January 1, 2012, the Company adopted retrospectively new authoritative guidance to address diversity in practice regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. Under the amended guidance acquisition costs are to include only those costs that are directly related to the acquisition or renewal of insurance contracts by applying a model similar to the accounting for loan origination costs. An entity may defer incremental direct costs of contract acquisition with independent third parties or employees that are essential to the contract transaction, as well as the portion of employee compensation, including payroll fringe benefits, and other costs directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts. Prior period financial information presented in these financial statements has been adjusted to reflect the retrospective adoption of the amended guidance. The impact of the retrospective adoption of this guidance on previously reported December 31, 2011 and December 31, 2010 balances was a reduction in "Deferred policy acquisition costs" of $91 and $95 million, an increase in "Policyholders' Account Balances" of less than $1 million for both periods, and a reduction in "Total equity" of $59 and $62 million, respectively. The impact of the retrospective adoption of this guidance on previously reported income from continuing operations before income taxes for the years ended December 31, 2011, 2010 and 2009 was an increase of $1 million and decreases of $11 and $6 million, respectively. The lower level of costs now qualifying for deferral will be only partially offset by a lower level of amortization of "Deferred policy acquisition costs," and, as such, will initially result in lower earnings in future periods primarily reflecting lower deferrals of wholesaler costs. While the adoption of this amended guidance changes the timing of when certain costs are reflected in the Company's results of operations, it has no effect on the total acquisition costs to be recognized over time and has no impact on the Company's cash flows. B-19 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following tables present amounts as previously reported in 2011 and the effect of the change due to the retrospective adoption of the amended guidance related to the deferral of acquisition costs as described above within the "Effect of Change" column. Statements of Financial Position:
December 31, 2011 ------------------------------- ------------------------------- As As Previously Effect of Currently Reported Change Reported ---------- --------- ---------- ------------------------------- (in thousands) Deferred policy acquisition costs $ 354,167 $(91,272) $ 262,895 Total Assets 8,919,414 (91,272) 8,828,142 Policyholders' account balances 1,132,897 183 1,133,080 Income taxes payable 55,188 (32,010) 23,178 Total Liabilities 8,297,636 (31,827) 8,265,809 Retained earnings 370,352 (65,071) 305,281 Accumulated other comprehensive income 41,498 5,626 47,124 Total Equity 621,778 (59,445) 562,333 Total Liabilities and Equity $8,919,414 $(91,272) $8,828,142 December 31, 2010 ------------------------------- As As Previously Effect of Currently Reported Change Reported ---------- --------- ---------- (in thousands) Deferred policy acquisition costs $ 365,970 $(94,791) $ 271,179 Total Assets 7,462,325 (94,791) 7,367,534 Policyholders' account balances 1,053,807 206 1,054,013 Income taxes 120,248 (33,249) 86,999 Total Liabilities 6,834,636 (33,043) 6,801,593 Retained earnings 430,663 (65,595) 365,068 Accumulated other comprehensive income 25,284 3,847 29,131 Total Equity 627,689 (61,748) 565,941 Total Liabilities and Equity $7,462,325 $(94,791) $7,367,534
B-20 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Statements of Operations:
Year Ended December 31, 2011 ----------------------------------- As Previously Effect of As Currently Reported Change Reported ------------- --------- ------------ (in thousands) Revenues Policy charges and fee income $ 113,444 $ 28 $ 113,472 Total revenues 121,132 28 121,160 Benefits and Expenses Amortization of deferred policy acquisition costs 105,101 (15,055) 90,046 General, administrative and other expenses 35,785 14,276 50,061 Total benefits and expenses 230,334 (779) 229,555 Income From Operations Before Income Taxes (109,202) 807 (108,395) Income tax expense (48,891) 283 (48,608) Net Income $ (60,311) $ 524 $ (59,787)
Year Ended December 31, 2010 ------------------------------------ As Previously Effect of As Currently Reported Change Reported ------------- --------- ------------ (in thousands) Revenues Policy charges and fee income $ 53,446 $ 165 $ 53,611 Total revenues 218,237 165 218,402 Benefits and Expenses Amortization of deferred policy acquisition costs 12,821 (4,159) 8,662 General, administrative and other expenses 27,002 14,995 41,997 Total benefits and expenses 76,750 10,836 87,586 Income from Operations before Income Taxes 141,487 (10,671) 130,816 Income tax expense 43,542 (3,734) 39,808 Net Income $ 97,945 $ (6,937) $ 91,008
Year Ended December 31, 2009 ------------------------------------ As Previously Effect of As Currently Reported Change Reported ------------- --------- ------------ (in thousands) Revenues Policy charges and fee income $ 69,234 $ (35) $ 69,199 Total revenues 181,616 (35) 181,581 Benefits And Expenses Amortization of deferred policy acquisition costs 22,842 (6,472) 16,370 General, administrative and other expenses 17,950 12,207 30,157 Total benefits and expenses 105,589 5,735 111,324 Income from Operations before Income Taxes 76,027 (5,770) 70,257 Income tax expense 21,006 (2,020) 18,986 Net Income $ 55,021 $(3,750) $ 51,271
B-21 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Statements of Cash Flows:
Year Ended December 31, 2011 ----------------------------------- As Previously Effect of As Currently Reported Change Reported ------------- --------- ------------ (in thousands) Cash Flows From Operating Activities Net income $(60,311) $ 524 $(59,787) Policy charges and fee income (25,594) (28) (25,622) Change in: Deferred policy acquisition costs 754 (779) (25) Income taxes payable (73,789) 283 (73,506) Cash flows from (used in) operating activities $(61,278) $ 0 $(61,278)
Year Ended December 31, 2010 ----------------------------------- As Previously Effect of As Currently Reported Change Reported ------------- --------- ------------ (in thousands) Cash Flows From Operating Activities Net income $ 97,945 $(6,937) $ 91,008 Policy charges and fee income (13,471) (165) (13,636) Change in: Deferred policy acquisition costs (72,689) 10,836 (61,853) Income taxes payable 14,700 (3,734) 10,966 Cash flows from (used in) operating activities $(14,550) $ 0 $(14,550)
Year Ended December 31, 2009 ----------------------------------- As Previously Effect of As Currently Reported Change Reported ------------- --------- ------------ (in thousands) Cash Flows from Operating Activities Net income $ 55,021 $(3,750) $ 51,271 Policy charges and fee income (15,597) 35 (15,562) Change in: Deferred policy acquisition costs (34,550) 5,735 (28,815) Income taxes payable 6,631 (2,020) 4,611 Cash flows from (used in) operating activities $ 32,366 $ 0 $ 32,366
Future Adoption of New Accounting Pronouncements In December 2011, the FASB issued updated guidance regarding the disclosure of offsetting assets and liabilities. This new guidance requires an entity to disclose information on both a gross basis and net basis about instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This new guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim reporting periods within those years, and should be applied retrospectively for all comparative periods presented. The Company is currently assessing the impact of the guidance on the Company's consolidated financial position, results of operations, and financial statement disclosures. B-22 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In May 2011, the FASB issued updated guidance regarding the fair value measurements and disclosure requirements. The updated guidance clarifies existing guidance related to the application of fair value measurement methods and requires expanded disclosures. This new guidance is effective for the first interim or annual reporting period beginning after December 15, 2011 and should be applied prospectively. The Company expects this guidance to have an impact on its financial statement disclosures but limited, if any, impact on the Company's financial position or results of operations. In April 2011, the FASB issued updated guidance regarding the assessment of effective control for repurchase agreements. This new guidance is effective for the first interim or annual reporting period beginning on or after December 15, 2011 and should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. The Company's adoption of this guidance effective January 1, 2012 is not expected to have a material effect on the Company's consolidated financial position, results of operations, and financial statement disclosures. 3. INVESTMENTS Fixed Maturities and Equity Securities The following tables provide information relating to fixed maturities and equity securities (excluding investments classified as trading) as of the dates indicated:
December 31, 2011 ------------------------------------------------------ Other-than- Gross Gross temporary Amortized Unrealized Unrealized Fair impairments Cost Gains Losses Value in AOCI (4) ---------- ---------- ---------- ---------- ----------- (in thousands) Fixed maturities, available-for-sale U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 29,889 $ 6,049 $ - $ 35,939 $ - Obligations of U.S. states and their political subdivisions - - - - - Foreign government bonds 20,868 2,163 - 23,030 - Public utilities 119,583 10,810 225 130,169 - All other corporate securities 713,531 55,770 622 768,678 (45) Asset-backed securities (1) 72,050 1,647 2,065 71,632 (3,513) Commercial mortgage-backed securities 89,238 6,770 2 96,006 - Residential mortgage-backed securities (2) 87,749 6,859 158 94,450 (391) ---------- ------- ------ ---------- ------- Total fixed maturities, available-for-sale $1,132,908 $90,068 $3,072 $1,219,904 $(3,949) ========== ======= ====== ========== ======= Equity securities, available-for-sale Common Stocks: Industrial, miscellaneous & other 405 - 70 335 Non-redeemable preferred stocks 1,116 1 32 1,085 ---------- ------- ------ ---------- Total equity securities, available-for-sale (3) $ 1,521 $ 1 $ 102 $ 1,420 ========== ======= ====== ==========
(1)Includes credit tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. (2)Includes publicly traded agency pass-through securities and collateralized mortgage obligations. (3)During 2011, perpetual preferred stocks of $1.5 million were reclassified to "Trading Account Assets." Prior periods were not restated. B-23 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) (4)Represents the amount of other-than-temporary impairment losses in "Accumulated other comprehensive income (loss)," or "AOCI" which were not included in earnings. Amount excludes $3 million of net unrealized gains (losses) on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.
December 31, 2010 ------------------------------------------------------ Other-than- Gross Gross temporary Amortized Unrealized Unrealized Fair impairments Cost Gains Losses Value in AOCI (3) ---------- ---------- ---------- ---------- ----------- (in thousands) Fixed maturities, available-for-sale U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 34,292 $ 2,199 $ 41 $ 36,450 $ - Obligations of U.S. states and their political subdivisions - - - - - Foreign government bonds 21,034 1,644 - 22,678 - Corporate securities 707,754 47,472 2,945 752,281 (26) Asset-backed securities (1) 57,808 1,671 5,446 54,033 (8,856) Commercial mortgage-backed securities 97,467 5,721 87 103,101 - Residential mortgage-backed securities (2) 89,300 6,746 48 95,998 (454) ---------- ------- ------ ---------- ------- Total fixed maturities, available-for-sale $1,007,655 $65,453 $8,567 $1,064,541 $(9,336) ========== ======= ====== ========== ======= Equity securities, available-for-sale Common Stocks: Industrial, miscellaneous & other 226 178 29 375 Non-redeemable preferred stocks 380 - 217 163 Perpetual preferred stocks 1,695 - 159 1,536 ---------- ------- ------ ---------- Total equity securities available-for-sale $ 2,301 $ 178 $ 405 $ 2,074 ========== ======= ====== ==========
(1)Includes credit tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. (2)Includes publicly traded agency pass-through securities and collateralized mortgage obligations. (3)Represents the amount of other-than-temporary impairment losses in "Accumulated other comprehensive income (loss)," or "AOCI" which, were not included in earnings. Amount excludes $5 million of net unrealized gains (losses) on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date. B-24 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) The amortized cost and fair value of fixed maturities by contractual maturities at December 31, 2011, are as follows:
Available-for-Sale --------------------- Amortized Fair Cost Value ---------- ---------- (in thousands) Due in one year or less $ 48,539 $ 49,149 Due after one year through five years 324,229 350,238 Due after five years through ten years 354,984 385,295 Due after ten years 156,119 173,134 Asset-backed securities 72,050 71,632 Commercial mortgage-backed securities 89,238 96,006 Residential mortgage-backed securities 87,749 94,450 ---------- ---------- Total $1,132,908 $1,219,904 ========== ==========
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed, and residential mortgage-backed securities are shown separately in the table above, as they are not due at a single maturity date. The following table depicts the sources of fixed maturity proceeds, equity security proceeds, and related investment gains (losses), as well as losses on impairments of both fixed maturities and equity securities:
2011 2010 2009 -------- -------- -------- (in thousands) Fixed maturities, available-for-sale Proceeds from sales $ 36,118 $ 35,017 $ 59,587 Proceeds from maturities/repayments 135,127 157,785 194,623 Gross investment gains from sales, prepayments, and maturities 2,614 4,160 1,540 Gross investment losses from sales and maturities (88) (83) (3,027) Equity securities, available-for-sale Proceeds from sales $ 2 $ - $ - Proceeds from maturities/repayments 473 2,000 - Gross investment gains from sales 368 139 - Gross investment losses from sales - - - Fixed maturity and equity security impairments Net writedowns for other-than-temporary impairment losses on fixed maturities recognized in earnings (1) $ (268) $ (2,554) $ (6,070) Writedowns for other-than-temporary impairment losses on equity securities $ (326) $ - $ (139)
(1)Excludes the portion of other-than-temporary impairments recorded in "Other comprehensive income (loss)," representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment. As discussed in Note 2, a portion of certain other-than-temporary impairment ("OTTI") losses on fixed maturity securities are recognized in "Other comprehensive income (loss)" ("OCI"). The net amount recognized in B-25 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) earnings ("credit loss impairments") represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in OCI. The following tables set forth the amount of pre-tax credit loss impairments on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in OCI, and the corresponding changes in such amounts. Credit losses recognized in earnings on fixed maturity securities held by the Company for which a portion of the OTTI loss was recognized in OCI
Year Ended Year Ended December 31, December 31, 2011 2010 -------------- -------------- (in thousands) (in thousands) Balance, beginning of period $ 6,763 $ 7,431 Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period (3,643) (1,059) Credit loss impairments previously recognized on securities impaired to fair value during the period (1) - (992) Credit loss impairment recognized in the current period on securities not previously impaired - - Additional credit loss impairments recognized in the current period on securities previously impaired 268 1,965 Increases due to the passage of time on previously recorded credit losses 323 530 Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected (273) (1,112) ------- ------- Balance, end of period $ 3,438 $ 6,763 ======= =======
(1)Represents circumstances where the Company determined in the current period that it intends to sell the security or it is more likely than not that it will be required to sell the security before recovery of the security's amortized cost. Trading Account Assets The following table provides information relating to trading account assets, at fair value as of the dates indicated:
December 31, 2011 December 31, 2010 ---------------- ----------------- Amortized Fair Amortized Fair Cost Value Cost Value --------- ------ --------- ----- (in thousands) Equity securities (1) 1,695 1,569 - - ------ ------ -- -- Total trading account assets $1,695 $1,569 $- $- ====== ====== == ==
(1)During 2011, perpetual preferred stocks of $1.5 million were reclassified from "Equity Securities, available-for-sale". Prior periods were not restated. The net change in unrealized gains (losses) from trading account assets still held at period end, recorded within "Other income" was ($0.1) million, $0.0 and $0.0 during the years ended December 31, 2011, 2010 and 2009, respectively. B-26 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) Commercial Mortgage and Other Loans The Company's commercial mortgage and other loans are comprised as follows as of the dates indicated:
2011 2010 -------------------- -------------------- Amount % of Amount % of (in thousands) Total (in thousands) Total Commercial mortgage and other loans by property type: Industrial buildings $ 42,883 18.5% $ 35,745 19.4% Retail 55,215 23.8 36,046 19.6 Apartments/Multi-Family 37,689 16.3 25,340 13.8 Office buildings 26,100 11.3 30,468 16.6 Hospitality 14,475 6.2 10,273 5.6 Other 37,150 16.0 33,834 18.4 -------- ----- -------- ----- Total commercial mortgage loans 213,512 92.2 171,706 93.4 Agricultural property loans 18,098 7.8 12,140 6.6 -------- ----- -------- ----- Total commercial mortgage and agricultural loans by property type 231,610 100.0% 183,846 100.0% ======== ===== ======== ===== Valuation allowance (1,410) (1,409) -------- -------- Total net commercial and agricultural mortgage loans by property type $230,200 $182,437 ======== ========
The commercial mortgage and agricultural loans are geographically dispersed throughout the United States with the largest concentrations in Florida (10%), Texas (9%), and New Jersey (9%) at December 31, 2011. Activity in the allowance for losses for all commercial mortgage and other loans, for the years ended December 31, 2011, 2010 and 2009, is as follows:
2011 (2) 2010 (2) 2009 (2) -------- -------- -------- (in thousands) Allowance for losses, beginning of year $1,409 $2,379 $1,444 Addition to / (release of) allowance of losses 1 (970) 935 ------ ------ ------ Allowance for losses, end of year (1) $1,410 $1,409 $2,379 ====== ====== ======
(1)Agricultural loans represent $0.02 million, $0.02 million and $0.0 million of the ending allowance at December 31, 2011, 2010 and 2009, respectively. (2)Valuation allowances for 2011 and 2010 are presented in a format consistent with new disclosure requirements under the updated guidance issued by FASB in 2011. Valuation allowances for 2009 are provided consistent with the prior presentation. B-27 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) The following tables set forth the allowance for credit losses and the recorded investment in commercial mortgage and agricultural loans for the years ended December 31, 2011 and 2010:
December 31, 2011 December 31, 2010 ----------------- ----------------- Total Loans (in thousands) Allowance for Credit Losses: Ending Balance: individually evaluated for impairment (1) $ - $ 424 Ending Balance: collectively evaluated for impairment (2) 1,410 985 -------- -------- Total ending balance $ 1,410 $ 1,409 ======== ======== Recorded Investment: (3) Ending balance: individually evaluated for impairment (1) $ - $ 3,847 Ending balance: collectively evaluated for impairment (2) 231,612 179,999 -------- -------- Total ending balance, gross of reserves $231,612 $183,846 ======== ========
(1)There were no agricultural loans individually evaluated for impairments at December 31, 2011 and December 31, 2010. (2)Agricultural loans collectively evaluated for impairment had a recorded investment of $18 million and $12 million and related allowance of $0.0 million at December 31, 2011 and December 31, 2010, respectively. (3)Recorded investment reflects the balance sheet carrying value gross of related allowance. Impaired loans include those loans for which it is probable that amounts due according to the contractual terms of the loan agreement will not all be collected. As of December 31, 2011, there were no impaired commercial mortgage loans identified in management's specific review. As of December 31, 2011 impaired commercial mortgage loans identified in management's specific review of probable loan losses consisted of Hospitality commercial mortgage loans with a recorded investment of $3.8 million, an unpaid principal balance of $3.8 million and the related allowance for losses was $0.4 million. Recorded investment reflects the balance sheet carrying value gross of related allowance. Impaired commercial mortgage and other loans with no allowance for losses are loans in which the fair value of the collateral or the net present value of the loans' expected future cash flows equals or exceeds the recorded investment. As of December 31, 2011 and December 31, 2010, the Company held no such loans. See Note 2 for information regarding the Company's accounting policies for non-performing loans. As described in Note 2, loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage and other loans. As of December 31, 2011 and 2010, 94% of the $232 million recorded investment and 90% of the $184 million recorded investment, respectively, had a loan-to-value ratio of less than 80%. As of December 31, 2011 and 2010, 99% and 98% of the recorded investment, respectively, had a debt service coverage ratio of 1.0X or greater. As of December 31, 2011, approximately $2 million or 1% of the recorded investment had a loan-to-value ratio greater than 100% or debt service coverage ratio less than 1.0X, reflecting loans where the mortgage amount exceeds the collateral value or where current debt payments are greater than income from property operations; none of which related to agricultural loans. As of December 31, 2010, approximately $8 million or 4% of the recorded investment had a loan-to-value ratio greater than 100% or debt service coverage ratio less than 1.0X; none of which related to agricultural loans. B-28 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) As of December 31, 2011 and 2010, all commercial mortgage and other loans were in current status. The Company defines current in its aging of past due commercial mortgage and agricultural loans as less than 30 days past due. Commercial mortgage and other loans on nonaccrual status as of December 31, 2011 and 2010, $3.2 million and $3.8 million, respectively, primarily related to Hospitality. See Note 2 for further discussion regarding nonaccrual status loans. For the year ended December 31 2011, there were no commercial mortgage and other loans sold or acquired. Other Long term Investments "Other long-term investments" are comprised as follows at December 31:
2011 2010 ------- ------- (in thousands) Company's investment in Separate accounts $ 1,662 $ 1,893 Joint ventures and limited partnerships 20,725 15,020 Derivatives (1) 6,688 - ------- ------- Total other long-term investments $29,075 $16,913 ======= =======
(1)A derivative balance of $(0.9) million at December 31, 2010 was reclassed to Other Liabilities. Net Investment Income Net investment income for the years ended December 31, was from the following sources:
2011 2010 2009 ------- ------- ------- (in thousands) Fixed maturities, available-for-sale $57,285 $57,502 $53,615 Equity securities, available-for-sale 12 148 218 Trading account assets 11 - - Commercial mortgage and other loans 12,187 11,264 9,822 Policy loans 9,503 9,363 9,177 Short-term investments and cash equivalents 85 129 434 Other long-term investments 1,718 1,691 (666) ------- ------- ------- Gross investment income 80,801 80,097 72,600 Less: investment expenses (3,245) (3,053) (2,656) ------- ------- ------- Net investment income $77,556 $77,044 $69,944 ======= ======= =======
Carrying value for non-income producing assets included in fixed maturities totaled $0 million as of December 31, 2011. Non-income producing assets represent investments that have not produced income for the twelve months preceding December 31, 2011. B-29 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) Realized Investment Gains (Losses), Net Realized investment gains (losses), net, for the years ended December 31, were from the following sources:
2011 2010 2009 --------- ------- ------- (in thousands) Fixed maturities $ 2,257 $ 1,523 $(7,557) Equity securities 42 139 (138) Commercial mortgage and other loans (1) 970 (935) Short-term investments and cash equivalents - 5 - Joint ventures and limited partnerships (44) - (124) Derivatives (112,310) 54,378 22,268 --------- ------- ------- Realized investment gains (losses), net $(110,056) $57,015 $13,514 ========= ======= =======
Net Unrealized Investment Gains (Losses) Net unrealized investment gains and losses on securities classified as "available for sale" and certain other long-term investments and other assets are included in the Statements of Financial Position as a component of "Accumulated other comprehensive income (loss)," or "AOCI." Changes in these amounts include reclassification adjustments to exclude from "Other comprehensive income (loss)" those items that are included as part of "Net income" for a period that had been part of "Other comprehensive income (loss)" in earlier periods. The amounts for the periods indicated below, split between amounts related to fixed maturity securities on which an OTTI loss has been recognized, and all other net unrealized investment gains and losses, are as follows: Net Unrealized Investment Gains and Losses on Fixed Maturity Securities on which an OTTI loss has been recognized
Accumulated Other Comprehensive Income (Loss) Deferred Related To Net Net Unrealized Deferred Policy Policy Holder Income Tax Unrealized Gains (Losses) on Acquisition Costs Account (Liability) Investment Gains Investments and Other Costs Balances Benefit (Losses) ----------------- ----------------- ------------- ----------- ----------------- (in thousands) Balance, December 31, 2008 $ - $ - $- $ - $ - Cumulative impact of the adoption of new authoritative guidance on January 1, 2009 (4,049) 290 - 1,316 (2,443) Cumulative impact of the retrospective adoption of new authoritative guidance on January 1, 2012 - - - - - Net investment gains (losses) on investments arising during the period 4,471 - - (1,565) 2,906 Reclassification adjustment for OTTI losses included in net income 5,080 - - (1,778) 3,302 Reclassification adjustment for OTTI gains excluded from net income(1) (11,483) - - 4,019 (7,464)
B-30 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued)
Accumulated Other Comprehensive Income (Loss) Deferred Related To Net Net Unrealized Deferred Policy Policy Holder Income Tax Unrealized Gains (Losses) on Acquisition Costs Account (Liability) Investment Gains Investments and Other Costs Balances Benefit (Losses) ----------------- ----------------- ------------- ----------- ----------------- (in thousands) Impact of net unrealized investment (gains) losses on deferred policy acquisition costs and other costs - 2,598 - (909) 1,689 Impact of net unrealized investment (gains) losses on Policyholders' account balance - - (1,378) 482 (896) ------- ------- ------- ------ ------- Balance, December 31, 2009 $(5,981) $ 2,888 $(1,378) $1,565 $(2,906) ------- ------- ------- ------ ------- Net investment gains (losses) on investments arising during the period (821) - - 287 (534) Reclassification adjustment for OTTI losses included in net income 2,504 - - (876) 1,628 Reclassification adjustment for OTTI gains excluded from net income(1) (11) - - 4 (7) Impact of net unrealized investment (gains) losses on deferred policy acquisition costs and other costs - (1,040) - 364 (676) Impact of net unrealized investment (gains) losses on policyholders' account balances - - 594 (208) 386 ------- ------- ------- ------ ------- Balance, December 31, 2010 $(4,309) $ 1,848 $ (784) $1,136 $(2,109) ------- ------- ------- ------ ------- Net investment gains (losses) on investments arising during the period 843 - - (295) 548 Reclassification adjustment for OTTI losses included in net income 2,049 - - (717) 1,332 Reclassification adjustment for OTTI gains excluded from net income(1) - - - - - Impact of net unrealized investment (gains) losses on deferred policy acquisition costs - (1,109) - 388 (721) Impact of net unrealized investment (gains) losses on policyholders' account balances - - 642 (225) 417 ------- ------- ------- ------ ------- Balance, December 31, 2011 $(1,417) $ 739 $ (142) $ 287 $ (533) ======= ======= ======= ====== =======
B-31 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) All Other Net Unrealized Investment Gains and Losses in AOCI
Accumulated Other Comprehensive Income (Loss) Deferred Related To Net Net Unrealized Deferred Policy Policy Holder Income Tax Unrealized Gains/(Losses) on Acquisition Costs Account (Liability) Investment Gains Investments(1) and Other Costs Balances Benefit (Losses) ----------------- ----------------- ------------- ----------- ----------------- (in thousands) Balance, December 31, 2008 $(70,920) $ 41,193 $(17,457) $ 16,514 $(30,670) Cumulative impact of the adoption of new authoritative guidance on January 1, 2009 (2,016) 33 - 694 (1,289) Cumulative impact of the retrospective adoption of new authoritative guidance on January 1, 2012 - (10,502) 74 3,650 (6,778) Net investment gains (losses) on investments arising during the period 91,116 - - (31,891) 59,225 Reclassification adjustment for (gains) losses included in net income 2,616 - - (916) 1,700 Reclassification adjustment for OTTI losses excluded from net income(2) 11,483 - - (4,019) 7,464 Impact of net unrealized investment (gains) losses on deferred policy acquisition costs - (46,579) - 16,303 (30,276) Impact of net unrealized investment (gains) losses on policyholders' account balances - - 23,632 (8,271) 15,361 -------- -------- -------- -------- -------- Balance, December 31, 2009 $ 32,279 $(15,855) $ 6,249 $ (7,936) $ 14,737 Net investment gains (losses) on investments arising during the period 24,868 - - (8,704) 16,164 Reclassification adjustment for (gains) losses included in net income 4,166 - - (1,458) 2,708 Reclassification adjustment for OTTI losses excluded from net income(2) 11 - - (4) 7 Impact of net unrealized investment (gains) losses on deferred policy acquisition costs and other costs - (8,437) - 2,953 (5,484) Impact of net unrealized investment (gains) losses on policyholders' account balances - - 4,712 (1,649) 3,063 -------- -------- -------- -------- -------- Balance, December 31, 2010 $ 61,324 $(24,292) $ 10,961 $(16,798) $ 31,195 Net investment gains (losses) on investments arising during the period 23,930 - - (8,376) 15,555
B-32 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued)
Accumulated Other Comprehensive Income (Loss) Deferred Related To Net Net Unrealized Deferred Policy Policy Holder Income Tax Unrealized Gains/(Losses) on Acquisition Costs Account (Liability) Investment Gains Investments(1) and Other Costs Balances Benefit (Losses) ----------------- ----------------- ------------- ----------- ----------------- (in thousands) Reclassification adjustment for (gains) losses included in net income 4,348 - - (1,522) 2,826 Reclassification adjustment for OTTI losses excluded Impact of net unrealized investment (gains) losses on deferred policy acquisition costs - (7,406) - 2,592 (4,814) Impact of net unrealized investment (gains) losses on policyholders' account balances - - 4,418 (1,546) 2,872 ------- -------- ------- -------- ------- Balance, December 31, 2011 $89,602 $(31,698) $15,379 $(25,649) $47,634 ======= ======== ======= ======== =======
(1)Include cash flow hedges. See Note 5 for information on cash flow hedges. The table below presents net unrealized gains (losses) on investments by asset class at December 31:
December 31, December 31, December 31, 2011 2010 2009 ------------ ------------ ------------ (in thousands) Fixed maturity securities on which an OTTI loss has been recognized $(1,417) $(4,309) $(5,981) Fixed maturity securities, available for sale-all other 88,414 61,195 31,975 Equity securities, available for sale (100) (227) (177) Derivatives designated as cash flow hedges (1) (630) (1,100) (675) Other investments 1,918 1,456 1,156 ------- ------- ------- Net unrealized gains (losses) on investments $88,185 $57,015 $26,298 ======= ======= =======
(1)See Note 5 for more information on cash flow hedges. B-33 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) Duration of Gross Unrealized Loss Positions for Fixed Maturities The following table shows the fair value and gross unrealized losses aggregated by investment category and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, at December 31:
December 31, 2011 ------------------------------------------------------------------- Less than twelve months Twelve months or more Total ----------------------- --------------------- --------------------- Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses ---------- ---------- ---------- ---------- ---------- ---------- (in thousands) Fixed maturities, available for sale U.S. Treasury securities and obligations of U.S. government authorities and agencies $ - $ - $ - $ - $ - $ - Corporate securities 31,041 670 998 177 32,039 847 Commercial mortgage-backed securities - - 1,051 2 1,051 2 Asset-backed securities 33,246 285 7,384 1,780 40,630 2,065 Residential mortgage-backed securities 4,367 158 - - 4,367 158 ------- ------ ------ ------ ------- ------ Total $68,654 $1,113 $9,433 $1,959 $78,087 $3,072 ======= ====== ====== ====== ======= ======
December 31, 2010 ------------------------------------------------------------------- Less than twelve months Twelve months or more Total ----------------------- --------------------- --------------------- Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses ---------- ---------- ---------- ---------- ---------- ---------- (in thousands) Fixed maturities, available for sale U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 2,078 $ 41 $ - $ - $ 2,078 $ 41 Corporate securities 73,679 2,524 6,545 421 80,224 2,945 Asset-backed securities 10,608 169 16,442 5,277 27,050 5,446 Commercial mortgage-backed securities 7,148 87 - - 7,148 87 Residential mortgage-backed securities 3,219 48 - - 3,219 48 ------- ------ ------- ------ -------- ------ Total $96,732 $2,869 $22,987 $5,698 $119,719 $8,567 ======= ====== ======= ====== ======== ======
The gross unrealized losses at December 31, 2011 and December 31, 2010 are composed of $1 million and $6 million, respectively, related to high or highest quality securities based on NAIC or equivalent rating and $2 million and $3 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. At December 31, 2011, $1.6 million of the gross unrealized losses represented declines in value of greater than 20%, $0.1 million of which had been in that position for less than six months, as compared to $5 million at December 31, 2010 that represented declines in value of greater than 20%, none of which had been in that position for less than six months. At December 31, 2011 and December 31, 2010, the $2 million and $6 million, respectively, of gross unrealized losses of twelve months or more were concentrated in asset backed securities. In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for other-than-temporary impairments for these securities was not warranted at December 31, 2011 and B-34 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) December 31, 2010. These conclusions are based on a detailed analysis of the underlying credit and cash flows on each security. The gross unrealized losses are primarily attributable to credit spread widening and increased liquidity discounts. At December 31, 2011, the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before the anticipated recovery of its remaining amortized cost basis. Duration of Gross Unrealized Loss Positions for Equity Securities The following table shows the fair value and gross unrealized losses aggregated by length of time that individual equity securities have been in a continuous unrealized loss position, at December 31:
December 31, 2011 -------------------------------------------------------------------- Less than twelve months Twelve months or more Total ------------------------ --------------------- --------------------- Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses ---------- ---------- ---------- ---------- ---------- ---------- (in thousands) Equity securities, available for sale $316 $102 $ - $ - $ 316 $102 ==== ==== ====== ==== ====== ==== December 31, 2010 -------------------------------------------------------------------- Less than twelve months Twelve months or more Total ------------------------ --------------------- --------------------- Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses ---------- ---------- ---------- ---------- ---------- ---------- (in thousands) Equity securities, available for sale $255 $245 $1,536 $160 $1,791 $405 ==== ==== ====== ==== ====== ====
At December 31, 2011, $99 thousand of the gross unrealized losses represented declines of greater than 20%, all of which have been in that position for less than nine months. At December 31, 2010, $245 thousand of the gross unrealized losses represented declines of greater than 20%, all of which have been in that position for less than six months. Included in the December 31, 2010 table above are perpetual preferred securities. Perpetual preferred securities have characteristics of both debt and equity securities. Since an impairment model similar to fixed maturity securities is applied to these securities, an other-than-temporary impairment has not been recognized on certain perpetual preferred securities that have been in a continuous unrealized loss position for twelve months or more as of December 31, 2011 and December 31, 2010. In accordance with its policy described in Note 2, the Company concluded that an adjustment for other-than-temporary impairments for these equity securities was not warranted at December 31, 2011 and December 31, 2010. Securities Pledged and Special Deposits The Company pledges as collateral investment securities it owns to unaffiliated parties through certain transactions, including securities lending, securities sold under agreements to repurchase and futures contracts. B-35 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENTS (continued) At December 31, the carrying value of investments pledged to third parties as reported in the Statements of Financial Position included the following:
2011 2010 ------- ------ (in thousands) Fixed maturity securities, available for sale - all other $19,670 $3,314 ------- ------ Total securities pledged $19,670 $3,314 ======= ======
As of December 31, 2011, the carrying amount of the associated liabilities supported by the pledged collateral was $20.2 million. Of this amount, $3.2 million was "Securities sold under agreements to repurchase" and $17.0 million was "Cash collateral for loaned securities. As of December 31, 2010, the carrying amount of the associated liabilities supported by the pledged collateral was $3.4 million. Of this amount, $3.0 million was "Securities sold under agreements to repurchase" and $0.4 million was "Cash collateral for loaned securities." Fixed maturities of $0.5 million at December 31, 2010 were on deposit with governmental authorities or trustees as required by certain insurance laws. 4. DEFERRED POLICY ACQUISITION COSTS The balances of and changes in deferred policy acquisition costs for the year ended December 31, are as follows:
2011 2010 2009 -------- -------- -------- (in thousands) Balance, beginning of year $271,179 $218,756 $232,145 Capitalization of commissions, sales and issue expenses 90,072 70,516 44,965 Amortization- Impact of assumption and experience unlocking and true-ups (983) 13,484 11,607 Amortization- All other (89,063) (22,147) (27,976) Change in unrealized investment gains/(losses) (8,310) (9,430) (41,985) -------- -------- -------- Balance, end of year $262,895 $271,179 $218,756 ======== ======== ========
Deferred acquisition costs include reductions in capitalization and amortization related to reinsurance expense allowances resulting from the coinsurance treaties with Prudential Arizona Reinsurance Captive Company, or "PARCC," and Prudential Arizona Reinsurance Term Company, or "PAR TERM" as discussed in Note 13. Ceded capitalization was $19 million, $29 million and $15 million in 2011, 2010 and 2009, respectively. Ceded amortization relating to this treaty included amounted to $7 million, $9 million and $8 million in 2011, 2010 and 2009, respectively. 5. POLICYHOLDERS' LIABILITIES Future Policy Benefits Future policy benefits at December 31 are as follows:
2011 2010 -------- -------- (in thousands) Life insurance $602,884 $534,286 Individual annuities 6,744 6,149 Policy claims and other liabilities 82,339 (37,081) -------- -------- Total future policy benefits $691,967 $503,354 ======== ========
B-36 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 5. POLICYHOLDERS' LIABILITIES (continued) Life insurance liabilities include reserves for death benefits and other policy benefits. Individual annuity liabilities include reserves for annuities that are in payout status. Future policy benefits for life insurance are generally equal to the aggregate of (1) the present value of future benefit payments and related expenses, less the present value of future net premiums, and (2) any premium deficiency reserves. Assumptions as to mortality and persistency are based on the Company's experience, and in certain instances, industry experience, when the basis of the reserve is established. Interest rates range from 2.50% to 7.50 %. Future policy benefits for individual and group annuities and supplementary contracts are generally equal to the aggregate of (1) the present value of expected future payments, and (2) any premium deficiency reserves. Assumptions as to mortality are based on the Company's experience, and in certain instances, industry experience, when the basis of the reserve is established. The interest rates used in the determination of the present value range from 1.65% to 7.25%, with 0% of the reserves based on an interest rate in excess of 8%. Future policy benefits for other contract liabilities are generally equal to the present value of expected future payments based on the Company's experience. Other contract liabilities also includes liabilities for guarantee benefits related to certain nontraditional long-duration life and annuity contracts which are discussed more fully in Note 7. The interest rates used in the determination of the present values range from 1.39% to 5.88%. Policyholders' Account Balances Policyholders' account balances at December 31 are as follows:
2011 2010 ---------- ---------- (in thousands) Interest-sensitive life contracts $ 794,528 $ 723,739 Individual annuities 207,149 210,671 Guaranteed interest accounts 38,125 38,713 Other 93,278 80,890 ---------- ---------- Total policyholders' account balances $1,133,080 $1,054,013 ========== ==========
Policyholders' account balances represent an accumulation of account deposits plus credited interest less withdrawals, expenses and mortality charges, if applicable. Interest crediting rates for interest-sensitive contracts range from 3.00% to 4.60%. Interest crediting rates for individual annuities range from 1.00% to 4.93%. Interest crediting rates for guaranteed interest accounts range from 1.25% to 5.25%. Interest crediting rates range from 1.00% to 3.50% for other. 6. REINSURANCE The Company participates in reinsurance with its affiliates Prudential Insurance, PARCC, Pruco Re, PAR TERM, through various plans of reinsurance, primarily on a yearly renewable term and coinsurance basis. This reinsurance provides risk diversification, additional capacity for future growth and limits the maximum net loss potential. For coinsurance agreements, all significant risks are ceded to the reinsurer, including mortality, investment, and lapse risk. For yearly renewable term agreements, mortality risk is the primary risk ceded to the reinsurer. Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to the Company under the terms of the reinsurance agreements. We believe a material reinsurance liability resulting from such inability of reinsurers to meet their obligations is unlikely. B-37 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 6. REINSURANCE (continued) The Company has entered into various reinsurance agreements with an affiliate, Pruco Re, to reinsure its living benefit features sold on certain of its annuities as part of its risk management and capital management strategies. For additional details on these agreements, see Note 13. Reinsurance premiums, commissions, expense reimbursements, benefits and reserves related to reinsured long-duration contracts are accounted for using assumptions consistent with those used to account for the underlying contracts. Amounts recoverable from reinsurers, for long duration reinsurance arrangements, are estimated in a manner consistent with the claim liabilities and policy benefits associated with the reinsured policies. The affiliated reinsurance agreements are described further in Note 13. Effective April 1, 2008, the Company entered into an agreement to reinsure certain variable Corporate Owned Life Insurance "COLI" policies with Pruco Life. Reinsurance amounts included in the Statement of Operations and Comprehensive Income (Loss) for the years ended December 31 are below:
2011 2010 2009 --------- --------- --------- (in thousands) Direct premiums $ 167,113 $ 164,009 $ 158,678 Reinsurance ceded (151,808) (149,276) (141,647) --------- --------- --------- Premiums $ 15,305 $ 14,733 $ 17,031 ========= ========= ========= Direct policy charges and fees $ 161,829 $ 120,146 $ 108,396 Reinsurance ceded (48,357) (66,535) (39,197) --------- --------- --------- Policy charges and fees $ 113,472 $ 53,611 $ 69,199 ========= ========= ========= Policyholders' benefits ceded $ 100,442 $ 95,634 $ 81,364 ========= ========= ========= Realized capital gains (losses) net, associated with derivatives $ (26,567) $ (407) $ (44,367) ========= ========= =========
Realized investment gains and losses include the reinsurance of certain of the Company's embedded derivatives. Changes in the fair value of the embedded derivatives are recognized through "Realized investment gains (losses)." The Company has entered into reinsurance agreements to transfer the risk related to certain living benefit options to Pruco Re. The reinsurance agreements contain derivatives and have been accounted for in the same manner as an embedded derivative. See Note 11 for additional information related to the accounting for embedded derivatives. Reinsurance premiums ceded for interest-sensitive products is accounted for as a reduction of policy charges and fee income. Reinsurance ceded for term insurance products is accounted for as a reduction of premiums. Reinsurance recoverables included in the Company's Statements of Financial Position at December 31, 2011 and 2010 were as follows:
December 31, December 31, 2011 2010 ------------ ------------ (in thousands) Domestic life insurance-affiliated $467,687 $407,516 Domestic individual annuities-affiliated 53,696 11,110 Domestic life insurance-unaffiliated 1,379 1,233 -------- -------- $522,762 $419,859 ======== ========
B-38 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 6. REINSURANCE (continued) Substantially all reinsurance contracts are with affiliates as of December 31, 2011 and 2010. These contracts are described further in Note 13 of the Financial Statements. The gross and net amounts of life insurance face amount in force as of December 31, 2011 and 2010 were as follows:
2011 2010 2009 ------------ ------------ ------------ (in thousands) Gross life insurance face amount in force $ 97,879,303 $ 96,896,483 $ 95,400,464 Reinsurance ceded (88,113,164) (86,500,898) (86,036,509) ------------ ------------ ------------ Net life insurance face amount in force $ 9,766,139 $ 10,395,585 $ 9,363,955 ============ ============ ============
7. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS The Company issues traditional variable annuity contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. The Company also issues variable annuity contracts with general and separate account options where the Company contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract less any partial withdrawals ("return of net deposits"), (2) total deposits made to the contract less any partial withdrawals plus a minimum return ("minimum return"), or (3) the highest contract value on a specified date minus any withdrawals ("contract value"). These guarantees include benefits that are payable in the event of death, annuitization or at specified dates during the accumulation period and withdrawal and income benefits payable during specified periods. The Company also issues annuity contracts with market value adjusted investment options ("MVAs"), which provide for a return of principal plus a fixed rate of return if held to maturity, or, alternatively, a "market adjusted value" if surrendered prior to maturity or if funds are allocated to other investment options. The market value adjustment may result in a gain or loss to the Company, depending on crediting rates or an indexed rate at surrender, as applicable. In addition, the Company issues variable life, variable universal life and universal life contracts where the Company contractually guarantees to the contractholder a death benefit even when there is insufficient value to cover monthly mortality and expense charges, whereas otherwise the contract would typically lapse ("no lapse guarantee"). Variable life and variable universal life contracts are offered with general and separate account options similar to variable annuities. The assets supporting the variable portion of both traditional variable annuities and certain variable contracts with guarantees are carried at fair value and reported as "Separate account assets" with an equivalent amount reported as "Separate account liabilities." Amounts assessed against the contractholders for mortality, administration, and other services are included within revenue in "Policy charges and fee income" and changes in liabilities for minimum guarantees are generally included in "Policyholders' benefits." In 2011, 2010 and 2009 there were no gains or losses on transfers of assets from the general account to a separate account. For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. The Company's primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, contract lapses and contractholder mortality. B-39 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 7. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS (continued) For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. The Company's primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, timing of annuitization, contract lapses and contractholder mortality. For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance. The Company's primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, interest rates, market volatility or contractholder behavior used in the original pricing of these products. The Company's contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed may not be mutually exclusive. The liabilities related to the net amount at risk are reflected within "Future policy benefits." As of December 31, 2011 and 2010, the Company had the following guarantees associated with these contracts, by product and guarantee type:
December 31, 2011 December 31, 2010 --------------------------- --------------------------- In the At In the At Event of Annuitization/ Event of Annuitization/ Death Accumulation (1) Death Accumulation (1) ---------- ---------------- ---------- ---------------- (in thousands) Variable Annuity Contracts Return of Net Deposits Account value $2,989,255 $ N/A $1,973,903 $ N/A Net amount at risk $ 72,823 $ N/A $ 8,252 $ N/A Average attained age of contractholders 74 N/A 60 N/A Minimum return or contract value Account value $1,290,856 $ 3,691,282 $1,036,830 $ 2,392,669 Net amount at risk $ 91,715 $ 249,224 $ 36,926 $ 65,120 Average attained age of contract holders 72 59 64 59 Average period remaining until earliest expected annuitization N/A 0.63 years N/A 1.58 years
(1)Includes income and withdrawal benefits as described herein
Unadjusted Value Adjusted Value Unadjusted Value Adjusted Value Market value adjusted annuities ---------------- -------------- ---------------- -------------- Account value $14,074 $14,428 $15,104 $15,827
B-40 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 7. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS (continued)
December 31, December 31, 2011 2010 ------------ ------------ In the Event of Death ------------------------- (in thousands) Variable Life, Variable Universal Life and Universal Life Contracts No Lapse Guarantees Separate account value $ 576,747 $ 569,060 General account value $ 217,849 $ 194,596 Net amount at risk $6,137,072 $6,039,086 Average attained age of contract holders 50 years 49 years
Account balances of variable annuity contracts with guarantees were invested in separate account investment options as follows:
December 31, 2011 December 31, 2010 ----------------- ----------------- (in thousands) Equity funds $1,913,597 $1,677,692 Bond funds 1,972,145 $ 968,140 Money market funds 197,699 165,075 ---------- ---------- Total $4,083,441 $2,810,907 ========== ==========
In addition to the above mentioned amounts invested in separate account investment options, $196.7 million and $199.8 million of account balances of variable annuity contracts with guarantees, inclusive of contracts with MVA feature were invested in general account investment options in 2011 and 2010, respectively. Liabilities for Guaranteed Benefits The table below summarizes the changes in general account liabilities for guarantees on variable contracts. The liabilities for guaranteed minimum death benefits ("GMDB") and guaranteed minimum income benefits ("GMIB") are included in "Future policy benefits" and the related changes in the liabilities are included in "Policyholders' benefits." Guaranteed minimum income and withdrawal benefits ("GMIWB"), guaranteed minimum withdrawal benefits ("GMWB") and guaranteed minimum accumulation benefits ("GMAB") features are considered to be bifurcated embedded derivatives and are recorded at fair value. Changes in the fair value of these derivatives, including changes in the Company's own risk of non-performance, along with any fees attributed or payments made relating to the derivative, are recorded in "Realized investment gains (losses), net." B-41 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 7. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS (continued) See Note 10 for additional information regarding the methodology used in determining the fair value of these embedded derivatives. The liabilities for GMAB, GMWB and GMIWB are included in "Future policy benefits."
GMWB-GMIWB- GMDB GMIB GMAB Total -------------------------- ---------------- ----------- -------- Variable Life, Variable Universal Variable Life & Universal Annuity Life Variable Annuity (in thousands) Balance as of December 31, 2008 $ 5,593 $11,276 $1,802 $ 63,903 $ 82,574 Incurred guarantee benefits (1) (1,821) 6,217 (489) (66,315) (62,408) Paid guarantee benefits (2,288) (250) -- -- (2,538) ------- ------- ------ -------- -------- Balance as of December 31, 2009 $ 1,484 $17,243 $1,313 $ (2,412) $ 17,628 Incurred guarantee benefits (1) 217 1,143 (77) (38,904) (37,621) Paid guarantee benefits (861) -- -- -- (861) ------- ------- ------ -------- -------- Balance as of December 31, 2010 $ 840 $18,386 $1,236 $(41,316) $(20,854) Incurred guarantee benefits (1) 1,248 6,053 318 118,312 125,931 Paid guarantee benefits (683) -- -- -- (683) ------- ------- ------ -------- -------- Balance as of December 31, 2011 $ 1,405 $24,439 $1,554 $ 76,996 $104,394 ======= ======= ====== ======== ========
(1)Incurred guarantee benefits include the portion of assessments established as additions to reserves as well as changes in estimates affecting the reserves. Also includes changes in the fair value of features considered to be embedded derivatives. The GMDB liability is determined each period end by estimating the accumulated value of a portion of the total assessments to date less the accumulated value of the death benefits in excess of the account balance. The GMIB liability is determined each period by estimating the accumulated value of a portion of the total assessments to date less the accumulated value of the projected income benefits in excess of the account balance. The portion of assessments used is chosen such that, at issue (or, in the case of acquired contracts, at the acquisition date), the present value of expected death benefits or expected income benefits in excess of the projected account balance and the portion of the present value of total expected assessments over the lifetime of the contracts are equal. The Company regularly evaluates the estimates used and adjusts the GMDB and GMIB liability balances, with an associated charge or credit to earnings, if actual experience or other evidence suggests that earlier assumptions should be revised. The GMAB features provide the contractholder with a guaranteed return of initial account value or an enhanced value if applicable. The most significant of the Company's GMAB features are the guaranteed return option ("GRO") features, which includes an asset transfer feature that reduces the Company's exposure to these guarantees. The GMAB liability is calculated as the present value of future expected payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. The GMWB features provide the contractholder with a guaranteed remaining balance if the account value is reduced to zero through a combination of market declines and withdrawals. The guaranteed remaining balance is generally equal to the protected value under the contract, which is initially established as the greater of the account value or cumulative deposits when withdrawals commence, less cumulative withdrawals. The contractholder also has the option, after a specified time period, to reset the guaranteed remaining balance to the then-current account value, if greater. The GMWB liability is calculated as the present value of future expected payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. B-42 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 7. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS (continued) The GMIWB features, taken collectively, provides a contractholder two optional methods to receive guaranteed minimum payments over time, a "withdrawal" option or an "income" option. The withdrawal option (which is available under only one of the Company's GMIWBs) guarantees that a contract holder can withdraw an amount each year until the cumulative withdrawals reach a total guaranteed balance. The income option (which varies among the Company's GMIWBs) in general guarantees the contract holder the ability to withdraw an amount each year for life (or for joint lives, in the case of any spousal version of the benefit) where such amount is equal to a percentage of a protected value under the benefit. The contractholder also has the potential to increase this annual amount, based on certain subsequent increases in account value that may occur. Certain GMIWB features include an asset transfer feature that reduces the Company's exposure to these guarantees. The GMIWB liability is calculated as the present value of future expected payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. As part of its risk management strategy, the Company limits its exposure to these risks through a combination of product design elements, such as an asset transfer feature, and affiliated reinsurance agreements. The asset transfer feature included in the design of certain optional living benefits transfers assets between certain variable investments selected by the annuity contractholder and, depending on the benefit feature, a fixed rate account in the general account or a bond portfolio within the separate accounts. The transfers are based on the static mathematical formula, used with the particular optional benefit, which considers a number of factors, including the impact of investment performance of the contractholder total account value. In general, negative investment performance may result in transfers to a fixed-rate account in the general account or a bond portfolio within the separate accounts, and positive investment performance may result in transfers back to contractholder-selected variable investments. Other product design elements utilized for certain products to manage these risks include asset allocation restrictions and minimum issuance age requirements. For risk management purposes the Company segregates the variable annuity living benefit features into those that include the asset transfer feature including certain GMIWB riders and certain GMAB riders that feature the GRO policyholder benefits; and those that do not include the asset transfer feature, including certain legacy GMIWB, GMWB, GMAB and GMIB riders. Living benefit riders that include the asset transfer feature also include GMDB riders, and as such the GMDB risk in these riders also benefits from the asset transfer feature. Sales Inducements The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize deferred policy acquisition costs. These deferred sales inducements are included in "Deferred Sales Inducements" in the Company's Statements of Financial Position. The Company offers various types of sales inducements. These inducements include: (1) a bonus whereby the policyholder's initial account balance is increased by an amount equal to a specified percentage of the customer's initial deposit and (2) additional credits after a certain number of years a contract is held. Changes in deferred sales inducements, reported as "Interest credited to policyholders' account balances," are as follows:
2011 2010 2009 -------- ------- ------- (in thousands) Balance, beginning of year $ 51,106 $30,265 $28,015 Capitalization 22,596 21,594 8,689 Amortization- Impact of assumption and experience unlocking and true-ups (2,290) 874 822 Amortization- All other (23,105) (1,579) (5,485) Change in unrealized investment gains and (losses) (206) (48) (1,776) -------- ------- ------- Balance, end of year $ 48,101 $51,106 $30,265 ======== ======= =======
B-43 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 8. STATUTORY NET INCOME AND SURPLUS AND DIVIDEND RESTRICTIONS The Company is required to prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the New Jersey Department of Banking and Insurance. Statutory accounting practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes, and certain assets on a different basis. Statutory net income (loss) of the Company amounted to $13 million, $52 million, and $4 million for the years ended December 31, 2011, 2010 and 2009, respectively. Statutory surplus of the Company amounted to $260 million and $216 million at December 31, 2011 and 2010, respectively. The Company prepares its statutory financial statements in accordance with accounting practices prescribed or permitted by the New Jersey Department of Banking and Insurance. Prescribed statutory accounting practices include publications of the NAIC, state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The Company is subject to New Jersey law, which limits the amount of dividends that insurance companies can pay to stockholders without approval of the New Jersey Department of Banking and Insurance. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is $26 million capacity to pay a dividend in 2012 without prior approval. The Company did not pay any dividends in 2011. 9. INCOME TAXES The components of income tax expense (benefit) for the years ended December 31, were as follows:
2011 2010 2009 -------- ------- ------- (in thousands) Current tax expense (benefit): U.S. $ (715) $23,841 $20,362 -------- ------- ------- Total (715) 23,841 20,362 -------- ------- ------- Deferred tax expense (benefit): U.S. (47,893) 15,967 (1,376) -------- ------- ------- Total (47,893) 15,967 (1,376) -------- ------- ------- Total income tax expense (benefit) on income from continuing operations (48,608) 39,808 18,986 Other comprehensive income (loss) 9,689 9,279 28,567 Cumulative effect of changes in accounting policy -- -- 2,010 -------- ------- ------- Total income tax expense (benefit) on continuing operations $(38,919) $49,087 $49,563 ======== ======= =======
The Company's income (loss) from continuing operations before income taxes includes income (loss) from domestic operations of ($109.2) million, $141.5 million and $76.0 million, and no income from foreign operations for the years ended December 31, 2011, 2010 and 2009, respectively. B-44 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 9. INCOME TAXES (continued) The Company's actual income tax expense for the years ended December 31, differs from the expected amount computed by applying the statutory federal income tax rate of 35% to income from continuing operations before income taxes and cumulative effect of accounting change for the following reasons:
2011 2010 2009 -------- ------- ------- (in thousands) Expected federal income tax expense (benefit) $(37,938) $45,784 24,591 Non-taxable investment income (7,885) (4,449) (3,240) Tax Credits (1,368) (362) (195) Expiration of statute of limitations and related interest - - (2,695) Other (1,417) (1,165) 525 -------- ------- ------- Total income tax expense (benefit) on income from continuing operations $(48,608) $39,808 $18,986 ======== ======= =======
Deferred tax assets and liabilities at December 31, resulted from the items listed in the following table:
2011 2010 -------- -------- (in thousands) Deferred tax assets Insurance reserves $ 47,597 $ 3,398 Investments 4,696 -- Other 929 7,252 -------- -------- Deferred tax assets $ 53,222 $ 10,650 -------- -------- Deferred tax liabilities $ 0 Deferred acquisition costs $ 46,444 $ 52,192 Investments $ 0 1,159 Net Unrealized gains on securities 31,085 20,341 Deferred Annuity Bonus 16,835 17,887 Deferred tax liabilities $ 94,364 $ 91,579 -------- -------- Net deferred tax asset (liability) $(41,142) $(80,929) ======== ========
The application of U.S. GAAP requires the Company to evaluate the recoverability of deferred tax assets and establish a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized. The company had no valuation allowance as of December 31, 2011, and 2010. Management believes that based on its historical pattern of taxable income, the Company will produce sufficient income in the future to realize its deferred tax assets. Adjustments to the valuation allowance will be made if there is a change in management's assessment of the amount of deferred tax asset that is realizable. B-45 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 9. INCOME TAXES (continued) The Company's unrecognized tax benefits for the periods indicated are as follows:
Unrecognized Total Unrecognized tax benefits unrecognized tax benefits 2002 and tax benefits prior to 2002 forward all years ------------- ------------ ------------ (in thousands) Amounts as of December 31, 2008 $ 3,596 $ 1,517 $ 5,113 Increases in unrecognized tax benefits taken in prior period - (210) (210) (Decreases) in unrecognized tax benefits taken in prior period - - - Settlements with taxing authorities - - - (Decreases) in unrecognized tax benefits as a result of lapse of the applicable statute of limitations (2,107) - (2,107) ------- ------- ------- Amounts as of December 31, 2009 $ 1,489 $ 1,307 $ 2,796 Increases in unrecognized tax benefits taken in prior period - - - (Decreases) in unrecognized tax benefits taken in prior period - (1,177) (1,177) ------- ------- ------- Amounts as of December 31, 2010 $ 1,489 $ 130 $ 1,619 Increases in unrecognized tax benefits taken in prior period - - - (Decreases) in unrecognized tax benefits taken in prior period (1,489) (17) (1,506) ------- ------- ------- Amounts as of December 31, 2011 $ - $ 113 $ 113 ======= ======= ======= Unrecognized tax benefits that, if recognized, would favorably impact the effective rate as of December 31, 2009 $ 1,489 $ - $ 1,489 ======= ======= ======= Unrecognized tax benefits that, if recognized, would favorably impact the effective rate as of December 31, 2010 $ 1,489 $ - $ 1,489 ======= ======= ======= Unrecognized tax benefits that, if recognized, would favorably impact the effective rate as of December 31, 2011 $(1,489) $ - $(1,489) ======= ======= =======
The Company classifies all interest and penalties related to tax uncertainties as income tax expense (benefit). The amounts recognized in the financial statements for tax-related interest and penalties for the years ended December 31, are as follows:
2011 2010 2009 ---- ------- ------ (in thousands) Interest and penalties recognized in the statements of operations $- $(1,100) $ 400 Interest and penalties recognized in liabilities in the statements of financial position $- $ - $1,100
The Company's liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the Internal Revenue Service ("IRS") or other taxing authorities. The completion of review or the expiration of the Federal statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Federal statute of limitations for the 2002 tax year expired on April 30, 2009. The Federal statute of limitations for the 2003 tax year expired on July 31, 2009. The Federal statute of limitations for the 2004 through 2007 tax years will expire in June 2012, unless extended. Tax years 2008 through 2010 are still open for IRS examination. The Company does not anticipate any significant changes within the next 12 months to its total unrecognized tax benefits related to tax years for which the statute of limitations has not expired. B-46 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 9. INCOME TAXES (continued) During the fourth quarter of 2011, the Company's parent, Prudential Financial, reached an agreement with the IRS on the resolution of the proposed foreign tax credits disallowance. The settlement of the foreign tax credit transactions for 2004 through 2006 marked the conclusion of the IRS audits for those years. As a result, all unrecognized tax positions plus interest relating to tax years prior to 2007 were recognized in 2011. The dividends received deduction ("DRD") reduces the amount of dividend income subject to U.S. tax and is the primary component of the non-taxable investment income shown in the table above, and, as such, is a significant component of the difference between the Company's effective tax rate and the federal statutory tax rate of 35%. The DRD for the current period was estimated using information from 2010, current year results, and was adjusted to take into account the current year's equity market performance. The actual current year DRD can vary from the estimate based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from mutual fund investments, changes in the account balances of variable life and annuity contracts, and the Company's taxable income before the DRD. In August 2007, the IRS released Revenue Ruling 2007-54, which included, among other items, guidance on the methodology to be followed in calculating the DRD related to variable life insurance and annuity contracts. In September 2007, the IRS released Revenue Ruling 2007-61. Revenue Ruling 2007-61 suspended Revenue Ruling 2007-54 and informed taxpayers that the U.S. Treasury Department and the IRS intend to address through new guidance the issues considered in Revenue Ruling 2007-54, including the methodology to be followed in determining the DRD related to variable life insurance and annuity contracts. On February 13, 2012, the Obama Administration released the "General Explanations of the Administration's Revenue Proposals." One proposal would change the method used to determine the amount of the DRD. A change in the DRD, including the possible retroactive or prospective elimination of this deduction through guidance or legislation, could increase actual tax expense and reduce the Company's consolidated net income. These activities had no impact on the Company's 2009, 2010 or 2011 results. In December 2006, the IRS completed all fieldwork with respect to its examination of the consolidated federal income tax returns for tax years 2002 and 2003. The final report was initially submitted to the Joint Committee on Taxation for their review in April 2007. The final report was resubmitted in March 2008 and again in April 2008. The Joint Committee returned the report to the IRS for additional review of an industry issue regarding the methodology for calculating the DRD related to variable life insurance and annuity contracts. The IRS completed its review of the issue and proposed an adjustment with respect to the calculation of the DRD. In order to expedite receipt of an income tax refund related to the 2002 and 2003 tax years, the Company agreed to such adjustment. The report, with the adjustment to the DRD, was submitted to the Joint Committee on Taxation in October 2008. The Company was advised on January 2, 2009 that the Joint Committee completed its consideration of the report and took no exception to the conclusions reached by the IRS. Accordingly, the final report was processed and a $157 million refund was received in February 2009. The Company believed that its return position with respect to the calculation of the DRD was technically correct. Therefore, the Company filed protective refund claims on October 1, 2009 to recover the taxes associated with the agreed upon adjustment. The IRS recently issued an Industry Director Directive ("IDD") stating that the methodology for calculating the DRD set forth in Revenue Ruling 2007-54 should not be followed. The IDD also confirmed that the IRS guidance issued before Revenue Ruling 2007-54, which guidance the Company relied upon in calculating its DRD, should be used to determine the DRD. The Company's parent, Prudential Financial, has received a refund of approximately $3 million pursuant to the protective refund claims. These activities had no impact on the Company's 2009, 2010 or 2011 results. B-47 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 9. INCOME TAXES (continued) For tax years 2007 through 2011, the Company is participating in the IRS's Compliance Assurance Program ("CAP"). Under CAP, the IRS assigns an examination team to review completed transactions contemporaneously during these tax years in order to reach agreement with the Company on how they should be reported in the tax returns. If disagreements arise, accelerated resolutions programs are available to resolve the disagreements in a timely manner before the tax returns are filed. It is management's expectation this program will shorten the time period between the filing of the Company's federal income tax returns and the IRS's completion of its examination of the returns. 10. FAIR VALUE OF ASSETS AND LIABILITIES Fair Value Measurement - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance around fair value established a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows: Level 1--Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. These generally provide the most reliable evidence and are used to measure fair value whenever available. Active markets are defined as having the following characteristics for the measured asset/liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information publicly available. The Company's Level 1 assets and liabilities primarily include certain cash equivalents and certain short term investments, and equity securities. Prices are obtained from readily available sources for market transactions involving identical assets or liabilities. Level 2--Fair value is based on significant inputs, other than Level 1 inputs, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. The Company's Level 2 assets and liabilities include: fixed maturities (corporate public and private bonds, most government securities, certain asset-backed and mortgage-backed securities, etc.), certain equity securities (mutual funds, which do not actively trade and are priced based on a net asset value), certain short-term investments and certain cash equivalents (primarily commercial paper), and certain over-the-counter derivatives. Valuations are generally obtained from third party pricing services for identical or comparable assets or liabilities or through the use of valuation methodologies using observable market inputs. Prices from services are validated through comparison to trade data and internal estimates of current fair value, generally developed using market observable inputs and economic indicators. Level 3--Fair value is based on at least one or more significant unobservable inputs for the asset or liability. These inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset or liability. The Company's Level 3 assets and liabilities primarily include: certain private fixed maturities and equity securities, certain manually priced public equity securities and fixed maturities, certain highly structured over-the-counter derivative contracts, certain consolidated real estate funds for which the Company is the general partner, and embedded derivatives resulting from certain products with guaranteed benefits. Prices are determined using valuation methodologies such as option pricing models, discounted cash flow models and other similar techniques. Non-binding broker quotes, which are utilized when pricing service information is not B-48 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) available, are reviewed for reasonableness based on the Company's understanding of the market, and are generally considered Level 3. Under certain conditions, based on its observations of transactions in active markets, the Company may conclude the prices received from independent third party pricing services or brokers are not reasonable or reflective of market activity. In those instances, the Company may choose to over-ride the third-party pricing information or quotes received and apply internally- developed values to the related assets or liabilities. To the extent the internally-developed valuations use significant unobservable inputs, they are classified as Level 3. As of December 31, 2011 and December 31, 2010, these over-rides on a net basis were not material. Assets and Liabilities by Hierarchy Level - The tables below present the balances of assets and liabilities measured at fair value on a recurring basis, as of the dates indicated.
As of December 31, 2011 -------------------------------------- Level 1 Level 2 Level 3 Total -------- ---------- ------- ---------- (in thousands) Fixed maturities, available for sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies $ - $ 35,938 $ - $ 35,938 Obligations of U.S. states and their political subdivisions - 2,826 - 2,826 Foreign government bonds - 23,031 - 23,031 Corporate securities - 894,266 1,755 896,021 Asset-backed securities - 53,005 18,627 71,632 Commercial mortgage-backed securities - 96,006 - 96,006 Residential mortgage-backed securities - 94,450 - 94,450 -------- ---------- ------- ---------- Sub-total - 1,199,522 20,382 1,219,904 Other trading account assets: Equity Securities - - 1,569 1,569 -------- ---------- ------- ---------- Sub-total - - 1,569 1,569 Equity securities, available for sale: 276 - 1,144 1,420 Short-term investments 1,069 - - 1,069 Cash equivalents 10,000 14,381 - 24,381 Other long-term investments - 6,670 18 6,688 Other assets - 8,647 53,677 62,324 -------- ---------- ------- ---------- Sub-total excluding separate account assets 11,345 1,229,220 76,790 1,317,355 Separate account assets (1) 141,133 6,110,880 5,995 6,258,008 -------- ---------- ------- ---------- Total assets $152,478 $7,340,100 $82,785 $7,575,363 ======== ========== ======= ========== Other liabilities - - - - Future policy benefits - - 76,996 76,996 -------- ---------- ------- ---------- Total liabilities $ - $ - $76,996 $ 76,996 ======== ========== ======= ==========
B-49 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued)
As of December 31, 2010 ---------------------------------------- Level 1 Level 2 Level 3 Total -------- ---------- -------- ---------- (in thousands) Fixed maturities, available for sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies $ - $ 36,450 $ - $ 36,450 Foreign government bonds - 22,678 - 22,678 Corporate securities - 748,645 3,636 752,281 Asset-backed securities - 37,414 16,619 54,033 Commercial mortgage-backed securities - 103,101 - 103,101 Residential mortgage-backed securities - 95,998 - 95,998 -------- ---------- -------- ---------- Sub-total - 1,044,286 20,254 1,064,541 Equity securities, available for sale: 283 1,536 255 2,074 Short-term investments 359 7,050 - 7,409 Cash equivalents 5,000 23,383 - 28,383 Other long-term investments - - - - Other assets - 2,792 16,996 19,788 -------- ---------- -------- ---------- Sub-total excluding separate account assets 5,642 1,079,047 37,505 1,122,194 Separate account assets (1) 132,005 4,900,653 5,393 5,038,051 -------- ---------- -------- ---------- Total assets $137,647 $5,979,700 $ 42,898 $6,160,245 ======== ========== ======== ========== Other liabilities - 898 - 898 Future policy benefits - - (41,316) (41,316) -------- ---------- -------- ---------- Total liabilities $ - $ 898 $(41,316) $ (40,418) ======== ========== ======== ==========
(1)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account assets classified as Level 3 consist primarily of real estate and real estate investment funds. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Consolidated Statement of Financial Position. (2)Includes reclassifications to conform to current period presentation. The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below. Information regarding separate account assets is excluded as the risk associated with these assets is primarily borne by Company's customers and policyholders. Fixed Maturity Securities - The fair values of the Company's public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices from pricing services are sourced from multiple vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company generally receives prices from multiple pricing services for each security, but ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. To validate reasonableness, prices are reviewed by internal asset managers through comparison with directly observed recent market trades and internal estimates of current fair value, developed using market observable inputs and economic indicators. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If the pricing information received from third party pricing services is not reflective of market activity or other inputs observable in the market, the B-50 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) Company may challenge the price through a formal process with the pricing service. If the pricing service updates the price to be more consistent in comparison to the presented market observations, the security remains within Level 2. If the Company ultimately concludes that pricing information received from the independent pricing service is not reflective of market activity, non-binding broker quotes are used, if available. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may over-ride the information from the pricing service or broker with an internally-developed valuation. As of December 31, 2011 and December 31, 2010, over-rides on a net basis were not material. Internally-developed valuations or non-binding broker quotes are also used to determine fair value in circumstances where vendor pricing is not available. These estimates may use significant unobservable inputs, which reflect the Company's own assumptions about the inputs market participants would use in pricing the asset. Circumstances where observable market data are not available may include events such as market illiquidity and credit events related to the security. Pricing service over-rides, internally-developed valuations and non-binding broker quotes are generally included in Level 3 in the fair value hierarchy. The fair value of private fixed maturities, which are primarily comprised of investments in private placement securities, originated by internal private asset managers, are primarily determined using a discounted cash flow model. In certain cases these models primarily use observable inputs with a discount rate based upon the average of spread surveys collected from private market intermediaries who are active in both primary and secondary transactions, taking into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Generally, these securities have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may also incorporate significant unobservable inputs, which reflect the Company's own assumptions about the inputs market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are not significant to the price of a security, a Level 2 classification is made. Otherwise, a Level 3 classification is used. Private fixed maturities also include debt investments in funds that, in addition to a stated coupon, pay a return based upon the results of the underlying portfolios. The fair values of these securities are determined by reference to the funds' net asset value ("NAV"). Since the NAV at which the funds trade can be observed by redemption and subscription transactions between third parties, the fair values of these investments have been reflected within Level 2 in the fair value hierarchy. Trading Account Assets - Trading account assets are comprised of perpetual preferred. Fair values of perpetual preferred stock based on observable market inputs are classified within Level 2. However, when prices from independent pricing services are based on non-binding broker quotes as the directly observable market inputs become unavailable, the fair value of perpetual preferred stock are classified as Level 3. Equity Securities - Equity securities consist principally of investments in common and preferred stock of publicly traded companies, perpetual preferred stock, privately traded securities, as well as common stock mutual fund shares. The fair values of most publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for most privately traded equity securities are determined using valuation and discounted cash flow models that require a substantial level of judgment. In determining the fair value of certain privately traded equity securities the discounted cash flow model may also use unobservable inputs, which reflect the Company's assumptions about the inputs market participants would use in pricing the asset. Most privately traded equity securities are B-51 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) classified within Level 3. The fair values of common stock mutual fund shares that transact regularly (but do not trade in active markets because they are not publicly available) are based on transaction prices of identical fund shares and are classified within Level 2 in the fair value hierarchy. The fair values of preferred equity securities are based on prices obtained from independent pricing services. These prices are then validated for reasonableness against recently traded market prices. Accordingly, these securities are generally classified within Level 2 in the fair value hierarchy. Fair values of perpetual preferred stock based on observable market inputs are classified within Level 2. However, when prices from independent pricing services are based on non-binding broker quotes as the directly observable market inputs become unavailable, the fair value of perpetual preferred stock are classified as Level 3. Derivative Instruments - Derivatives are recorded at fair value either as assets, within "Other long-term investments," or as liabilities, within "Other liabilities," except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts are determined based on quoted prices in active exchanges or through the use of valuation models. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, credit spreads, market volatility, expected returns, non-performance risk, liquidity and other factors. Liquidity valuation adjustments are made to reflect the cost of exiting significant risk positions, and consider the bid-ask spread, maturity, complexity, and other specific attributes of the underlying derivative position. The majority of the Company's derivative positions are traded in the over-the-counter (OTC) derivative market and are classified within Level 2 in the fair value hierarchy. OTC derivatives classified within Level 2 are valued using models generally accepted in the financial services industry that use actively quoted or observable market input values from external market data providers, third-party pricing vendors and/or recent trading activity. The fair values of most OTC derivatives, including interest rate and cross currency swaps, are determined using discounted cash flow models. These models' key inputs include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, currency rates, credit spreads, equity prices, index dividend yields, non-performance risk and volatility. To reflect the market's perception of its own and the counterparty's non-performance risk, the Company incorporates additional spreads over London Interbank Offered Rate ("LIBOR") into the discount rate used in determining the fair value of OTC derivative assets and liabilities which are uncollateralized. The additional credit spread over LIBOR rates is determined taking into consideration publicly available information relating to the financial strength of the Company. The Company adjusts these credit spreads to remove any illiquidity risk premium, which is subject to a floor based on a percentage of the credit spread. Most OTC derivative contract inputs have bid and ask prices that are actively quoted or can be readily obtained from external market data providers. The Company's policy is to use mid-market pricing in determining its best estimate of fair value. Derivatives classified as Level 3 may include first-to-default credit basket swaps and other structured products. These derivatives are valued based upon models with some significant unobservable market inputs or inputs from less actively traded markets. The fair values of first to default credit basket swaps are derived from relevant observable inputs such as: individual credit default spreads, interest rates, recovery rates and unobservable model-specific input values such as correlation between different credits within the same basket. Level 3 methodologies are validated through periodic comparison of the Company's fair values to broker-dealer values. As of December 31, 2011, and December 31, 2010, there were derivatives with the fair value of $18 thousand and $0 classified within Level 3, and all other derivatives were classified within Level 2. See Note 11 for more details on the fair value of derivative instruments by primary underlying. B-52 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) Cash Equivalents and Short-Term Investments - Cash equivalents and short-term investments include money market instruments, commercial paper and other highly liquid debt instruments. Money market instruments are generally valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. The remaining instruments in the Cash Equivalents and Short-term Investments category are typically not traded in active markets; however, their fair values are based on market observable inputs and, accordingly, these investments have been classified within Level 2 in the fair value hierarchy. Other Assets - Other assets carried at fair value include reinsurance recoverables related to the reinsurance of our living benefit guarantees on certain of our variable annuities. These guarantees are described further below in "Future Policy Benefits." Also included in other assets are certain universal life products that contain a no-lapse guarantee provision. The reinsurance agreements covering these guarantees are derivatives and are accounted for in the same manner as an embedded derivative. Future Policy Benefits - The liability for future policy benefits includes general account liabilities for guarantees on variable annuity contracts, including guaranteed minimum accumulation benefits ("GMAB"), guaranteed minimum withdrawal benefits ("GMWB") and guaranteed minimum income and withdrawal benefits ("GMIWB"), accounted for as embedded derivatives. The fair values of the GMAB, GMWB, and GMIWB liabilities are calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or asset balance, given changing capital market conditions and various policyholder behavior assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management judgment. The Company is also required to incorporate the market-perceived risk of its own non-performance ("NPR") in the valuation of the embedded derivatives associated with its optional living benefit features and no-lapse feature on certain universal life products. Since insurance liabilities are senior to debt, the Company believes that reflecting the financial strength ratings of the Company in the valuation of the liability or contra-liability appropriately takes into consideration its NPR. To reflect NPR, the Company incorporates an additional credit spread over LIBOR rates into the discount rate used in the valuations of the embedded derivatives associated with its optional living benefit features. The additional credit spread over LIBOR rates is determined taking into consideration publicly available information relating to the financial strength of the Company. The Company adjusts these credit spreads to remove any illiquidity risk premium, which is subject to a floor based on a percentage of the credit spread. The additional credit spread over LIBOR rates incorporated into the discount rate as of December 31, 2011 generally ranged from 125 to 250 basis points for the portion of the interest rate curve most relevant to these liabilities. This additional spread is applied at an individual contract level and only to those individual living benefit contracts in a liability position and not to those in a contra-liability position. Other significant inputs to the valuation models for the embedded derivatives associated with the optional living benefit features of the Company's variable annuity products include capital market assumptions, such as interest rate and implied volatility assumptions, as well as various policyholder behavior assumptions that are actuarially determined, including lapse rates, benefit utilization rates, mortality rates and withdrawal rates. These assumptions are reviewed at least annually, and updated based upon historical experience and give consideration to any observable market data, including market transactions such as acquisitions and reinsurance transactions. B-53 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) Since many of the assumptions utilized in the valuation of the embedded derivatives associated with the Company's optional living benefit features are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level 3 in the fair value hierarchy. As of December 31, 2011, the fair value of the embedded derivatives associated with the optional living benefit features of before the NPR adjustment was a net liability of $344 million. This net liability was comprised of $360 million of individual living benefit contracts in a liability position net of $15 million of individual living benefit contracts in a contra-liability position. At December 31, 2011, NPR resulted in a $267 million cumulative decrease to the embedded derivative liability, reflecting the additional credit spread over LIBOR the Company incorporated into the discount rate used in the valuations of those embedded derivatives in a liability position. Significant declines in risk-free interest rates and the impact of account value performance in 2011 drove an increase in the embedded derivative liability associated with the optional living benefit features of the Company's variable annuity products as of December 31, 2011. These factors, as well as widening of the spreads used in valuing NPR, also drove offsetting increases in the NPR adjustment. As a result, the increase in these embedded derivative liabilities are largely offset by corresponding increases in the reinsurance recoverable associated with the affiliated reinsurance. Transfers between Levels 1 and 2 - During the twelve months ended December 31, 2011, there were no material transfers between Level 1 and Level 2. B-54 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) Changes in Level 3 assets and liabilities - The following tables provide a summary of the changes in fair value of Level 3 assets and liabilities for the year ended December 31, 2011, as well as the portion of gains or losses included in income for the year ended December 31, 2011 attributable to unrealized gains or losses related to those assets and liabilities still held at December 31, 2011.
Year Ended December 31, 2011 ---------------------------------------------------------------- Fixed Maturities Fixed Available Fixed Maturities For Sale - Maturities Available For Commercial Equity Available For Sale - Asset- Mortgage- Securities, Sale - Corporate Backed Backed Available for Other Securities Securities Securities Sale Assets ---------------- ------------- ---------- ------------- -------- (in thousands) Fair value, beginning of period $ 3,636 $16,619 $ -- $ 255 $ 16,996 Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net 2 -- -- (516) (25,919) Asset management fees and other income -- -- -- -- -- Interest credited to policyholder account balances -- -- -- -- -- Included in other comprehensive income (loss) (96) (121) 0 398 (13) Net investment income 59 256 (0) -- -- Purchases 1,300 11,089 5,019 1,000 68,593 Sales (99) -- -- -- -- Issuances 73 -- -- -- -- Settlements (148) (5,251) -- -- (1) Foreign currency translation -- -- -- -- -- Transfers into Level 3 (2) 900 -- -- 1,536 -- Transfers out of Level 3 (2) (3,872) (3,965) (5,019) -- (5,979) Other (4) -- -- -- (1,529) -- ------- ------- ------- ------- -------- Fair value, end of period $ 1,755 $18,627 $ -- $ 1,144 $ 53,677 ======= ======= ======= ======= ======== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net $ -- $ -- $ -- $ (454) $ 18,797 Asset management fees and other income $ -- $ -- $ -- $ -- $ -- Interest credited to policyholder account balances $ -- $ -- $ -- $ -- $ -- Included in other comprehensive income (loss) $ (96) $ (109) $ 0 $ 359 $ --
B-55 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued)
Year Ended December 31, 2011 ----------------------------------------------------- Other Trading Separate Other Long- Account Assets - Account Future Policy Term Equity Assets (1) Benefits Investments Securities ---------- ------------- ----------- ---------------- (in thousands) Fair value, beginning of period $5,393 $ 41,316 $ 0 $ - Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net - (94,684) 18 - Asset management fees and other income - - - 40 Interest credited to policyholder account balances 602 - - - Included in other comprehensive income - - - - Net investment income - - - - Purchases - (23,628) - - Sales - - - - Issuances - - - - Settlements - - - - Foreign currency translation - - - - Transfers into Level 3 (2) - - - - Transfers out of Level 3 (2) - - - - Other (4) - - - 1,529 ---------- ------------- ----------- ---------------- Fair value, end of period $5,995 $(76,996) $18 $1,569 ========== ============= =========== ================ Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net $ - $(94,098) $ - $ - Asset management fees and other income $ - $ - $ - $ - Interest credited to policyholder account balances $ 602 $ - $ - $ - Included in other comprehensive income $ - $ - $ - $ -
(1)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Statements of Financial Position. (2)Transfers into or out of Level 3 are generally reported as the value as of the beginning of the quarter in which the transfer occurs. (3)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. (4)Other primarily represents reclasses of certain assets between reporting categories. Transfers - As a part of an ongoing monitoring assessment of pricing inputs to ensure appropriateness of the level classification in the fair value hierarchy the Company may reassign level classification from time to time. As a result of such a review, in the first quarter of 2011, it was determined that the pricing inputs for perpetual preferred stocks provided by third party pricing services were primarily based on non-binding broker quotes which could not always be verified against directly observable market information. Consequently, perpetual preferred stocks were transferred into Level 3 within the fair value hierarchy. This represents the majority of the B-56 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) transfers into Level 3 for Equity Securities Available-for-Sale. Other transfers into Level 3 were primarily the result of unobservable inputs utilized within valuation methodologies and the use of broker quotes (that could not be validated) when previously, information from third party pricing services (that could be validated) was utilized. Transfers out of Level 3 were primarily due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company was able to validate. Changes in Level 3 assets and liabilities - The following tables provide a summary of the changes in fair value of Level 3 assets and liabilities for the year ended December 31, 2010, as well as the portion of gains or losses included in income for the year ended December 31, 2010 attributable to unrealized gains or losses related to those assets and liabilities still held at December 31, 2010.
Year Ended December 31, 2010 ---------------------------------------------------- Fixed Fixed Maturities Maturities Available For Equity Available For Sale - Asset- Securities, Sale - Corporate Backed Available for Other Securities Securities Sale Assets ---------------- ------------- ------------- ------- (in thousands) Fair value, beginning of period $2,398 $ 25,259 $ 576 $16,039 Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net 8 (139) - (443) Asset management fees and other income - - - - Included in other comprehensive income (loss) 514 (1,258) (374) 263 Net investment income 34 164 - - Purchases, sales, issuances, and settlements (149) 9,049 53 1,137 Foreign currency translation - - - - Transfers into Level 3 (2) 957 - - - Transfers out of Level 3 (2) (127) (16,456) - - ------ -------- ----- ------- Fair value, end of period $3,636 $ 16,619 $ 255 $16,996 ====== ======== ===== ======= Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net $ 10 $ (41) $ - $ (303) Asset management fees and other income $ - $ - $ - $ - Included in other comprehensive income (loss) $ 514 $ (1,258) $(374) $ 263
B-57 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued)
Year Ended December 31, 2010 ----------------------------------- Separate Account Future Policy Other Assets (1) Benefits Liabilities ---------- ------------- ----------- (in thousands) Fair value, beginning of period $5,104 $ 2,412 $(67) Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net - 47,655 67 Asset management fees and other income - - - Interest credited to policyholder account balances 289 - - Included in other comprehensive income - - - Net investment income - - - Purchases, sales, issuances, and settlements - (8,751) - Foreign currency translation - - - Transfers into Level 3 (2) - - - Transfers out of Level 3 (2) - - - ------ ------- ---- Fair value, end of period $5,393 $41,316 $ - ====== ======= ==== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net $ - $ 8,290 $ 70 Asset management fees and other income $ - $ - $ - Interest credited to policyholder account balances $ 289 $ - $ - Included in other comprehensive income $ - $ - $ -
(1)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Consolidated Statement of Financial Position. (2)Transfers into or out of Level 3 are generally reported as the value as of the beginning of the quarter in which the transfer occurs. (3)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. Transfers - As part of an ongoing assessment of pricing inputs to ensure appropriateness of the level classification in the fair value hierarchy the Company may reassign level classification from time to time. As a result of such a review, it was determined that the pricing inputs for perpetual preferred stocks provided by third party pricing services were primarily based on non-binding broker quotes which could not always be verified against directly observable market information. Consequently, perpetual preferred stocks were transferred into Level 3 within the fair value hierarchy. Other transfers into Level 3 were primarily the result of unobservable inputs utilized within valuation methodologies and the use of broker quotes (that could not be validated) when previously, information from third party pricing services (that could be validated) was utilized. Transfers out of Level 3 were primarily due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company was able to validate. Transfers between Levels 1 and 2 - During the year ended December 31, 2011, there were no material transfers between Level 1 and Level 2. B-58 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) Changes in Level 3 assets and liabilities - The following tables provide a summary of the changes in fair value of Level 3 assets and liabilities for the year ended December 31, 2009, as well as the portion of gains or losses included in income for the year ended December 31, 2009 attributable to unrealized gains or losses related to those assets and liabilities still held at December 31, 2009.
Year Ended December 31, 2009 -------------------------------------------------------- Fixed Fixed Maturities Maturities Available For Equity Available For Sale - Asset- Securities, Sale - Corporate Backed Available for Securities Securities Sale Other Assets ---------------- ------------- ------------- ------------ (in thousands) Fair value, beginning of period $ 266 $ 5,732 $121 $ 58,880 Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net (506) (1,634) - (44,396) Asset management fees and other income - - - - Included in other comprehensive income (loss) 449 9,708 455 590 Net investment income (1) 121 - - Purchases, sales, issuances, and settlements (169) (1,780) - 965 Foreign currency translation - - - - Transfers into Level 3 (2) 2,413 13,858 - - Transfers out of Level 3 (2) (54) (746) - - ------ ------- ---- -------- Fair value, end of period $2,398 $25,259 $576 $ 16,039 ====== ======= ==== ======== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net $ (506) $(1,383) $ - $(43,833) Asset management fees and other income $ - $ - $ - $ - Interest credited to policyholder account balances $ - $ - $ - $ - Included in other comprehensive income (loss) $ 447 $ 9,605 $455 $ 590
B-59 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued)
Year Ended December 31, 2009 -------------------------------------------------- Separate Account Future Policy Assets (1) Benefits Other Liabilities ---------------- ------------- ----------------- (in thousands) Fair value, beginning of period $ 6,494 $(63,903) (4,272) Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net - 69,126 4,205 Interest credited to policyholder account balances (1,335) - - Included in other comprehensive income (loss) - - - Net investment income - - - Purchases, sales, issuances, and settlements 38 (2,811) - Foreign currency translation - - - Transfers into Level 3 (2) - - - Transfers out of Level 3 (2) (93) - - ---------------- ------------- ----------------- Fair value, end of period $ 5,104 $ 2,412 (67) ================ ============= ================= Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net $ - $ 68,705 $ 4,208 Asset management fees and other income $ - $ - $ - Interest credited to policyholder account balances $(1,335) $ - $ - Included in other comprehensive income (loss) $ - $ - $ -
(1)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Statement of Financial Position. (2)Transfers into or out of Level 3 are generally reported as the value as of the beginning of the quarter in which the transfer occurs. (3)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. Transfers - Transfers out of Level 3 for Fixed Maturities Available for Sale - Asset-Backed Securities totaled $4.0 million for the year ended December 31, 2011 resulting from the Company's conclusion that the market for asset-backed securities collateralized by sub-prime mortgages became increasingly active, as evidenced by orderly transactions. The pricing received from independent pricing services could be validated by the Company, as discussed in detail above. There were no transfers into Level 3. Fair Value of Financial Instruments - The Company is required by U.S. GAAP to disclose the fair value of certain financial instruments including those that are not carried at fair value. For the following financial instruments the carrying amount equals or approximates fair value: fixed maturities classified as available-for-sale, trading account assets, equity securities, securities purchased under agreements to resell, short-term investments, cash and cash equivalents, accrued investment income, separate account assets, securities sold under agreements to repurchase, and cash collateral for loaned securities, as well as certain items recorded within other assets and other liabilities such as broker-dealer related receivables and payables. See Note 11 for a discussion of derivative instruments. B-60 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) The following table discloses the Company's financial instruments where the carrying amounts and fair values differ:
December 31, 2011 December 31, 2010 ------------------------ ------------------------ Fair Fair Carrying Amount value Carrying Amount value --------------- -------- --------------- -------- (in thousands) Assets: Commercial mortgage and other loans $230,201 $247,865 $182,437 $192,102 Policy loans 177,162 235,706 175,514 211,513 Liabilities: Policyholder account balances - investment contracts 113,938 113,010 102,593 101,551 Short-term and long-term debt to affiliates 70,000 70,293 - -
The fair values presented above for those financial instruments where the carrying amounts and fair values may differ have been determined by using available market information and by applying market valuation methodologies, as described in more detail below. Commercial mortgage and other loans The fair value of commercial mortgage and other loans is primarily based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate adjusted for appropriate credit spread for similar quality loans. The quality ratings for these loans, a primary determinant of the credit spread and a significant component of the pricing input, are based on internally developed methodology. The internally derived credit spreads take into account public corporate bond spreads of similar quality and maturity, public commercial mortgage-backed securities spreads, third-party mortgage loan survey spreads and other relevant market information such as pricing indications from market participants on new originations, and where applicable adjustments for property types and locations. Policy Loans The fair value of policy loans is calculated using a discounted cash flow model based upon current U.S. Treasury rates and historical loan repayment patterns. Investment Contracts - Policyholders' Account Balances Only the portion of policyholders' account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities, payout annuities and other similar contracts without life contingencies, fair values are derived using discounted projected cash flows based on interest rates that are representative of the Company's claims paying ratings, and hence reflect the Company's own nonperformance risk. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. Short-term and long-term debt to affiliates The fair value of short-term and long-term debt is generally determined by either prices obtained from independent pricing services, which are validated by the Company, or discounted cash flow models. These fair values consider the Company's own non-performance risk. Discounted cash flow models predominately use B-61 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 10. FAIR VALUE OF ASSETS AND LIABILITIES (continued) market observable inputs such as the borrowing rates currently available to the Company for debt and financial instruments with similar terms and remaining maturities. For commercial paper issuances and other debt with a maturity of less than 90 days, the carrying value approximates fair value. 11. DERIVATIVE INSTRUMENTS Types of Derivative Instruments and Derivative Strategies Interest Rate Contracts Interest rate swaps are used by the Company to manage interest rate exposures arising from mismatches between assets and liabilities (including duration mismatches) and to hedge against changes in the value of assets it anticipates acquiring and other anticipated transactions and commitments. Swaps may be attributed to specific assets or liabilities or may be used on a portfolio basis. Under interest rate swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts calculated by reference to an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty at each due date. Equity Contracts Equity index options are contracts which will settle in cash based on differentials in the underlying indices at the time of exercise and the strike price. The Company uses combinations of purchases and sales of equity index options to hedge the effects of adverse changes in equity indices within a predetermined range. These hedges do not qualify for hedge accounting. Foreign Exchange Contracts Currency derivatives, including currency swaps and forwards, are used by the Company to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company either holds or intends to acquire or sell. Under currency swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between one currency and another at an exchange rate and calculated by reference to an agreed principal amount. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. Credit Contracts Credit derivatives are used by the Company to enhance the return on the Company's investment portfolio by creating credit exposure similar to an investment in public fixed maturity cash instruments. With credit derivatives the Company can sell credit protection on an identified name, or a basket of names in a first to default structure, and in return receive a quarterly premium. With first to default baskets, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket. If there is an event of default by the referenced name or one of the referenced names in a basket, as defined by the agreement, then the Company is obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced defaulted security or similar security. See credit derivatives written section for discussion of guarantees related to credit derivatives written. In addition to selling credit protection, the Company may purchase credit protection using credit derivatives in order to hedge specific credit exposures in the Company's investment portfolio. B-62 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 11. DERIVATIVE INSTRUMENTS (continued) Embedded Derivatives The Company sells variable annuity contracts that include certain optional living benefit features that are treated, for accounting purposes, as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these embedded derivatives to an affiliate, Pruco Reinsurance Ltd. ("Pruco Re"). The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value. Mark-to-market changes in the fair value of the underlying contractual guarantees are determined using valuation models as described in Note 7, and are recorded in "Realized investment gains (losses), net." The Company invests in fixed maturities that, in addition to a stated coupon, provide a return based upon the results of an underlying portfolio of fixed income investments and related investment activity. The Company accounts for these investments as available-for-sale fixed maturities containing embedded derivatives. Such embedded derivatives are marked to market through "Realized investment gains (losses), net," based upon the change in value of the underlying portfolio. The fair value of the embedded derivatives included in Future policy benefits was a liability of $77 million and a contra-liability of $41 million as of December 31, 2011 and December 31, 2010, respectively. The fair value of the embedded derivatives related to the reinsurance of certain of these benefits to Pruco Re included in "Reinsurance Recoverable" was an asset of $54 million as of December 31, 2011 and an asset of $11 million as of December 31, 2010. The table below provides a summary of the gross notional amount and fair value of derivatives contracts, excluding embedded derivatives which are recorded with the associated host, by the primary underlying. Many derivative instruments contain multiple underlyings.
December 31, 2011 December 31, 2010 --------------------------- --------------------------- Notional Fair Value Notional Fair Value -------- ------------------ -------- ------------------ Primary Underlying Amount Assets Liabilities Amount Assets Liabilities ------------------ -------- ------ ----------- -------- ------ ----------- (in thousands) Qualifying Hedges Currency/Interest Rate $ 14,972 $ 221 $ (846) $11,018 $ - $(1,104) -------- ------ ----------- -------- ------ ----------- Total Qualifying Hedges $ 14,972 $ 221 $ (846) $11,018 $ - $(1,104) ======== ====== =========== ======== ====== =========== Non-Qualifying Hedges Interest Rate $ 57,200 $8,442 $ - $47,000 $1,737 $(1,006) Credit 17,000 118 (339) 8,900 1,206 (878) Currency/Interest Rate 16,615 - (909) 9,115 - (853) Equity - - - - - - -------- ------ ----------- -------- ------ ----------- Total Non-Qualifying Hedges 90,815 8,560 (1,248) 65,015 2,943 (2,737) ======== ====== =========== ======== ====== =========== Total Derivatives (1) $105,787 $8,781 $(2,094) $76,033 $2,943 $(3,841) ======== ====== =========== ======== ====== ===========
(1)Excludes embedded derivatives which contain multiple underlyings. The fair value of these embedded derivatives was a liability of $80 million as of December 31, 2011 and a conta-liability of $38 million as of December 31, 2010 included in "Future policy benefits" and "Fixed maturities available for sale." B-63 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 11. DERIVATIVE INSTRUMENTS (continued) Cash Flow Hedges The Company uses currency swaps in its cash flow hedge accounting relationships. This instrument is only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, credit, and equity or embedded derivatives in any of its cash flow hedge accounting relationships. The following table provides the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, excluding the offset of the hedged item in an effective hedge relationship:
Year Ended December 31, --------------------------- 2011 2010 2009 --------- ------- ------- (in thousands) Qualifying Hedges Cash flow hedges Currency/Interest Rate Net investment income $ (41) $ 45 $ 3 Other income 2 2 (12) Accumulated Other Comprehensive Income (1) 471 (426) (711) --------- ------- ------- Total cash flow hedges $ 432 $ (379) $ (720) --------- ------- ------- Non-qualifying hedges Realized investment gains (losses) Interest Rate $ 9,402 $ 6,717 $(6,086) Currency/Interest Rate (181) 617 (880) Credit 68 (762) 2,763 Equity - - - Embedded Derivatives (121,599) 47,806 26,471 --------- ------- ------- Total non-qualifying hedges $(112,310) $54,378 $22,268 --------- ------- ------- Total Derivative Impact $(111,878) $53,999 $21,548 ========= ======= =======
(1)Amounts deferred in "Accumulated other comprehensive income (loss)." For the period ending December 31, 2011, the ineffective portion of derivatives accounted for using hedge accounting was not material to the Company's results of operations and there were no material amounts reclassified into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging. Presented below is a roll forward of current period cash flow hedges in "Accumulated other comprehensive income (loss)" before taxes:
(in thousands) Balance, December 31, 2010 $(1,100) Net deferred gains on cash flow hedges from January 1 to December 31, 2011 (7,152) Amount reclassified into current period earnings 7,622 ------- Balance, December 31, 2011 $ (630) =======
B-64 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 11. DERIVATIVE INSTRUMENTS (continued) As of December 31, 2011, the Company does not have any qualifying cash flow hedges of forecasted transactions other than those related to the variability of the payment or receipt of interest or foreign currency amounts on existing financial instruments. The maximum length of time for which these variable cash flows are hedged is 15 years. Income amounts deferred in "Accumulated other comprehensive income (loss)" as a result of cash flow hedges are included in "Net unrealized investment gains (losses)" in the Statements of Equity. Credit Derivatives Written The Company holds certain externally managed investments in the European market which contain embedded derivatives whose fair value are primarily driven by changes in credit spreads. These investments are medium term notes that are collateralized by investment portfolios primarily consisting of investment grade European fixed income securities, including corporate bonds and asset-backed securities, and derivatives, as well as varying degrees of leverage. The notes have a stated coupon and provide a return based on the performance of the underlying portfolios and the level of leverage. The Company invests in these notes to earn a coupon through maturity, consistent with its investment purpose for other debt securities. The notes are accounted for under U.S. GAAP as available for sale fixed maturity securities with bifurcated embedded derivatives (total return swaps). Changes in the value of the fixed maturity securities are reported in Equity under the heading "Accumulated Other Comprehensive Income" and changes in the market value of the embedded total return swaps are included in current period earnings in "Realized investment gains (losses), net." The Company's maximum exposure to loss from these interests was $7 million at December 31, 2011 and December 31, 2010. The fair value of the embedded derivatives included in Fixed maturities, available for sale was a liability of $3 million at December 31, 2011 and December 31, 2010. The Company writes credit derivatives under which the Company is obligated to pay the counterparty the referenced amount of the contract and receive in return the defaulted security or similar security. The Company's maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, is $10 million and $0 million notional of credit default swap ("CDS") selling protection with an associated fair value of approximately less than $1 million, at December 31, 2011 and December 31, 2010, respectively, These credit derivatives generally have maturities of five to ten years and consist of corporate securities within the finance industry. At December 31, 2011, the underlying credits have an NAIC designation rating of 1. In addition to writing credit protection, the Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company's investment portfolio. As of December 31, 2011 and December 31, 2010, the Company had $7 million and $9 million of outstanding notional amounts, respectively, reported at fair value as a liability of $0.2 million and an asset of $0.3 million, respectively. Credit Risk The Company is exposed to credit-related losses in the event of non-performance by our counterparty to financial derivative transactions. Generally, the credit exposure of the Company's over-the-counter (OTC) derivative transactions is represented by the contracts with a positive fair value (market value) at the reporting date after taking into consideration the existence of netting agreements. The Company has credit risk exposure to an affiliate, Prudential Global Funding, LLC related to its over-the-counter derivative transactions. Prudential Global Funding, LLC manages credit risk with external counterparties by entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties, and by obtaining collateral where appropriate. B-65 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 11. DERIVATIVE INSTRUMENTS (continued) Under fair value measurements, the Company incorporates the market's perceptions of its own and the counterparty's non-performance risk in determining the fair value of the portion of its OTC derivative assets and liabilities that are uncollateralized. Credit spreads are applied to the derivative fair values on a net basis by counterparty. To reflect the Company's own credit spread a proxy based on relevant debt spreads is applied to OTC derivative net liability positions. Similarly, the Company's counterparty's credit spread is applied to OTC derivative net asset positions. 12. COMMITMENTS, CONTINGENT LIABILITIES AND LITIGATION AND REGULATORY MATTERS Commitments The Company has made commitments to fund $6 million of commercial loans as of December 31, 2011. The Company also made commitments to purchase or fund investments, mostly private fixed maturities, of $20 million as of December 31, 2011. Contingent Liabilities On an ongoing basis, the Company's internal supervisory and control functions review the quality of sales, marketing and other customer interface procedures and practices and may recommend modifications or enhancements. From time to time, this review process results in the discovery of product administration, servicing or other errors, including errors relating to the timing or amount of payments or contract values due to customers. In certain cases, if appropriate, the Company may offer customers remediation and may incur charges, including the costs of such remediation, administrative costs and regulatory fines. The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements. For additional discussion of these matters, see "Litigation and Regulatory Matters" below. It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual period could be materially affected as a result of payments in connection with the matters discussed above or other matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that ultimate payments in connection with these matters, after consideration of applicable reserves and rights to indemnification, should not have a material adverse effect on the Company's financial position. Litigation and Regulatory Matters The Company is subject to legal and regulatory actions in the ordinary course of its business. Pending legal and regulatory actions include proceedings specific to the Company and proceedings generally applicable to business practices in the industry in which it operates. The Company is subject to class action lawsuits and other litigation involving a variety of issues and allegations involving sales practices, claims payments and procedures, premium charges, policy servicing and breach of fiduciary duty to customers. The Company is also subject to litigation arising out of its general business activities, such as its investments, contracts, leases and labor and employment relationships, including claims of discrimination and harassment, and could be exposed to claims or litigation concerning certain business or process patents. In some of the pending legal and regulatory actions, plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. In addition, the Company, along with other participants in the businesses in which it engages, may be subject from time to time to investigations, examinations and inquiries, in some cases industry-wide, concerning issues or matters upon B-66 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 12. COMMITMENTS, CONTINGENT LIABILITIES AND LITIGATION AND REGULATORY MATTERS (continued) which such regulators have determined to focus. In some of the Company's pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain. The following is a summary of certain pending proceedings. In January 2012, a qui tam action on behalf of the State of Illinois, Total Asset Recovery Services v. Met Life Inc, et al., Prudential Financial, Inc., The Prudential Insurance Company of America, and Prudential Holdings, LLC, filed in the Circuit Court of Cook County, Illinois, was served on the Company. The complaint alleges that the Company failed to escheat life insurance proceeds to the State of Illinois in violation of the Illinois False Claims Whistleblower Reward and Protection Act and seeks injunctive relief, compensatory damages, civil penalties, treble damages, prejudgment interest, attorneys' fees and costs. In March 2012, a qui tam action on behalf of the State of Minnesota, Total Asset Recovery v. MetLife Inc., et al., Prudential Financial Inc., The Prudential Insurance Company of America and Prudential Holdings, Inc., filed in the Fourth Judicial District, Hennepin County, in the State of Minnesota was served on the Company. The complaint alleges that the Company failed to escheat life insurance proceeds to the State of Minnesota in violation of the Minnesota False Claims Act and seeks injunctive relief, compensatory damages, civil penalties, treble damages, prejudgment interest, attorneys' fees and costs. In January 2012, a Global Resolution Agreement entered into by the Company and a third party auditor became effective upon its acceptance by the unclaimed property departments of 20 states and jurisdictions. Under the terms of the Global Resolution Agreement, the third party auditor acting on behalf of the signatory states will compare expanded matching criteria to the Social Security Master Death File ("SSMDF") to identify deceased insureds and contract holders where a valid claim has not been made. In February 2012, a Regulatory Settlement Agreement entered into by the Company to resolve a multi-state market conduct examination regarding its adherence to state claim settlement practices became effective upon its acceptance by the insurance departments of 20 states and jurisdictions. The Regulatory Settlement Agreement applies prospectively and requires the Company to adopt and implement additional procedures comparing its records to the SSMDF to identify unclaimed death benefits and prescribes procedures for identifying and locating beneficiaries once deaths are identified. Other jurisdictions that are not signatories to the Regulatory Settlement Agreement are considering proposals that would apply prospectively and require life insurance companies to take additional steps to identify unreported deceased policy and contract holders. These prospective changes and any escheatable property identified as a result of the audits and inquiries could result in: (1) additional payments of previously unclaimed death benefits; (2) the payment of abandoned funds to U.S. jurisdictions; and (3) changes in the Company's practices and procedures for the identification of escheatable funds and beneficiaries, which would impact claim payments and reserves, among other consequences. The Company is one of several companies subpoenaed by the New York Attorney General regarding its unclaimed property procedures. Additionally, the New York Department of Insurance ("NYDOI") has requested that 172 life insurers (including the Company) provide data to the NYDOI regarding use of the SSMDF. The New York Office of Unclaimed Funds recently notified the Company that it intends to conduct an audit of the Company's compliance with New York's unclaimed property laws. The Minnesota Attorney General has also requested information regarding the Company's use of the SSMDF and its claim handling procedures and the Company is one of several companies subpoenaed by the Minnesota Department of Commerce, Insurance Division. In February 2012, the Massachusetts Office of the Attorney General requested information regarding the Company's unclaimed property procedures. B-67 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 12. COMMITMENTS, CONTINGENT LIABILITIES AND LITIGATION AND REGULATORY MATTERS (continued) In July 2010, the Company, along with other life insurance industry participants, received a formal request for information from the State of New York Attorney General's Office in connection with its investigation into industry practices relating to the use of retained asset accounts. In August 2010, the Company received a similar request for information from the State of Connecticut Attorney General's Office. The Company is cooperating with these investigations. The Company has also been contacted by state insurance regulators and other governmental entities, including the U.S. Department of Veterans Affairs and Congressional committees regarding retained asset accounts. These matters may result in additional investigations, information requests, claims, hearings, litigation, adverse publicity and potential changes to business practices. The Company's litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that the Company's results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of the Company's litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on the Company's financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on the Company's financial position. 13. RELATED PARTY TRANSACTIONS The Company has extensive transactions and relationships with Prudential Insurance and other affiliates. Although we seek to ensure that these transactions and relationships are fair and reasonable, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. Expense Charges and Allocations Many of the Company's expenses are allocations or charges from Prudential Insurance or other affiliates. These expenses can be grouped into general and administrative expenses and agency distribution expenses. The Company's general and administrative expenses are charged to the Company using allocation methodologies based on business production processes. Management believes that the methodology is reasonable and reflects costs incurred by Prudential Insurance to process transactions on behalf of the Company. The Company operates under service and lease agreements whereby services of officers and employees, supplies, use of equipment and office space are provided by Prudential Insurance. The Company reviews its allocation methodology periodically which it may adjust accordingly. General and administrative expenses include allocations of stock compensation expenses related to a stock option program and a deferred compensation program issued by Prudential Financial. The expense charged to the Company for the stock option program was less than $0.1 million for the twelve months ended December 31, of 2011, 2010 and 2009. The expense charged to the Company for the deferred compensation program was less than $0.6 million, $0.5 million and $0.3 million for the twelve months ended December 31, of 2011, 2010 and 2009 respectively. The Company is charged for its share of employee benefits expenses. These expenses include costs for funded and non-funded contributory and non-contributory defined benefit pension plans. Some of these benefits are based on final group earnings and length of service while others are based on an account balance, which takes B-68 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 13. RELATED PARTY TRANSACTIONS (continued) into consideration age, service and earnings during career. The Company's share of net expense for the pension plans was $1.5 million and $1.3 million in 2011 and 2010, respectively. Prudential Insurance sponsors voluntary savings plans for its employees (401(k) plans). The plans provide for salary reduction contributions by employees and matching contributions by the Company of up to 4% of annual salary. The Company's expense for its share of the voluntary savings plan was $0.7 million, $0.7 million and $0.5 million in 2011, 2010 and 2009, respectively. The Company is charged distribution expenses from Prudential Insurance's agency network for both its domestic life and annuity products through a transfer pricing agreement, which is intended to reflect a market based pricing arrangement. Corporate Owned Life Insurance The Company has sold two Corporate Owned Life Insurance, or "COLI", policies to Prudential Insurance and one to Prudential Financial. The cash surrender value included in separate accounts for these COLI contracts was $1.1 billion and at December 31, 2011 and $1.0 billion at December 31, 2010, respectively. Fees related to these COLI policies were $16 million, $25 million and $23 million for the years ending December 31, 2011, 2010 and 2009, respectively. Reinsurance with Affiliates Pruco Life Effective April 1, 2008, the Company entered into an agreement to reinsure certain variable COLI policies with Pruco Life. Reinsurance recoverables related to this agreement were $7 million and $5 million as of December 31, 2011 and December 31, 2010, respectively. Fees ceded to Pruco Life were $8 million, $10 million, and $6 million for the years ended December 31, 2011, 2010, and 2009, respectively. Benefits ceded were $2 million, $1 million and $2 million for the years ended December 31, 2011, 2010 and 2009, respectively. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. PARCC The Company reinsures 90% of the risks under its term life insurance policies, written prior to January 1, 2010, excluding My Term and ROP Term life insurance, through an automatic coinsurance agreement with PARCC. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. Reinsurance recoverables related to this agreement were $403 million and $360 million as of December 31, 2011 and December 31, 2010, respectively. Premiums ceded to PARCC in 2011, 2010 and 2009 were $125 million, $134 million and $140 million, respectively. Benefits ceded in 2011, 2010 and 2009 were $52 million, $53 million and $53 million, respectively. Reinsurance expense allowances, net of capitalization and amortization were $26 million, $29 million and $31 million for the years ended December 31, 2011, 2010 and 2009, respectively. PAR TERM The Company reinsures 95% of the risks under its term life insurance policies issued on or after January 1, 2010, excluding My Term, through an automatic coinsurance agreement with PAR TERM. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. Reinsurance recoverables related to this agreement were $28 million and $10 million as of December 31, 2011 and December 31, 2010, respectively. Premiums ceded to PAR TERM in 2011 and 2010 were $24 million and $11 million, respectively. Benefits ceded to PAR TERM in 2011 and 2010 were $4 million and less than $1 million, respectively. Reinsurance expense allowances, net of capitalization and amortization were $4 million and $2 million for the years ended December 31, 2011 and 2010, respectively. B-69 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 13. RELATED PARTY TRANSACTIONS (continued) Prudential Insurance The Company has a yearly renewable term reinsurance agreement with Prudential Insurance and reinsures the majority of all mortality risks not otherwise reinsured. The reinsurance recoverables related to this agreement were $30 million and $31 million as of December 31, 2011 and December 31, 2010, respectively. Premiums and fees ceded to Prudential Insurance in 2011, 2010 and 2009 were $41 million, $58 million and $33 million respectively. Benefits ceded to Prudential in 2011, 2010 and 2009 were $42 million, $40 million and $29 million, respectively. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. Pruco Reinsurance The Company uses reinsurance as part of its risk management and capital management strategies for certain of its optional living benefit features. The following table provides information relating to fees ceded to Pruco Reinsurance ("Pruco Re") under these agreements which are included in "Realized investment (losses) gains, net" on the Statement of Operations and Comprehensive Income for the dates indicated.
Year Ended -------------------------------------- December 31, December 31, December 31, 2011 2010 2009 ------------ ------------ ------------ (in thousands) Pruco Reinsurance Effective October 1, 2011 Highest Daily Lifetime Income ("HDI") 9,369 - - Spousal Highest Daily Lifetime Income ("SHDI") 2,973 - - Highest Daily Lifetime 6 Plus ("HD6 Plus") 40,887 - - Spousal Highest Daily Lifetime 6 Plus ("SHD6 Plus") 14,490 - - Effective Since 2006 Spousal Lifetime Five ("SLT5") $ 173 $ 167 $ 149 Effective Since 2005 Lifetime Five ("LT5") 1,244 1,195 1,080 ------- ------ ------ Total Pruco Reinsurance $69,136 $1,362 $1,229 ------- ------ ------
Effective October 1, 2011 the Company ceded the HDI, SHDI, HD6+ and SHD6+ benefits to Pruco Re, as noted in the table above. The Company paid an initial premium of $62.3 million and established a reinsurance recoverable of $30.7 million resulting in an initial ceding loss of $31.6 million, recognized in "realized gains (losses)" in 2011. The Company's reinsurance recoverables related to the above product reinsurance agreements were $54 million and $11 million as of December 31, 2011, and December 31, 2010, respectively. Realized gains (losses) were ($27) million, ($0.4) million and ($44) million for the years ended December 31, 2011, 2010 and 2009, respectively. Change in realized gains (losses) for 2011 includes the loss of reinsurance ceded in 2011 as noted above as well as changes in market conditions. Changes in realized gains (losses) for the 2010 and 2009 periods were primarily due to changes in market conditions in the period. The underlying assets as of December 31, 2011, and December 31, 2010 are reflected in "Reinsurance recoverables" in the Company's Statement of Financial Position. B-70 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 13. RELATED PARTY TRANSACTIONS (continued) Deferred Policy Acquisition Costs Ceded to Term Reinsurance Affiliates In 2009 when implementing a revision to the reinsurance treaties with PARCC and PAR TERM modifications were made affecting premiums. The related impact on the deferral of ceded reinsurance expense allowances did not reflect this change resulting in the understatement of deferred reinsurance expense allowances. During second quarter 2011, the Company recorded the correction, charging $1 million to net DAC amortization which represented the cumulative impact of this change. These adjustments are not material to any previously reported quarterly or annual financial statements. Affiliated Asset Administration Fee Income Effective April 15, 2009, the Company amended an existing agreement to add AST Investment Services, Inc., formerly known as American Skandia Investment Services, Inc, as a party whereas the Company receives fee income calculated on contractholder separate account balances invested in the Advanced Series Trust, formerly known as American Skandia Trust. Income received from AST Investment Services, Inc. related to this agreement was $12.3 million, $3.7 million, and $1.1 million for the years ended December 31, 2011, 2010, and 2009 respectively. These revenues are recorded as "Asset administration fees" in the Statements of Operations and Comprehensive Income (Loss). The Company participates in a revenue sharing agreement with Prudential Investments LLC, whereby the Company receives fee income from policyholders' account balances invested in The Prudential Series Fund ("PSF"). Income received from Prudential Investments LLC, related to this agreement was $6.0 million, $5.7 million, and $5.0 million for the years ended December 31, 2011, 2010, and 2009 respectively. These revenues are recorded as "Asset administration fees" in the Statements of Operations and Comprehensive Income (Loss). Affiliated Asset Transfers The Company buys and sells assets to and from affiliated companies. In December 2010, the Company amended certain of its affiliated reinsurance treaties to change the settlement mode from monthly to annual. As a result of these treaty amendments, we were required to pay Prudential Insurance the premium difference that resulted. Settlement of the premium difference was made by transfer of securities that had an amortized cost of $19 million and a fair market value of $20 million. The difference between amortized cost and fair market value was accounted for as an increase of $1 million to additional paid-in capital, net of taxes in 2010. In December 2011, the Company purchased commercial loan securities from its parent company, Pruco Life. These securities had an amortized cost of $10 million and a fair market value of $11 million. The difference between amortized cost and fair market value of these transfers was accounted for as a decrease of $1 million to additional paid-in capital, net of taxes in 2011. In December 2011, the Company sold fixed maturity securities to its parent company, Pruco Life. These securities had an amortized cost of $13 million and a fair market value of $14 million. The difference between amortized cost and fair market of these transfers was accounted for as an increase of $1 million to additional paid-in capital, net of taxes in 2011. Debt Agreements The Company and its parent, Pruco Life, have an agreement with an affiliate, Prudential Funding, LLC, which allows it to borrow funds for working capital and liquidity needs. The borrowings under this agreement are B-71 Pruco Life Insurance Company of New Jersey Notes to Financial Statements -------------------------------------------------------------------------------- 13. RELATED PARTY TRANSACTIONS (continued) limited to $200 million. The Company had $15 million in Pru Funding short term debt and $11 million in PFI short term debt as of December 31, 2011, and no short-term debt outstanding as of December 31, 2010. On December 16, 2011 the Company entered into a series of four $11 million borrowings with Prudential Financial, totaling $44 million. The loans have fixed interest rates ranging from 2.65% to 3.61% and maturity dates staggered one year apart, from December 16, 2013 to December 16, 2016. The total related interest expense was $0.06 million for the year ended December 31, 2011. Contributed Capital In June 2011, the Company received a capital contribution from Pruco Life in the amount of $21 million to fund acquisition costs for sales of variable annuities. In December 2011, the Company received a capital contribution from Pruco Life in the amount of $17 million to fund acquisition costs for sales of variable annuities. Derivative Trades In the ordinary course of business, the Company enters into over-the-counter ("OTC") derivative contracts with an affiliate, Prudential Global Funding, LLC. For these OTC derivative contracts, Prudential Global Funding, LLC has a substantially equal and offsetting position with external counterparties. 14. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The unaudited quarterly results of operations for the years ended December 31, 2011 and 2010 are summarized in the table below:
Three Months Ended ------------------------------------------ March 31 June 30 September 30 December 31 -------- -------- ------------ ----------- (in thousands) 2011 Total revenues $80,087 $ 60,305 $ (51,055) $31,823 Total benefits and expenses 39,265 46,653 111,568 32,069 Income (loss) from operations before income taxes 40,822 13,652 (162,623) (246) Net income (loss) $28,566 $ 10,231 $(101,424) $ 2,840 ======= ======== ========= ======= 2010 Total revenues $53,557 $ 39,034 $ 51,823 $73,988 Total benefits and expenses 30,872 55,748 5,524 (4,558) Income (loss) from operations before income taxes 22,685 (16,714) 46,299 78,546 Net income (loss) $16,907 $(11,703) $ 34,649 $51,155 ======= ======== ========= =======
B-72 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholder of Pruco Life Insurance Company of New Jersey: In our opinion, the accompanying statements of financial position and the related statements of operations and comprehensive income, of equity and of cash flows present fairly, in all material respects, the financial position of Pruco Life Insurance Company of New Jersey (an indirect, wholly owned subsidiary of The Prudential Insurance Company of America) at December 31, 2011 and December 31, 2010, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 2 of the financial statements, the Company changed its method of determining and recording other-than-temporary impairment for debt securities on January 1, 2009, the manner in which it accounts for the costs associated with acquiring or renewing insurance contracts and the presentation of comprehensive income. /s/ PRICEWATERHOUSECOOPERS LLP New York, New York March 9, 2012, except for the effects of the adoption of the new accounting guidance for the costs to acquire or renew insurance contracts, and the adoption of the accounting standard related to the presentation of comprehensive income discussed in Note 2, as to which the date is November 28, 2012. B-73 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Unaudited Interim Consolidated Financial Statements September 30, 2012 and December 31, 2011 TABLE OF CONTENTS
Page Number ------ PART I - FINANCIAL INFORMATION Item 1.. Financial Statements:.......................................................................................... 4 Unaudited Interim Statements of Financial Position As of September 30, 2012 and December 31, 2011.............. 4 Unaudited Interim Statements of Operations and Comprehensive Income (Loss) For the three and nine months ended September 30, 2012 and 2011.................................................................................. 5 Unaudited Interim Statements of Equity For the nine months ended September 30, 2012 and 2011................... 6 Unaudited Interim Statements of Cash Flows For the nine months ended September 30, 2012 and 2011............... 7 Notes to Unaudited Interim Financial Statements................................................................ 9
3 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Pruco Life Insurance Company of New Jersey Unaudited Interim Statements of Financial Position As of September 30, 2012 and December 31, 2011 (in thousands, except share amounts) --------------------------------------------------------------------------------
September 30, December 31, 2012 2011 ------------- ------------ ASSETS Fixed maturities available for sale, at fair value (amortized cost: 2012-$1,000,498; 2011-$1,132,908). $ 1,095,344 $1,219,904 Equity securities available for sale, at fair value (cost: 2012-$1,362; 2011-$1,521).................. 1,383 1,420 Trading account assets, at fair value................................................................. 1,391 1,569 Policy loans.......................................................................................... 171,661 177,162 Short-term investments................................................................................ 3,005 1,069 Commercial mortgage and other loans................................................................... 227,924 230,202 Other long-term investments........................................................................... 37,184 29,073 ----------- ---------- Total investments.................................................................................. 1,537,892 1,660,399 Cash and cash equivalents............................................................................. 32,293 26,723 Deferred policy acquisition costs..................................................................... 291,972 262,895 Accrued investment income............................................................................. 14,856 17,275 Reinsurance recoverables.............................................................................. 834,470 522,762 Receivables from parents and affiliates............................................................... 29,170 23,148 Deferred sales inducements............................................................................ 66,872 48,102 Other assets.......................................................................................... 9,067 8,830 Separate account assets............................................................................... 8,041,072 6,258,008 ----------- ---------- TOTAL ASSETS................................................................................... $10,857,664 $8,828,142 =========== ========== LIABILITIES AND EQUITY LIABILITIES Policyholders' account balances....................................................................... $ 1,174,269 $1,133,080 Future policy benefits and other policyholder liabilities............................................. 820,256 691,967 Cash collateral for loaned securities................................................................. 4,156 17,012 Securities sold under agreements to repurchase........................................................ 0 3,216 Income taxes.......................................................................................... 7,184 23,178 Short-term debt to affiliates......................................................................... 27,010 26,000 Long-term debt to affiliates.......................................................................... 44,000 44,000 Payables to parent and affiliates..................................................................... 6,885 2,267 Other liabilities..................................................................................... 102,846 67,081 Separate account liabilities.......................................................................... 8,041,072 6,258,008 ----------- ---------- TOTAL LIABILITIES.............................................................................. 10,227,678 8,265,809 ----------- ---------- COMMITMENTS AND CONTINGENT LIABILITIES (See Note 6) EQUITY Common stock, ($5 par value; 400,000 shares, authorized, issued and outstanding)...................... 2,000 2,000 Additional paid-in capital............................................................................ 211,049 207,928 Retained earnings..................................................................................... 371,515 305,281 Accumulated other comprehensive income................................................................ 45,422 47,124 ----------- ---------- TOTAL EQUITY................................................................................... 629,986 562,333 ----------- ---------- TOTAL LIABILITIES AND EQUITY................................................................... $10,857,664 $8,828,142 =========== ==========
See Notes to Unaudited Interim Financial Statements 4 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Unaudited Interim Statements of Operations and Comprehensive Income (Loss) Three and Nine Months Ended September 30, 2012 and 2011 (in thousands)
Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 -------- --------- -------- --------- REVENUES Premiums...................................................................... $ 3,330 $ 3,674 $ 10,081 $ 10,610 Policy charges and fee income................................................. 34,112 23,385 106,077 84,387 Net investment income......................................................... 22,623 19,189 62,144 57,235 Asset administration fees..................................................... 7,754 5,663 21,250 15,750 Other income.................................................................. 1,970 901 3,562 2,517 Realized investment gains (losses), net: Other-than-temporary impairments on fixed maturity securities................ (3,236) (2,501) (3,852) (5,145) Other-than-temporary impairments on fixed maturity securities transferred to. Other comprehensive income................................................... 2,276 2,337 2,382 4,933 Other realized investment gains, net......................................... 797 (103,703) 7,045 (80,951) -------- --------- -------- --------- Total realized investment gains, net.................................. (163) (103,867) 5,575 (81,163) -------- --------- -------- --------- TOTAL REVENUES............................................................... 69,626 (51,055) 208,689 89,336 -------- --------- -------- --------- BENEFITS AND EXPENSES Policyholders' benefits....................................................... 8,201 3,190 30,449 22,520 Interest credited to policyholders' account balances.......................... 2,649 31,484 26,332 52,604 Amortization of deferred policy acquisition costs............................. (12,309) 63,727 12,624 84,930 General, administrative and other expenses.................................... 16,601 13,167 48,128 37,432 -------- --------- -------- --------- TOTAL BENEFITS AND EXPENSES.................................................. 15,142 111,568 117,533 197,486 -------- --------- -------- --------- INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES............................. 54,484 (162,623) 91,156 (108,150) -------- --------- -------- --------- Income tax expense (benefit)................................................. 14,191 (61,199) 24,922 (45,522) -------- --------- -------- --------- NET INCOME (LOSS)............................................................. $ 40,293 $(101,424) $ 66,234 $ (62,628) -------- --------- -------- --------- Other comprehensive income (loss), before tax: Foreign currency translation adjustments................................... 30 (99) (8) 8 Unrealized investment gains (losses) for the period...................... (10,373) 14,966 (4,754) 18,203 Reclassification adjustment for (gains) losses included in net income.... 1,307 633 2,143 6,529 -------- --------- -------- --------- Net unrealized investment gains (losses)................................... (9,066) 15,599 (2,611) 24,732 -------- --------- -------- --------- Other comprehensive income (loss), before tax:................................ (9,036) 15,500 (2,619) 24,740 Less: Income tax expense (benefit) related to:............................. Foreign currency translation adjustments................................. 10 (35) (3) 3 Net unrealized investment gains (losses)................................. (3,173) 5,461 (914) 8,657 -------- --------- -------- --------- Total.................................................................. (3,163) 5,426 (917) 8,660 Other comprehensive income (loss), net of tax:................................ (5,873) 10,074 (1,702) 16,080 -------- --------- -------- --------- COMPREHENSIVE INCOME (LOSS)................................................... $ 34,420 $ (91,350) $ 64,532 $ (46,548) ======== ========= ======== =========
See Notes to Unaudited Interim Financial Statements 5 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Unaudited Interim Statements of Equity Nine Months Ended September 30, 2012 and 2011 (in thousands) --------------------------------------------------------------------------------
Accumulated Other Common Additional Retained Comprehensive Stock Paid-in Capital Earnings Income (Loss) Total Equity ------ --------------- -------- ------------- ------------ Balance, December 31, 2011............................ $2,000 $207,928 $305,281 $47,124 $562,333 Contributed capital- parent/child asset transfers..... -- 3,121 -- -- 3,121 Comprehensive income: Net income......................................... -- -- 66,234 -- 66,234 Other comprehensive income (loss), net of tax...... -- -- -- (1,702) (1,702) -------- Total comprehensive income............................ 64,532 ------ -------- -------- ------- -------- Balance, September 30, 2012........................... $2,000 $211,049 $371,515 $45,422 $629,986 ====== ======== ======== ======= ======== Accumulated Other Common Additional Retained Comprehensive Stock Paid-in Capital Earnings Income (Loss) Total Equity - ------ --------------- -------- ------------- ------------ Balance, December 31, 2010............................ $2,000 $169,742 $430,663 $25,284 $627,689 Cumulative effect of adoption of accounting principle. -- -- (65,595) 3,846 (61,749) Contributed Capital................................... -- 21,000 -- -- 21,000 Comprehensive income: Net income......................................... -- -- (62,628) -- (62,628) Other comprehensive income (loss), net of tax...... -- -- -- 16,080 16,080 -------- Total comprehensive income............................ (46,548) ------ -------- -------- ------- -------- Balance, September 30, 2011........................... $2,000 $190,742 $302,440 $45,210 $540,392 ====== ======== ======== ======= ========
See Notes to Unaudited Interim Financial Statements 6 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Unaudited Interim Statements of Cash Flows Nine Months Ended September 30, 2012 and 2011 (in thousands)
Nine Months Ended September 30, -------------------- 2012 2011 --------- --------- CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES: Net income............................................................................................... $ 66,234 $ (62,628) Adjustments to reconcile net income to net cash provided by operating activities: Policy charges and fee income......................................................................... (14,918) (19,410) Interest credited to policyholders' account balances.................................................. 26,332 52,604 Realized investment (gains) losses, net............................................................... (5,575) 81,163 Amortization and other non-cash items................................................................. (6,999) (1,642) Change in:............................................................................................ Future policy benefits and other insurance liabilities............................................ 100,060 71,597 Reinsurance recoverables.......................................................................... (73,427) (49,300) Accrued investment income......................................................................... 679 (73) Receivables from parent and affiliates............................................................ (6,720) (408) Payables to parent and affiliates................................................................. 4,617 (3,906) Deferred policy acquisition costs................................................................. (61,487) 14,642 Income taxes payable.............................................................................. 29,787 (77,073) Deferred sales inducements........................................................................ (18,340) (17,934) Other, net........................................................................................ 15,848 (14,445) --------- --------- Cash flows from (used in) operating activities........................................................... $ 56,091 $ (26,813) --------- --------- CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: Proceeds from the sale/maturity/prepayment of: Fixed maturities, available for sale.................................................................. $ 117,449 $ 119,484 Short-term investments................................................................................ 6,441 5,248 Policy loans.......................................................................................... 14,710 15,783 Ceded Policy Loans.................................................................................... (142) -- Commercial mortgage and other loans................................................................... 13,678 17,393 Other long-term investments........................................................................... 2,437 -- Equity securities, available for sale................................................................. 2,660 473 Payments for the purchase/origination of: Fixed maturities, available for sale.................................................................. (133,093) (209,977) Short-term investments................................................................................ (8,377) -- Policy loans.......................................................................................... (16,763) (10,701) Ceded Policy Loans.................................................................................... 6,524 -- Commercial mortgage and other loans................................................................... (47,074) (46,433) Other long-term investments........................................................................... (7,164) (4,747) Equity securities, available for sale................................................................. (2,508) (1,296) Notes receivable from parent and affiliates, net...................................................... 1,370 1,244 Other................................................................................................. (54) -- --------- --------- Cash flows from (used in) investing activities........................................................... $ (49,906) $(113,529) --------- --------- CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Policyholders' account deposits....................................................................... $ 148,220 $ 119,570 Ceded Policyholders' account deposits................................................................. (39,838) -- Policyholders' account withdrawals.................................................................... (93,262) (49,762) Ceded Policyholders' account withdrawals.............................................................. 600 -- Net change in securities sold under agreement to repurchase and cash collateral for loaned securities. (16,072) 30,552 Contributed capital................................................................................... -- 21,000 Net change in financing arrangements (maturities 90 days or less)..................................... 1,010 -- Drafts outstanding.................................................................................... (1,273) 76,635 Net change in long-term borrowing..................................................................... -- -- --------- --------- Cash flows from (used in) financing activities........................................................... $ (615) $ 197,995 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................................................... 5,570 57,653 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............................................................. 26,723 87,961 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD................................................................. $ 32,293 $ 145,614 ========= =========
See Notes to Unaudited Interim Financial Statements 7 Cash Flows from Investing Activities in the September 30, 2012 Unaudited Interim Statement of Cash Flows excludes $202 million of decreases in fixed maturities, available for sale and commercial mortgages related to the coinsurance transaction between the Company and PAR U, an affiliate (See Note 8). The assets transferred included $156 million of consideration for the initial premium due under the coinsurance agreement with this affiliate and $46 million to Prudential Financial, the Company's ultimate parent company, to settle tax expenses arising from this coinsurance transaction. 8 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements -------------------------------------------------------------------------------- 1. BUSINESS AND BASIS OF PRESENTATION Pruco Life Insurance Company of New Jersey, or the ("Company"), is a wholly owned subsidiary of the Pruco Life Insurance Company, or ("Pruco Life"), which in turn is a wholly owned subsidiary of The Prudential Insurance Company of America, ("Prudential Insurance"). Prudential Insurance is an indirect wholly owned subsidiary of Prudential Financial, Inc., or ("Prudential Financial"). The Company is licensed to sell life insurance and annuities, primarily through third party distributors only in New Jersey and New York. Basis of Presentation The Unaudited Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or "U.S. GAAP," on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission ("SEC"). In the opinion of management, all adjustments necessary for a fair statement of the consolidated results of operations and financial condition of the Company have been made. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results that may be expected for the full year. The Company has extensive transactions and relationships with Prudential Insurance and other affiliates, (as more fully described in Note 8). Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. These financial statements should be read in conjunction with the Audited Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include those used in determining deferred policy acquisition costs and related amortization; amortization of deferred sales inducements; future policy benefits including guarantees; valuation of investments including derivatives and the recognition of other-than-temporary impairments; provision for income taxes and valuation of deferred tax assets; and reserves for contingent liabilities, including reserves for losses in connection with unresolved legal matters. Reclassifications Certain amounts in prior periods have been reclassified to conform to the current period presentation. 9 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS Investments and Investment Related Liabilities The Company's investments in debt and equity securities include fixed maturities; equity securities; and short-term investments. The accounting policies related to these, as well as commercial mortgage and other loans, are as follows: Fixed maturities are comprised of bonds, notes and redeemable preferred stock. Fixed maturities classified as "available-for-sale" are carried at fair value. See Note 4 for additional information regarding the determination of fair value. The amortized cost of fixed maturities is adjusted for amortization of premiums and accretion of discounts to maturity. Interest income, as well as the related amortization of premium and accretion of discount, is included in "Net investment income" under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions regarding the underlying collateral, including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of other-than-temporary impairments recognized in earnings and other comprehensive income. For high credit quality mortgage-backed and asset-backed securities (those rated AA or above), cash flows are provided quarterly, and the amortized cost and effective yield of the security are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. The adjustments to amortized cost are recorded as a charge or credit to net investment income in accordance with the retrospective method. For asset-backed and mortgage-backed securities rated below AA, or those for which an other than temporary impairment has been recorded, the effective yield is adjusted prospectively for any changes in estimated cash flows. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Unrealized gains and losses on fixed maturities classified as "available-for-sale," net of tax, and the effect on deferred policy acquisition costs, deferred sales inducements and future policy benefits that would result from the realization of unrealized gains and losses, are included in "Accumulated other comprehensive income (loss)." Equity securities, available-for-sale are comprised of common stock and non-redeemable preferred stock and are carried at fair value. The associated unrealized gains and losses, net of tax, and the effect on deferred policy acquisition costs, deferred sales inducements and future policy benefits that would result from the realization of unrealized gains and losses, are included in "Accumulated other comprehensive income (loss)." The cost of equity securities is written down to fair value when a decline in value is considered to be other-than-temporary. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Dividends from these investments are recognized in "Net investment income" when earned. Trading account assets at fair value are comprised of perpetual preferred stock. Realized and unrealized gains and losses for these investments are reported in "Other income." Dividend income from these investments is reported in "Net investment income." Commercial mortgage and other loans consist of commercial mortgage loans and agricultural loans. Commercial mortgage loans are broken down by class which is based on property type (industrial properties, retail, office, multi-family/apartment, hospitality, and other). Commercial mortgage and other loans originated and held for investment are generally carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses and net of an allowance for losses. Commercial mortgage and other loans acquired, including those related to the acquisition of a business, are recorded at fair value when purchased, reflecting any premiums or discounts to unpaid principal balances. Interest income, as well as prepayment fees and the amortization of the related premiums or discounts, related to commercial mortgage and other loans, are included in "Net investment income." Impaired loans include those loans for which it is probable that amounts due will not be collected according to the contractual terms of the loan agreement. The Company defines "past due" as principal or interest not collected at least 30 days past the scheduled contractual due date. Interest received on loans that are past due, including impaired and non-impaired loans as well as loans that were previously modified in a troubled debt restructuring, is either applied against the principal or reported as net investment income based on the Company's assessment as to the collectability of the principal. See Note 3 for additional information about the Company's past due loans. The Company discontinues accruing interest on loans after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability. When the Company discontinues accruing interest on a loan, any accrued but uncollectible interest on the loan and other loans backed by the same collateral, if any, is charged to interest income in the same period. Generally, a loan is restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the payment of interest has been interrupted for a substantial period, or the loan has been modified, a regular payment performance has been established. The Company reviews the performance and credit quality of the commercial mortgage loan and agricultural loan portfolios on an on-going basis. Loans are placed on watch list status based on a predefined set of criteria and are assigned one of three categories. Loans are placed on "early warning" status in cases where, based on the Company's analysis of the loan's collateral, the financial situation of the borrower or tenants or other market factors, it is believed a loss of principal or interest could occur. Loans are classified as "closely monitored" when it is determined that there is a collateral deficiency or other credit events that may lead to a potential loss of principal or interest. Loans "not in good standing" are those loans where the Company has concluded that there is a high probability of loss of principal, such as when the loan is delinquent or in the process of foreclosure. As described below, in determining the allowance for losses, the Company evaluates each loan on the watch list to determine if it is probable that amounts due will not be collected according to the contractual terms of the loan agreement. 10 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. A smaller loan-to-value ratio indicates a greater excess of collateral value over the loan amount. The debt service coverage ratio compares a property's net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan's current debt payments. A larger debt service coverage ratio indicates a greater excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company's periodic review of the commercial mortgage loan and agricultural loan portfolio, which includes an internal appraisal of the underlying collateral value. The Company's periodic review also includes a quality re-rating process, whereby the internal quality rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary quality rating system. The loan-to-value ratio is the most significant of several inputs used to establish the internal credit rating of a loan which in turn drives the allowance for losses. Other key factors considered in determining the internal credit rating include debt service coverage ratios, amortization, loan term, estimated market value growth rate and volatility for the property type and region. See Note 3 for additional information related to the loan-to-value ratios and debt service coverage ratios related to the Company's commercial mortgage and agricultural loan portfolios. The allowance for loan losses includes a loan specific reserve for each impaired loan that has a specifically identified loss and a portfolio reserve for probable incurred but not specifically identified losses. For impaired commercial mortgage loans and agricultural loans, the allowances for losses are determined based on the present value of expected future cash flows discounted at the loan's effective interest rate, or based upon the fair value of the collateral if the loan is collateral dependent. The portfolio reserves for probable incurred but not specifically identified losses in the commercial mortgage and agricultural loan portfolio segments considers the current credit composition of the portfolio based on an internal quality rating, (as described above). The portfolio reserves are determined using past loan experience, including historical credit migration, loss probability and loss severity factors by property type. These factors are reviewed each quarter and updated as appropriate. The allowance for losses on commercial mortgage loans and agricultural loans can increase or decrease from period to period based on the factors noted above. "Realized investment gains (losses), net" includes changes in the allowance for losses. "Realized investment gains (losses), net" also includes gains and losses on sales, certain restructurings, and foreclosures. When a commercial mortgage or other loan is deemed to be uncollectible, any specific valuation allowance associated with the loan is reversed and a direct write down to the carrying amount of the loan is made. The carrying amount of the loan is not adjusted for subsequent recoveries in value. Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in "Net investment income" at the contract interest rate when earned. Securities repurchase and resale agreements and securities loaned transactions are used to earn spread income, to borrow funds, or to facilitate trading activity. Securities repurchase and resale agreements are generally short term in nature, and therefore, the carrying amounts of these instruments approximate fair value. As part of securities repurchase agreements or securities loan transactions the Company transfers U.S. government and government agency securities and receives cash as collateral. As part of securities resale agreements, the Company transfers cash as collateral and receives U.S. government securities. For securities repurchase agreements and securities loaned transactions used to earn spread income, the cash received is typically invested in cash equivalents, short term investments or fixed maturities. Securities repurchase and resale agreements that satisfy certain criteria are treated as collateralized financing arrangements. These agreements are carried at the amounts at which the securities will be subsequently resold or reacquired, as specified in the respective agreements. For securities purchased under agreements to resell, the Company's policy is to take possession or control of the securities and to value the securities daily. Securities to be resold are the same, or substantially the same, as the securities received. For securities sold under agreements to repurchase, the market value of the securities to be repurchased is monitored, and additional collateral is obtained where appropriate, to protect against credit exposure. Securities to be repurchased are the same, or substantially the same as those sold. Income and expenses related to these transactions executed within the insurance subsidiary used to earn spread income are reported as "Net investment income," however, for transactions used to borrow funds, the associated borrowing cost is reported as interest expense (included in "General, administrative and other expenses"). Securities loaned transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company's securities loaned transactions are with large brokerage firms. Income and expenses associated with securities loaned transactions used to earn spread income are generally reported as "Net investment income;" however, for securities loaned transactions used for funding purposes the associated rebate is reported as interest expense (included in "General, administrative and other expenses"). Other long-term investments consist of derivatives, the Company's investments in joint ventures and limited partnerships in which the Company does not exercise control, as well as investments in the Company's own separate accounts, which are carried at fair value, and investment real estate. Joint venture and partnership interests are generally accounted for using the equity method of accounting, except in instances in which the Company's interest is so minor that it exercises virtually no influence over operating and financial policies. In such instances, the Company applies the cost method of accounting. The Company's share of net income from investments in joint ventures and partnerships is generally included in "Net investment income." 11 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- "Short-term investments" primarily consist of highly liquid debt instruments with a maturity of greater than three months and less than twelve months when purchased. These investments are generally carried at fair value and include certain money market investments and other highly liquid debt instruments. Realized investment gains (losses) are computed using the specific identification method. Realized investment gains and losses are generated from numerous sources, including the sale of fixed maturity securities, equity securities, investments in joint ventures and limited partnerships and other types of investments, as well as adjustments to the cost basis of investments for net other-than-temporary impairments recognized in earnings. Realized investment gains and losses are also generated from prepayment premiums received on private fixed maturity securities, allowance for losses on commercial mortgage and other loans and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment. The Company's available-for-sale securities with unrealized losses are reviewed quarterly to identify other-than-temporary impairments in value. In evaluating whether a decline in value is other-than-temporary, the Company considers several factors including, but not limited to the following: (1) the extent and the duration of the decline; (2) the reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); and (3) the financial condition of and near-term prospects of the issuer. With regard to available-for-sale equity securities, the Company also considers the ability and intent to hold the investment for a period of time to allow for a recovery of value. When it is determined that a decline in value of an equity security is other-than-temporary, the carrying value of the equity security is reduced to its fair value, with a corresponding charge to earnings. Under the authoritative guidance for the recognition and presentation of other-than-temporary impairments for debt securities, an other-than-temporary impairment must be recognized in earnings for a debt security in an unrealized loss position when an entity either (a) has the intent to sell the debt security or (b) more likely than not will be required to sell the debt security before its anticipated recovery. For all debt securities in unrealized loss positions that do not meet either of these two criteria, the guidance requires that the Company analyze its ability to recover the amortized cost by comparing the net present value of projected future cash flows with the amortized cost of the security. The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The Company may use the estimated fair value of collateral as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment, an other-than-temporary impairment is recognized. Under the authoritative guidance for the recognition and presentation of other-than-temporary impairments, when an other-than-temporary impairment of a debt security has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the debt security meets either of these two criteria, the other-than-temporary impairment recognized in earnings is equal to the entire difference between the security's amortized cost basis and its fair value at the impairment measurement date. For other-than-temporary impairments of debt securities that do not meet these criteria, the net amount recognized in earnings is equal to the difference between the amortized cost of the debt security and its net present value calculated as described above. Any difference between the fair value and the net present value of the debt security at the impairment measurement date is recorded in "Other comprehensive income (loss)" ("OCI"). Unrealized gains or losses on securities for which an other-than-temporary impairment has been recognized in earnings is tracked as a separate component of "Accumulated other comprehensive income (loss)." For debt securities, the split between the amount of an other-than-temporary impairment recognized in other comprehensive income and the net amount recognized in earnings is driven principally by assumptions regarding the amount and timing of projected cash flows. For mortgage-backed and asset-backed securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including interest rate and prepayment assumptions, based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also include other assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. For structured securities, the payment priority within the tranche structure is also considered. For all other debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. The Company has developed these estimates using information based on its historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security, such as the general payment terms of the security and the security's position within the capital structure of the issuer. The new cost basis of an impaired security is not adjusted for subsequent increases in estimated fair value. In periods subsequent to the recognition of an other-than-temporary impairment, the impaired security is accounted for as if it had been purchased on the measurement date of the impairment. For debt securities, the discount (or reduced premium) based on the new cost basis may be accreted into net investment income in future periods, including increases in cash flow on a prospective basis. In certain cases where there are decreased cash flow expectations, the security is reviewed for further cash flow impairments. Asset Administration Fees The Company receives asset administration fee income from policyholders' account balances invested in The Prudential Series Funds or, "PSF," which are a portfolio of mutual fund investments related to the Company's separate account products. Also, the Company receives fee income calculated on contractholder separate account balances invested in the Advanced Series Trust Funds (see Note 8). In addition, the Company receives fees from policyholders' account balances invested in funds managed by companies other than affiliates of Prudential Insurance. Asset administration fees are recognized as income when earned. 12 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Derivative Financial Instruments Derivatives are financial instruments whose values are derived from interest rates, financial indices, or the values of securities. Derivative financial instruments generally used by the Company include swaps and options which are contracted in the over-the-counter market with an affiliate. Derivative positions are carried at fair value, generally by obtaining quoted market prices or through the use of valuation models. Values can be affected by changes in interest rates, financial indices, values of securities, credit spreads, market volatility, expected returns, non-performance risks and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivatives are used to manage the characteristics of the Company's asset/liability mix to manage the interest rate and currency characteristics of assets or liabilities. Additionally, derivatives may be used to seek to reduce exposure to interest rate, credit, foreign currency and equity risks associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. Derivatives are recorded either as assets, within "Other long-term investments," or as liabilities, within "Other liabilities," except for embedded derivatives, which are recorded with the associated host contract. The Company nets the fair value of all derivative financial instruments with its affiliated counterparty for which a master netting arrangement has been executed. As discussed below and in Note 5, all realized and unrealized changes in fair value of derivatives, with the exception of the effective portion of cash flow hedges are recorded in current earnings. Cash flows from these derivatives are reported in the operating and investing activities sections in the Unaudited Interim Statements of Cash Flows based on the nature and purpose of the derivative. The Company designates derivatives as either (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge), or (2) a derivative that does not qualify for hedge accounting. To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a derivative qualifies for hedge accounting treatment, there may be an element of ineffectiveness of the hedge. Under such circumstances, the ineffective portion is recorded in "Realized investment gains (losses), net." The Company formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the balance sheet or to forecasted transactions. When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded in "Accumulated other comprehensive income (loss)" to the extent they are effective, until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in the income statement line item associated with the hedged item. If it is determined that a derivative no longer qualifies as an effective cash flow hedge, or management removes the hedge designation, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in "Realized investment gains (losses), net." In this scenario, the hedged asset or liability under a fair value hedge will no longer be adjusted for changes in fair value and the existing basis adjustment is amortized to the income statement line associated with the asset or liability. The component of "Accumulated other comprehensive income (loss)" related to discontinued cash flow hedges is reclassified to the income statement line associated with the hedged cash flows consistent with the earnings impact of the original hedged cash flows. When hedge accounting is discontinued because it is probable that the forecasted transaction will not occur by the end of the specified time period, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in "Realized investment gains (losses), net." Gains and losses that were in "Accumulated other comprehensive income (loss)" pursuant to the hedge of a forecasted transaction are recognized immediately in "Realized investment gains (losses), net." If a derivative does not qualify for hedge accounting, all changes in its fair value, including net receipts and payments, are included in "Realized investment gains (losses), net" without considering changes in the fair value of the economically associated assets or liabilities. The Company is a party to financial instruments that contain derivative instruments that are "embedded" in the financial instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded instrument qualifies as an embedded derivative that is separated from the host contract, carried at fair value, and changes in its fair value are included in "Realized investment gains (losses), net." For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company may elect to classify the entire instrument as a trading account asset and report it within "Trading account assets, at fair value." The Company sells variable annuity contracts that include optional living benefit features that may be treated from an accounting perspective as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these embedded derivatives to an affiliate, Pruco Reinsurance Ltd. ("Pruco Re"). The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value and included in "Future policy benefits and other policyholder liabilities" and "Reinsurance recoverables," respectively. Changes in the fair value are determined using valuation models as described in Note 4, and are recorded in "Realized investment gains (losses), net." 13 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Effective July 1, 2012, the Company entered into a new coinsurance agreement with an affiliate, Prudential Arizona Reinsurance Universal Company, ("PAR U"). The settlement of the initial coinsurance premium occurred subsequent to the effective date of the coinsurance agreement. As a result, the settlement was treated as if settled on the effective date and adjusted for the time elapsed between this date and the settlement date. The adjustment to the initial coinsurance premium was equal to the earned interest and changes in market values from the effective date through the settlement date related to fixed maturity and commercial mortgage securities from an asset portfolio within the Company. The settlement feature of this agreement was accounted for as a derivative (See Note 8 for additional information about this agreement). Income Taxes The Company determines its interim tax provision using the annual effective tax rate methodology in accordance with the authoritative guidance. The increase in the income tax expense for the three months and nine months ended September 30, 2012 and change in effective tax rate was primarily driven by an increase in pre-tax income for the three months and nine months ended September 30, 2012 compared to the three months and nine months ended September 30, 2011. Adoption of New Accounting Pronouncements Effective January 1, 2012, the Company adopted, retrospectively, updated guidance regarding the presentation of comprehensive income. The updated guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. Under the updated guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The updated guidance does not change the items that are reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The Company opted to present the total of comprehensive income, the components of net income, and the components of other comprehensive income in a single continuous statement of comprehensive income. The Unaudited Interim Financial Statements included herein reflect the adoption of this updated guidance. Effective January 1, 2012, the Company adopted, prospectively, updated guidance regarding the fair value measurements and disclosure requirements. The updated guidance clarifies existing guidance related to the application of fair value measurement methods and requires expanded disclosures. The expanded disclosures required by this guidance are included in Note 4. Adoption of this guidance did not have a material effect on the Company's financial position or results of operations. Effective January 1, 2012, the Company adopted, prospectively, updated guidance regarding the assessment of effective control for repurchase agreements. The Company's adoption of this guidance did not have a material effect on the Company's financial position, results of operations, and financial statement disclosures. Effective January 1, 2012, the Company adopted retrospectively new authoritative guidance to address diversity in practice regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. Under the amended guidance acquisition costs are to include only those costs that are directly related to the acquisition or renewal of insurance contracts by applying a model similar to the accounting for loan origination costs. An entity may defer incremental direct costs of contract acquisition with independent third parties or employees that are essential to the contract transaction, as well as the portion of employee compensation, including payroll fringe benefits, and other costs directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts. Prior period financial information presented in these financial statements has been adjusted to reflect the retrospective adoption of the amended guidance. The lower level of costs now qualifying for deferral will be only partially offset by a lower level of amortization of "Deferred policy acquisition costs," and, as such, will initially result in lower earnings in future periods primarily reflecting lower deferrals of wholesaler costs. While the adoption of this amended guidance changes the timing of when certain costs are reflected in the Company's results of operations, it has no effect on the total acquisition costs to be recognized over time and has no impact on the Company's cash flows. The following tables present amounts as previously reported in 2011, the effect of the change due to the retrospective adoption of the amended guidance related to the deferral of acquisition costs as described above, and the adjusted amounts that are reflected in the Unaudited Interim Financial Statements included herein. Unaudited Interim Statements of Financial Position:
December 31, 2011 ------------------------------------ As Previously Effect of As Currently Reported Change Reported ------------- --------- ------------ (in thousands) Deferred policy acquisition costs...... $ 354,167 $(91,272) $ 262,895 TOTAL ASSETS........................... 8,919,414 (91,272) 8,828,142 Policyholders' account balances........ 1,132,897 183 1,133,080 Income taxes........................... 55,188 (32,010) 23,178 TOTAL LIABILITIES...................... 8,297,636 (31,827) 8,265,809 Retained earnings...................... 370,352 (65,071) 305,281 Accumulated other comprehensive income. 41,498 5,626 47,124 TOTAL EQUITY........................... 621,778 (59,445) 562,333 TOTAL LIABILITIES AND EQUITY........... $8,919,414 $(91,272) $8,828,142
14 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Unaudited Interim Statements of Operations:
Three Months Ended September 30, 2011 ------------------------------------------ As Previously As Currently Reported Effect of Change Reported ------------- ---------------- ------------ (in thousands) REVENUES Policy charges and fee income..................... $ 23,359 $ 26 $ 23,385 Total revenues................................. (51,081) 26 (51,055) BENEFITS AND EXPENSES Amortization of deferred policy acquisition costs. 71,876 (8,149) 63,727 General, administrative and other expenses........ 9,653 3,514 13,167 Total benefits and expenses.................... 116,203 (4,635) 111,568 INCOME FROM OPERATIONS BEFORE INCOME TAXES........ (167,284) 4,661 (162,623) Income tax expense (benefit)...................... (62,779) 1,580 (61,199) NET INCOME........................................ $(104,505) $ 3,081 $(101,424) Nine Months Ended September 30, 2011 ------------------------------------------ As Previously As Currently Reported Effect of Change Reported - ------------- ---------------- ------------ (in thousands) REVENUES Policy charges and fee income..................... $ 84,363 $ 24 $ 84,387 Total revenues................................. 89,312 24 89,336 BENEFITS AND EXPENSES Amortization of deferred policy acquisition costs. 98,172 (13,242) 84,930 General, administrative and other expenses........ 26,655 10,777 37,432 Total benefits and expenses.................... 199,951 (2,465) 197,486 INCOME FROM OPERATIONS BEFORE INCOME TAXES........ (110,639) 2,489 (108,150) Income tax expense (benefit)...................... (46,504) 982 (45,522) NET INCOME........................................ $ (64,135) $ 1,507 $ (62,628)
Unaudited Interim Statements of Cash Flows:
Nine Months Ended September 30, 2011 ------------------------------------------ As Previously As Currently Reported Effect of Change Reported ------------- ---------------- ------------ (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income..................................... $(64,135) $ 1,507 $(62,628) Policy charges and fee income.................. (19,386) (24) (19,410) Change in: Deferred policy acquisition costs........... 17,107 (2,465) 14,642 Income taxes payable........................ (78,055) 982 (77,073) Cash flows from (used in) operating activities. $(26,813) $ -- $(26,813)
15 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- 3. INVESTMENTS Fixed Maturities and Equity Securities The following tables provide information relating to fixed maturities and equity securities (excluding investments classified as trading) as of the dates indicated:
September 30, 2012 ------------------------------------------------------ Other-than- Gross Gross temporary Amortized Unrealized Unrealized Fair impairments Cost Gains Losses Value in AOCI (3) ---------- ---------- ---------- ---------- ----------- (in thousands) Fixed maturities, available-for-sale U.S. Treasury securities and obligations of U.S. government authorities and agencies.................................. $ 25,775 $ 5,918 $ -- $ 31,693 $ -- Obligations of U.S. states and their political subdivisions. 2,789 189 -- 2,978 -- Foreign government bonds.................................... 11,539 1,783 -- 13,322 -- Public utilities............................................ 96,803 10,484 -- 107,287 -- All other corporate securities.............................. 666,072 61,553 206 727,419 (45) Asset-backed securities (1)................................. 57,812 1,933 758 58,987 (2,388) Commercial mortgage-backed securities....................... 72,833 8,028 12 80,849 -- Residential mortgage-backed securities (2).................. 66,875 5,934 -- 72,809 (344) ---------- ------- ---- ---------- ------- Total fixed maturities, available-for-sale.................. $1,000,498 $95,822 $976 $1,095,344 $(2,777) ========== ======= ==== ========== ======= Equity securities, available-for-sale Common Stocks:........................................... Industrial, miscellaneous & other.................... 309 73 64 318 Non-redeemable preferred stocks.......................... 1,053 12 -- 1,065 ---------- ------- ---- ---------- Total equity securities, available-for-sale................. $ 1,362 $ 85 $ 64 $ 1,383 ========== ======= ==== ==========
(1)Includes credit tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. (2)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations. (3)Represents the amount of other-than-temporary impairment losses in "Accumulated other comprehensive income (loss)," or "AOCI" which were not included in earnings. Amount excludes $2 million of net unrealized gains (losses) on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.
December 31, 2011 (4) ------------------------------------------------------ Other-than- Gross Gross temporary Amortized Unrealized Unrealized Fair impairments Cost Gains Losses Value in AOCI (3) ---------- ---------- ---------- ---------- ----------- (in thousands) Fixed maturities, available-for-sale U.S. Treasury securities and obligations of U.S. government authorities and agencies.................................. $ 29,889 $ 6,049 $ -- $ 35,938 $ -- Obligations of U.S. states and their political subdivisions. 2,793 33 -- 2,826 Foreign government bonds.................................... 20,868 2,163 -- 23,031 -- Public utilities............................................ 97,991 8,842 54 106,779 -- All other corporate securities.............................. 732,330 57,705 793 789,242 (45) Asset-backed securities (1)................................. 72,050 1,647 2,065 71,632 (3,513) Commercial mortgage-backed securities....................... 89,238 6,770 2 96,006 -- Residential mortgage-backed securities (2).................. 87,749 6,859 158 94,450 (391) ---------- ------- ------ ---------- ------- Total fixed maturities, available-for-sale.................. $1,132,908 $90,068 $3,072 $1,219,904 $(3,949) ========== ======= ====== ========== ======= Equity securities, available-for-sale Common Stocks:........................................... Industrial, miscellaneous & other.................... 405 -- 70 335 Non-redeemable preferred stocks.......................... 1,116 1 32 1,085 ---------- ------- ------ ---------- Total equity securities available-for-sale.................. $ 1,521 $ 1 $ 102 $ 1,420 ========== ======= ====== ==========
(1)Includes credit tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. (2)Includes publicly-traded agency pass-through securities and collateralized mortgage obligations. (3)Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $3 million of net unrealized gains (losses) on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date. (4)Prior period's amounts are presented on a basis consistent with the current period presentation. 16 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- The amortized cost and fair value of fixed maturities by contractual maturities at September 30, 2012, are as follows: Available-for-Sale --------------------- Amortized Fair Cost Value ---------- ---------- (in thousands) Due in one year or less................ $ 91,644 $ 94,247 Due after one year through five years.. 273,075 296,942 Due after five years through ten years. 243,967 273,618 Due after ten years.................... 194,292 217,892 Asset-backed securities................ 57,812 58,987 Commercial mortgage-backed securities.. 72,833 80,849 Residential mortgage-backed securities. 66,875 72,809 ---------- ---------- Total............................... $1,000,498 $1,095,344 ========== ========== Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed, and residential mortgage-backed securities are shown separately in the table above, as they are not due at a single maturity date. The following table depicts the sources of fixed maturity proceeds, equity security proceeds, and related investment gains (losses), as well as losses on impairments of both fixed maturities and equity securities:
Three Months Ended Nine Months Ended September 30, September 30, ---------------- ----------------- 2012 2011 2012 2011 ------- ------- -------- ------- (in thousands) Fixed maturities, available-for-sale Proceeds from sales..................................................... $ 2,942 $ 1,410 $ 8,927 $19,800 Proceeds from maturities/repayments..................................... 31,180 40,007 108,762 99,593 Gross investment gains from sales, prepayments, and maturities.......... 10,609 339 12,427 1,808 Gross investment losses from sales and maturities....................... (1) -- (1) (44) Equity securities, available-for-sale Proceeds from sales..................................................... $ 2,660 $ -- $ 2,660 $ 473 Proceeds from maturities/repayments..................................... -- -- -- -- Gross investment gains from sales3...................................... 146 -- 146 -- Gross investment losses from sales...................................... -- -- -- -- Fixed maturity and equity security impairments Net writedowns for other-than-temporary impairment losses on fixed maturities recognized in earnings (1)................................. $ (960) $ (164) $ (1,470) $ (212) Writedowns for other-than-temporary impairment losses on equity securities............................................................ (31) (74) (152) (264)
(1)Excludes the portion of other-than-temporary impairments recorded in "Other comprehensive income (loss)," representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment. As discussed in Note 2, a portion of certain other-than-temporary impairment ("OTTI") losses on fixed maturity securities are recognized in OCI. For these securities, the net amount recognized in earnings ("credit loss impairments") represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in OCI. The following table sets forth the amount of pre-tax credit loss impairments on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in OCI, and the corresponding changes in such amounts. Credit losses recognized in earnings on fixed maturity securities held by the Company for which a portion of the OTTI loss was recognized in OCI
Three Months Ended Nine Months Ended September 30, September 30, 2012 2012 ------------------ ----------------- (in thousands) Balance, beginning of period.......................................... $2,499 $3,438 Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period.......... (69) (944) Credit loss impairments previously recognized on securities impaired to fair value during the period (1)................................. -- -- Credit loss impairment recognized in the current period on securities not previously impaired............................................. -- -- Additional credit loss impairments recognized in the current period on securities previously impaired................................... 70 70 Increases due to the passage of time on previously recorded credit losses.............................................................. 16 61 Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected..................... (114) (223) ------ ------ Balance, end of period................................................ $2,402 $2,402 ====== ======
(1)Represents circumstances where the Company determined in the current period that it intends to sell the security or it is more likely than not that it will be required to sell the security before recovery of the security's amortized cost. 17 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended September 30, September 30, 2011 2011 ------------------ ----------------- (in thousands) Balance, beginning of period................................ $3,540 $ 6,763 Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period.................................................... (294) (3,494) Credit loss impairments previously recognized on securities impaired to fair value during the period.................. -- -- Credit loss impairment recognized in the current period on securities not previously impaired........................ -- -- Additional credit loss impairments recognized in the current period on securities previously impaired.......... 164 213 Increases due to the passage of time on previously recorded credit losses............................................. 88 236 Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected. (25) (245) ------ ------- Balance, end of period...................................... $3,473 $ 3,473 ====== =======
Trading Account Assets The following table provides information relating to trading account assets, at fair value as of the dates indicated:
September 30, 2012 December 31, 2011 ------------------ ---------------- Amortized Fair Amortized Fair Cost Value Cost Value --------- ------ --------- ------ Trading account assets (in thousands) Equity securities (1)................... $1,695 $1,391 $1,695 $1,569 ====== ====== ====== ======
(1)Included in equity securities are perpetual preferred stock securities that have characteristics of both debt and equity securities. The net change in unrealized gains (losses) from trading account assets still held at period end, recorded within "Other income" included $0.2 million of losses during the three months ended September 30, 2012 and 2011, respectively, and $0.2 million of losses and $0.2 million of losses during the nine months ended September 30, 2012 and 2011, respectively. Commercial Mortgage and Other Loans The Company's commercial mortgage and other loans are comprised as follows, as of the dates indicated:
September 30, 2012 December 31, 2011 ------------------------ ------------------------ Amount Amount (in thousands) % of Total (in thousands) % of Total -------------- ---------- -------------- ---------- Commercial mortgage and other loans by property type: Industrial............................................................ $ 45,253 19.7 % $ 42,884 18.5 % Retail................................................................ 64,898 28.3 55,216 23.8 Apartments/Multi-Family............................................... 48,731 21.2 37,689 16.3 Office................................................................ 23,276 10.1 26,100 11.3 Hospitality........................................................... 14,377 6.3 14,475 6.2 Other................................................................. 12,322 5.4 37,150 16.1 -------- ------ -------- ------ Total commercial mortgage loans by property type...................... 208,857 91.0 213,514 92.2 Agricultural property loans........................................... 20,542 9.0 18,098 7.8 -------- ------ -------- ------ Total commercial mortgage and agricultural loans by property type..... 229,399 100.0 % 231,612 100.0 % ====== ====== Valuation allowance................................................ (1,475) (1,410) -------- -------- Total net commercial and agricultural mortgage loans by property type. $227,924 $230,202 ======== ========
18 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- The commercial mortgage and agricultural loans are geographically dispersed throughout the United States with the largest concentrations in Florida (12%), Texas (12%), and Illinois (11%) at September 30, 2012. Activity in the allowance for losses for all commercial mortgage and other loans, as of the dates indicated, is as follows:
September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Allowance for losses, beginning of year........ $1,410 $1,409 Addition to / (release of) allowance of losses. 65 1 ------ ------ Allowance for losses, end of year (1).......... $1,475 $1,410 ====== ======
(1)Agricultural loans represent $0.03 million and $0.02 million of the ending allowance at September 30, 2012 and December 31, 2011, respectively. The following tables set forth the allowance for credit losses and the recorded investment in commercial mortgage and agricultural loans as of the dates indicated:
September 30, December 31, 2012 2011 ------------- ------------ Total Loans -------------------------- (in thousands) Allowance for Credit Losses: Ending balance: individually evaluated for impairment (1)................... $ -- $ -- Ending balance: collectively evaluated for impairment (2)................... 1,475 1,410 -------- -------- Total ending balance........................................................ $ 1,475 $ 1,410 ======== ======== Recorded Investment: (3) Ending balance gross of reserves: individually evaluated for impairment (1). $ -- $ -- Ending balance gross of reserves: collectively evaluated for impairment (2). 229,399 231,612 -------- -------- Total ending balance, gross of reserves..................................... $229,399 $231,612 ======== ========
(1)There were no agricultural loans individually evaluated for impairments at September 30, 2012 and December 31, 2011. (2)Agricultural loans collectively evaluated for impairment had a recorded investment of $21 million and $8 million with no related allowances at September 30, 2012 and December 31, 2011, respectively. (3)Recorded investment reflects the balance sheet carrying value gross of related allowance. Impaired loans include those loans for which it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. As of both September 30, 2012 and December 31, 2011, there were no impaired commercial mortgage loans identified in management's specific review. Impaired commercial mortgage and other loans with no allowance for losses are loans in which the fair value of the collateral or the net present value of the loans' expected future cash flows equals or exceeds the recorded investment. As of both September 30, 2012 and December 31, 2011, the Company held no such loans. See Note 2 for information regarding the Company's accounting policies for non-performing loans. As described in Note 2, loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage and other loans. As of September 30, 2012 and December 31, 2011, 94% of the $217 million recorded investment and 94% of the $232 million recorded investment, respectively, had a loan-to-value ratio of less than 80%. As of September 30, 2012 and December 31, 2011, 98% and 99% of the recorded investment, respectively, had a debt service coverage ratio of 1.0X or greater. As of September 30, 2012, approximately $4 million or 2% of the recorded investment had a loan-to-value ratio greater than 100% or debt service coverage ratio less than 1.0X, reflecting loans where the mortgage amount exceeds the collateral value or where current debt payments are greater than income from property operations; none of which related to agricultural loans. As of December 31, 2011, approximately $2 million or 1% of the recorded investment had a loan-to-value ratio greater than 100% or debt service coverage ratio less than 1.0X; none of which related to agricultural loans. As of both September 30, 2012 and December 31, 2011, all commercial mortgage and other loans were in current status. The Company defines current in its aging of past due commercial mortgage and agricultural loans as less than 30 days past due. Commercial mortgage and other loans on nonaccrual status totaled $0 million and $3.2 million as of September 30, 2012 and December 31, 2011, respectively, and were primarily related to Hospitality. Nonaccrual loans are those on which the accrual of interest has been suspended after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability and loans for which a loan specific reserve has been established. See Note 2 for further discussion regarding nonaccrual status loans. 19 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- For the three months ended September 30, 2012, there were no commercial mortgage and other loans sold or acquired. Net Investment Income Net investment income for the three and nine months ended September 30, 2012 and 2011, was from the following sources:
Three Months Ended Nine Months Ended September 30, September 30, ---------------- ---------------- 2012 2011 2012 2011 ------- ------- ------- ------- (in thousands) Fixed maturities, available-for-sale........ $14,460 $14,518 $43,717 $42,620 Equity securities, available-for-sale....... 1 2 9 16 Trading account assets...................... 4 3 12 3 Commercial mortgage and other loans......... 3,790 3,047 10,512 9,019 Policy loans................................ 2,340 2,308 7,035 7,025 Short-term investments and cash equivalents. 27 18 55 62 Other long-term investments................. 2,919 103 3,508 889 ------- ------- ------- ------- Gross investment income..................... 23,541 19,999 64,848 59,634 Less: investment expenses................... (918) (810) (2,704) (2,399) ------- ------- ------- ------- Net investment income.................... $22,623 $19,189 $62,144 $57,235 ======= ======= ======= =======
Realized Investment Gains (Losses), Net Realized investment gains (losses), net, for the three and nine months ended September 30, 2012 and 2011 were from the following sources:
Three Months Ended Nine Months Ended September 30, September 30, ------------------- ----------------- 2012 2011 2012 2011 -------- --------- ------- -------- (in thousands) Fixed maturities............................ $ 9,649 $ 175 $10,956 $ 1,552 Equity securities........................... 114 (74) (6) 103 Commercial mortgage and other loans......... 3,533 (128) 3,613 (348) Short-term investments and cash equivalents. -- -- -- -- Joint ventures and limited partnerships..... -- (44) -- (44) Derivatives................................. (13,459) (103,796) (8,988) (82,426) -------- --------- ------- -------- Realized investment gains (losses), net.. $ (163) $(103,867) $ 5,575 $(81,163) ======== ========= ======= ========
20 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Net Unrealized Investment Gains (Losses) Net unrealized investment gains and losses on securities classified as "available-for-sale" and certain other long-term investments and other assets are included in the Company's Unaudited Interim Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from "Other comprehensive income (loss)" those items that are included as part of "Net income" for a period that had been part of "Other comprehensive income (loss)" in earlier periods. The amounts for the periods indicated below, split between amounts related to fixed maturity securities on which an OTTI loss has been recognized, and all other net unrealized investment gains and losses, are as follows: Net Unrealized Investment Gains and Losses on Fixed Maturity Securities on which an OTTI loss has been recognized
Accumulated Other Comprehensive Income (Loss) Deferred Related To Net Net Unrealized Deferred Policy Policy Holder Income Tax Unrealized Gains (Losses) on Acquisition Costs Account (Liability) Investment Gains Investments and Other Costs Balances Benefit (Losses) ----------------- ----------------- ------------- ----------- ----------------- (in thousands) Balance, December 31, 2011................... $(1,417) $ 739 $(142) $ 287 $(533) Net investment gains (losses) on investments arising during the period.................. 226 -- -- (79) 147 Reclassification adjustment for (gains) losses included in net income.............. 730 -- -- (256) 474 Reclassification adjustment for OTTI losses excluded from net income(1)................ (106) -- -- 37 (69) Impact of net unrealized investment (gains) losses on deferred policy acquisition costs -- (377) -- 132 (245) Impact of net unrealized investment (gains) losses on policyholders' account balances.. -- -- 157 (55) 102 ------- ----- ----- ----- ----- Balance, September 30, 2012.................. $ (567) $ 362 $ 15 $ 66 $(124) ======= ===== ===== ===== =====
(1)Represents "transfers in" related to the portion of OTTI losses recognized during the period that were not recognized in earnings for securities with no prior OTTI loss. All Other Net Unrealized Investment Gains and Losses in AOCI
Accumulated Other Comprehensive Income (Loss) Deferred Related To Net Net Unrealized Deferred Policy Policy Holder Income Tax Unrealized Gains (Losses) on Acquisition Costs Account (Liability) Investment Gains Investments(1) and Other Costs Balances Benefit (Losses) ----------------- ----------------- ------------- ----------- ----------------- (in thousands) Balance, December 31, 2011................... $ 89,602 $(31,698) $15,379 $(25,649) $47,634 Net investment gains (losses) on investments arising during the period.................. 18,746 -- -- (6,561) 12,185 Reclassification adjustment for (gains) losses included in net income.............. (11,679) -- -- 4,088 (7,391) Reclassification adjustment for OTTI losses excluded from net income(2)................ 106 -- -- (37) 69 Impact of net unrealized investment (gains) losses on deferred policy acquisition costs -- (8,655) -- 3,029 (5,626) Impact of net unrealized investment (gains) losses on policyholders' account balances.. -- -- (1,757) 615 (1,142) -------- -------- ------- -------- ------- Balance, September 30, 2012.................. $ 96,775 $(40,353) $13,622 $(24,515) $45,529 ======== ======== ======= ======== =======
(1)Includes cash flow hedges. See Note 5 for information on cash flow hedges. (2)Represents "transfers out" related to the portion of OTTI losses recognized during the period that were not recognized in earnings for securities with no prior OTTI loss. The table below presents net unrealized gains (losses) on investments by asset class as of the dates indicated:
September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Fixed maturity securities on which an OTTI loss has been recognized. $ (567) $(1,417) Fixed maturity securities, available-for-sale - all other........... 95,413 88,414 Equity securities, available-for-sale............................... 21 (100) Derivatives designated as cash flow hedges (1)...................... (486) (630) Other investments................................................... 1,827 1,918 ------- ------- Net unrealized gains (losses) on investments........................ $96,208 $88,185 ======= =======
(1)See Note 5 for more information on cash flow hedges. 21 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Duration of Gross Unrealized Loss Positions for Fixed Maturities The following tables shows the fair value and gross unrealized losses aggregated by investment category and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:
September 30, 2012 ---------------------------------------------------------------- Less than twelve months Twelve months or more Total ----------------------- --------------------- ------------------ Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses ------- ---------- ------ ---------- ------- ---------- (in thousands) Fixed maturities, available-for-sale U.S. Treasury securities and obligations of U.S. government authorities and agencies $ -- $ -- $ -- $ -- $ -- $ -- Obligations of U.S. states and their political subdivisions. -- -- -- -- -- -- Foreign government bonds.................................... -- -- -- -- -- -- Corporate securities........................................ 27,739 100 982 106 28,721 206 Commercial mortgage-backed securities....................... -- -- 545 12 545 12 Asset-backed securities..................................... -- -- 8,239 758 8,239 758 Residential mortgage-backed securities...................... -- -- -- -- -- -- ------- ------ ------ ------ ------- ------ Total.................................................... $27,739 $ 100 $9,766 $ 876 $37,505 $ 976 ======= ====== ====== ====== ======= ====== December 31, 2011 ---------------------------------------------------------------- Less than twelve months Twelve months or more Total ----------------------- --------------------- ------------------ Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses ------- ---------- ------ ---------- ------- ---------- (in thousands) Fixed maturities, available-for-sale U.S. Treasury securities and obligations of U.S. government authorities and agencies $ -- $ -- $ -- $ -- $ -- $ -- Obligations of U.S. states and their political subdivisions Corporate securities........................................ 31,041 670 998 177 32,039 847 Asset-backed securities..................................... 33,246 285 7,384 1,780 40,630 2,065 Commercial mortgage-backed securities....................... -- -- 1,051 2 1,051 2 Residential mortgage-backed securities...................... 4,367 158 -- -- 4,367 158 ------- ------ ------ ------ ------- ------ Total.................................................... $68,654 $1,113 $9,433 $1,959 $78,087 $3,072 ======= ====== ====== ====== ======= ======
The gross unrealized losses at September 30, 2012 and December 31, 2011 are composed of both $0 million related to high or highest quality securities based on National Association of Insurance Commissioners, or "NAIC", or equivalent rating and $1 million and $2 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. At September 30, 2012, $0 million of the gross unrealized losses represented declines in value of greater than 20%, none of which had been in that position for less than six months, as compared to $1.6 million at December 31, 2011 that represented declines in value of greater than 20%, $0.1 million of which had been in that position for less than six months. At September 30, 2012 and December 31, 2011, the $1 million and $2 million, respectively, of gross unrealized losses of twelve months or more were concentrated in asset-backed securities. In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for other-than-temporary impairments for these securities was not warranted at September 30, 2012 or December 31, 2011. These conclusions are based on a detailed analysis of the underlying credit and cash flows on each security. The gross unrealized losses are primarily attributable to credit spread widening and increased liquidity discounts. At September 30, 2012, the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before the anticipated recovery of its remaining amortized cost basis. 22 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Duration of Gross Unrealized Loss Positions for Equity Securities The following table shows the fair value and gross unrealized losses aggregated by length of time that individual equity securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:
September 30, 2012 -------------------------------------------------------------- Less than twelve months Twelve months or more Total ----------------------- --------------------- ---------------- Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses ----- ---------- ----- ---------- ----- ---------- (in thousands) Equity securities, available-for-sale. $ 25 $ 64 $-- $-- $ 25 $ 64 ==== ==== === === ==== ==== December 31, 2011 -------------------------------------------------------------- Less than twelve months Twelve months or more Total ----------------------- --------------------- ---------------- Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses ----- ---------- ----- ---------- ----- ---------- (in thousands) Equity securities, available-for-sale. $316 $102 $-- $-- $316 $102 ==== ==== === === ==== ====
At September 30, 2012, $0.1 million of the gross unrealized losses represented declines in value of greater than 20%, all of which have been in that position for less than nine months. At December 31, 2011, $0.1 million of the gross unrealized losses represented declines of greater than 20%, all of which have been in that position for less than six months. In accordance with its policy described in Note 2, the Company concluded that an adjustment for other-than-temporary impairments for these equity securities was not warranted at September 30, 2012 or December 31, 2011. 4. FAIR VALUE OF ASSETS AND LIABILITIES Fair Value Measurement - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance around fair value establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows: Level 1 - Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. These generally provide the most reliable evidence and are used to measure fair value whenever available. The Company's Level 1 assets and liabilities primarily include certain cash equivalents and short term investments and equity securities that trade on an active exchange market. Level 2 - Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. The Company's Level 2 assets and liabilities include: fixed maturities (corporate public and private bonds, most government securities, certain asset-backed and mortgage-backed securities, etc.), certain equity securities (mutual funds, which do not actively trade and are priced based on a net asset value), certain short-term investments and certain cash equivalents (primarily commercial paper), and certain over-the-counter derivatives. Level 3 - Fair value is based on at least one or more significant unobservable inputs for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value. The Company's Level 3 assets and liabilities primarily include: certain private fixed maturities and equity securities, certain manually priced public equity securities and fixed maturities, certain highly structured over-the-counter derivative contracts, certain consolidated real estate funds for which the Company is the general partner, and embedded derivatives resulting from certain products with guaranteed benefits. The Company has established policies and guidelines that require the establishment of valuation methodologies and consistent application of such methodologies. These policies and guidelines govern the use of inputs and price source hierarchies and provide controls around the valuation processes. These controls include appropriate review and analysis of prices against market activity or indicators of reasonableness, approval of price source changes, price overrides, methodology changes and classification of fair value hierarchy levels. The valuation policies and guidelines are reviewed and updated as appropriate. 23 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Assets and Liabilities by Hierarchy Level - The tables below present the balances of assets and liabilities measured at fair value on a recurring basis, as of the dates indicated.
As of September 30, 2012 --------------------------------------------------- Level 1 Level 2 Level 3 Netting (2) Total -------- ---------- -------- ----------- ---------- (in thousands) Fixed maturities, available for sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies.......................................................... $ -- $ 31,693 $ -- $ $ 31,693 Obligations of U.S. states and their political subdivisions............. -- 2,978 -- 2,978 Foreign government bonds................................................ -- 13,322 -- 13,322 Corporate securities.................................................... -- 828,220 6,486 834,706 Asset-backed securities................................................. -- 44,654 14,333 58,987 Commercial mortgage-backed securities................................... -- 80,849 -- 80,849 Residential mortgage-backed securities.................................. -- 72,809 -- 72,809 -------- ---------- -------- ------- ---------- Sub-total............................................................... -- 1,074,525 20,819 1,095,344 Trading account assets: Equity securities....................................................... -- -- 1,391 1,391 -------- ---------- -------- ------- ---------- Sub-total........................................................ -- -- 1,391 1,391 Equity securities, available for sale:.................................. 255 64 1,064 1,383 Short-term investments.................................................. 3,005 -- -- 3,005 Cash equivalents........................................................ -- 29,572 -- 29,572 Other long-term investments............................................. -- 10,892 -- (2,102) 8,790 Reinsurance recoverables................................................ -- -- 97,386 97,386 Other assets............................................................ -- 8,120 -- 8,120 -------- ---------- -------- ------- ---------- Sub-total excluding separate account assets............................. 3,260 1,123,173 120,660 (2,102) 1,244,991 Separate account assets (1)............................................. 31,957 8,003,029 6,086 8,041,072 -------- ---------- -------- ------- ---------- Total assets......................................................... $ 35,217 $9,126,202 $126,746 $(2,102) $9,286,063 ======== ========== ======== ======= ========== Future policy benefits.................................................. -- -- 131,657 -- 131,657 Other liabilities....................................................... -- 2,102 -- (2,102) -- -------- ---------- -------- ------- ---------- Total liabilities....................................................... $ -- $ 2,102 $131,657 $(2,102) $ 131,657 ======== ========== ======== ======= ========== As of December 31, 2011 (3) --------------------------------------------------- Level 1 Level 2 Level 3 Netting (2) Total -------- ---------- -------- ----------- ---------- (in thousands) Fixed maturities, available for sale: U.S. Treasury securities and obligations of U.S. government authorities and agencies.......................................................... $ -- $ 35,938 $ -- $ $ 35,938 Obligations of U.S. states and their political subdivisions............. -- 2,826 -- 2,826 Foreign government bonds................................................ -- 23,031 -- 23,031 Corporate securities.................................................... -- 894,266 1,755 896,021 Asset-backed securities................................................. -- 53,005 18,627 71,632 Commercial mortgage-backed securities................................... -- 96,006 -- 96,006 Residential mortgage-backed securities.................................. -- 94,450 -- 94,450 -------- ---------- -------- ------- ---------- Sub-total............................................................ -- 1,199,522 20,382 1,219,904 Trading account assets: Equity securities....................................................... -- -- 1,569 1,569 -------- ---------- -------- ------- ---------- Sub-total............................................................ -- -- 1,569 1,569 Equity securities, available for sale:.................................. 276 -- 1,144 1,420 Short-term investments.................................................. 1,069 -- -- 1,069 Cash equivalents........................................................ 10,000 14,381 -- 24,381 Other long-term investments............................................. -- 8,764 18 (2,094) 6,688 Reinsurance recoverables................................................ -- -- 53,677 53,677 Other assets............................................................ -- 8,647 -- 8,647 -------- ---------- -------- ------- ---------- Sub-total excluding separate account assets.......................... 11,345 1,231,314 76,790 (2,094) 1,317,355 Separate account assets (1)............................................. 141,133 6,110,880 5,995 6,258,008 -------- ---------- -------- ------- ---------- Total assets......................................................... $152,478 $7,342,194 $ 82,785 $(2,094) $7,575,363 ======== ========== ======== ======= ========== Future policy benefits.................................................. -- -- 76,996 -- 76,996 Other liabilities....................................................... -- 2,094 -- (2,094) -- -------- ---------- -------- ------- ---------- Total liabilities.................................................... $ -- $ 2,094 $ 76,996 $(2,094) $ 76,996 ======== ========== ======== ======= ==========
(1)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account assets classified as Level 3 consist primarily of real estate and real estate investment funds. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Unaudited Interim Statement of Financial Position. (2)"Netting" amounts represent the impact of offsetting asset and liability positions held within the same counterparty. (3)Includes reclassifications to conform to current period presentation. 24 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below. Fixed Maturity Securities - The fair values of the Company's public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices from pricing services are sourced from multiple vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company generally receives prices from multiple pricing services for each security, but ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If the pricing information received from third party pricing services is not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service. If the pricing service updates the price to be more consistent with the presented market observations, the security remains within Level 2. Internally-developed valuations or indicative broker quotes are also used to determine fair value in circumstances where vendor pricing is not available, or where the Company ultimately concludes that pricing information received from the independent pricing service is not reflective of market activity. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may over-ride the information from the pricing service or broker with an internally-developed valuation. As of September 30, 2012 and December 31, 2011, over-rides on a net basis were not material. These estimates may use significant unobservable inputs, which reflect the Company's own assumptions about the inputs market participants would use in pricing the asset. Pricing service over-rides, internally-developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy. The fair value of private fixed maturities, which are comprised of investments in private placement securities, originated by internal private asset managers, are primarily determined using a discounted cash flow model. In cases where these models primarily use observable inputs, the securities have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may also incorporate significant unobservable inputs, which reflect the Company's own assumptions about the inputs market participants would use in pricing the asset. In these cases, a Level 3 classification is used. Private fixed maturities also include debt investments in funds that, in addition to a stated coupon, pay a return based upon the results of the underlying portfolios. The fair values of these securities are determined by reference to the funds' net asset value ("NAV"). Since the NAV at which the funds trade can be observed by redemption and subscription transactions between third parties, the fair values of these investments have been reflected within Level 2 in the fair value hierarchy. Trading Account Assets - Trading account assets are comprised of perpetual preferred stock whose fair values are determined consistent with similar instruments described below under "Equity Securities." Equity Securities - Equity securities consist principally of investments in common and preferred stock of publicly traded companies, perpetual preferred stock, privately traded securities, as well as mutual fund shares. The fair values of most publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for most privately traded equity securities are determined using valuation and discounted cash flow models that require a substantial level of judgment. As these models may use unobservable inputs, most privately traded equity securities are classified within Level 3. The fair values of mutual fund shares that transact regularly (but do not trade in active markets because they are not publicly available) are based on transaction prices of identical fund shares and are classified within Level 2 in the fair value hierarchy. The fair values of perpetual preferred stock are based on inputs obtained from independent pricing services that are primarily based on indicative broker quotes, as the directly observable market inputs are not available. As a result, the fair values of perpetual preferred stock are classified as Level 3. Derivative Instruments - Derivatives are recorded at fair value either as assets, within "Other long-term investments," or as liabilities, within "Other liabilities," except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts are determined based on quoted prices in active exchanges or through the use of valuation models. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, credit spreads, market volatility, expected returns, non-performance risk, liquidity and other factors. Liquidity valuation adjustments are made to reflect the cost of exiting significant risk positions, and consider the bid-ask spread, maturity, complexity, and other specific attributes of the underlying derivative position. The majority of the Company's derivative positions is traded in the over-the-counter ("OTC") derivative market and are classified within Level 2 in the fair value hierarchy. OTC derivatives classified within Level 2 are valued using models that utilize actively quoted or observable market input values from external market data providers, third-party pricing vendors and/or recent trading activity. The Company's policy is to use mid-market pricing in determining its best estimate of fair value. The fair values of most OTC derivatives, including interest rate, cross currency swaps, currency forward contracts and single name credit default swaps are determined using discounted cash flow models. The fair values of European style option contracts are determined using Black-Scholes option pricing models. These models' key inputs include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, currency rates, credit spreads, equity prices, index dividend yields, non-performance risk, volatility and other factors. 25 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- To reflect the market's perception of its own and the counterparty's non-performance risk, the Company incorporates additional spreads over London Interbank Offered Rate ("LIBOR") into the discount rate used in determining the fair value of OTC derivative assets and liabilities that are not otherwise collateralized. Derivatives classified as Level 3 include first-to-default credit basket swaps and other structured products. These derivatives are valued based upon models with some significant unobservable market inputs or inputs from less actively traded markets. The fair values of first to default credit basket swaps are derived from relevant observable inputs (e.g. individual credit default spreads, interest rates and recovery rates), and unobservable model-specific input values such as correlation between different credits within the same basket. Other structured options and derivatives are valued using simulation models such as the Monte Carlo and other techniques. Level 3 methodologies are validated through periodic comparison of the Company's fair values to broker-dealer values. As of September 30, 2012 and December 31, 2011, there were derivatives with the fair value of $0 and $18 thousand classified within Level 3, and all other derivatives were classified within Level 2. See Note 5 for more details on the fair value of derivative instruments by primary underlying. Cash Equivalents and Short-Term Investments - Cash equivalents and short-term investments include money market instruments, commercial paper and other highly liquid debt instruments. Certain money market instruments are valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. The remaining instruments in the Cash Equivalents and Short-term Investments category are typically not traded in active markets; however, their fair values are generally based on market observable inputs and, accordingly, these investments have been primarily classified within Level 2 in the fair value hierarchy. Separate Account Assets - Separate Account Assets include fixed maturity securities, treasuries, equity securities and real estate investments for which values are determined consistent with similar instruments described above under "Fixed Maturity Securities," "Equity Securities" and "Other Long-Term Investments." Other Assets - Other assets carried at fair value include affiliated bonds within our legal entity whose fair value are determined consistent with similar securities described above under "Fixed Maturity Securities" managed by affiliated asset managers. Reinsurance Recoverables - Reinsurance recoverables carried at fair value include the reinsurance of our living benefit guarantees on certain of our variable annuities. These reinsurance recoverables are valued in the same manner as the living benefit guarantees as described below in "Future Policy Benefits". Future Policy Benefits - The liability for future policy benefits primarily includes general account liabilities for guarantees on variable annuity contracts, including guaranteed minimum accumulation benefits ("GMAB"), guaranteed minimum withdrawal benefits ("GMWB") and guaranteed minimum income and withdrawal benefits ("GMIWB"), accounted for as embedded derivatives. The fair values of the GMAB, GMWB, and GMIWB liabilities are calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various policyholder behavior assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management judgment. The significant inputs to the valuation models for the embedded derivatives associated with the optional living benefit features of the Company's variable annuity products include capital market assumptions, such as interest rate and implied volatility assumptions, the Company's market-perceived risk of its own non-performance ("NPR"), as well as various assumptions that are actuarially determined, including lapse rates, benefit utilization rates, withdrawal rates, and mortality rates. Since many of these assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level 3 in the fair value hierarchy. Capital market inputs and actual policyholders' account values are updated each quarter based on capital market conditions as of the end of the quarter, including interest rates, equity markets, and implied volatility. In the risk neutral valuation, interest rates are used to both grow the policyholders' account values as well as discount all projected future cash flows. The Company's discount rate assumption is based on the LIBOR swap curve, and is adjusted for NPR, as discussed below. Assuming all other assumptions remain unchanged, a decline in interest rates will generally cause account values to grow more slowly, increasing future expected benefit payments, as well as decreasing the discounting impact in the present value calculation, both of which would cause increases in the fair value of the liability. The opposite impacts occur as interest rates rise. Implied volatility also impacts the estimate of future expected benefit payments, as discussed below. Actuarial assumptions are reviewed at least annually, and updated based upon historical experience giving consideration to any observable market data, including available industry studies or market transactions such as acquisitions and reinsurance transactions. Assumptions relating to contractholder behavior such as lapse, benefit utilization, withdrawal, and mortality rates, are based on experience by product type and/or year of contract issuance, as well as available industry studies. Unless a material change in contractholder behavior or mortality experience that the Company feels is indicative of a long term trend is observed in an interim periods, assumptions related to contractholder behavior and mortality are generally updated in the third quarter of each year by considering recent experience that has occurred during the period from the most recent update to the expected amounts or updates to industry studies. These assumptions require the use of management judgment and are discussed in further detail below. 26 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Level 3 Assets and Liabilities by Price Source - The table below presents the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources.
As of September 30, 2012 ---------------------------------- Internal (1) External (2) Total ------------ ------------ -------- (in thousands) Corporate securities........................... 5,565 921 6,486 Asset-backed securities........................ 248 14,085 14,333 Equity securities.............................. 1,065 1,390 2,455 Reinsurance Recoverable........................ 97,386 -- 97,386 -------- ------- -------- Sub-total excluding separate account assets. 104,264 16,396 120,660 Separate account assets........................ 6,086 -- 6,086 -------- ------- -------- Total assets............................ $110,350 $16,396 $126,746 ======== ======= ======== Future policy benefits......................... $131,657 $ -- $131,657 -------- ------- -------- Total liabilities....................... $131,657 $ -- $131,657 ======== ======= ========
(1)Represents valuations reflecting both internally-derived and market inputs, as well as third-party pricing information or quotes. See below for additional information related to internally-developed valuation for significant items in the above table. (2)Represents unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available. Quantitative Information Regarding Internally Priced Level 3 Assets and Liabilities - The table below presents quantitative information on significant internally-priced Level 3 assets and liabilities for which the investment risks associated with market value changes are borne by the Company.
As of September 30, 2012 ------------------------------------------------------------------------------------ Fair Value Valuation Techniques Unobservable Inputs Range (Weighted Average) ---------- --------------------- ------------------------ -------------------------- (in thousands) Assets: Corporate securities..... $ 5,565 Discounted cash flow Discount rate $12.00% - 17.50% (13.61%) Liquidation Liquidation value 25% (25%) Reinsurance recoverables. $ 97,386 Fair values are determined in the same manner as future policy benefits Liabilities: Future policy benefits... $131,657 Discounted cash flow Lapse rate 0% - 14% NPR spread 0.24% - 1.82% Utilization rate 70% - 94% Withdrawal rate 85% - 100% Mortality rate (1) 0% - 13% Equity Volatility curve 19% - 34%
(1)Range reflects the mortality rate for the vast majority of business with living benefits, with policyholders ranging from 35 to 90 years old. While the majority of living benefits have a minimum age requirement, certain benefits do not have an age restriction. This results in contractholders for certain benefits with mortality rates approaching 0%. Sensitivity to Changes in Unobservable Inputs - The following is a general description of sensitivities of significant unobservable inputs and their impact on the fair value measurement for the assets and liabilities reflected in the table above Corporate Securities - Internally priced corporate securities classified in Level 3 include certain below investment grade watchlist and distressed fixed maturity securities. For securities where discounted cash flows are used, the primary unobservable input is an internally developed discount rate. Significant increases (decreases) in the discount rate would result in a significantly lower (higher) fair value measurement. In certain cases, the Company uses an estimated liquidation value of the borrower or underlying assets. In isolation, an increase (decrease) in the value of these inputs would result in a higher (lower) fair value measurement. Reinsurance Recoverables - Reinsurance recoverables carried at fair value include the reinsurance of our living benefit guarantees on certain of our variable annuities. These reinsurance recoverables covering these guarantees are valued in the same manner as the living benefit guarantees as described below in "Future Policy Benefits". Future Policy Benefits - Future policy benefits classified as Level 3 are calculated using internally-developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, 27 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- and the general uncertainty around the timing and amount of future cash flows. As described above, the significant unobservable inputs to the valuation models for the embedded derivatives associated with the optional living benefit features of the Company's variable annuity products include various assumptions that are actuarially determined, including lapse rates, benefit utilization rates, withdrawal rates and mortality rates as well as volatility assumptions and assumptions used to reflect NPR. The Company's dynamic lapse rate assumption adjusts the base lapse rate at the contract level based on a comparison of the actuarially calculated guaranteed amount and the current policyholder account value as well as other factors, such as the applicability of any surrender charges. The dynamic lapse adjustment reduces the base lapse rate based on the magnitude of the difference between the guaranteed amount and the account value. In-the-money contracts are those with a guaranteed benefit in excess of the current policyholder account value. Since in-the-money contracts are less likely to lapse, the dynamic lapse adjustment will reduce the lapse rate assumption for these contracts. For less in the money contracts, the lapse rate assumption will be closer to the base lapse rate. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. A higher base lapse rate is applied to contracts in the year the surrender charge period expires. To reflect NPR, the Company incorporates an additional spread over LIBOR into the discount rate used in the valuations of the embedded derivatives associated with its optional living benefit features. Since insurance liabilities are senior to debt, the Company believes that reflecting the financial strength ratings of the Company in the valuation of the liability or asset appropriately takes into consideration NPR. The additional spread over LIBOR is determined taking into consideration publicly available information relating to the financial strength of the Company. The Company adjusts these credit spreads to remove any illiquidity risk premium, which is subject to a floor based on a percentage of the credit spread. This additional spread, as mentioned in the table above, is applied at an individual contract level and only to those individual living benefit contracts in a liability position and generally not to those in a contra-liability position. An increase in the spread over LIBOR increases the discounting impact in the present value calculation and will generally cause a decrease in the fair value of the liability. The Company's benefit utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, including the estimated timing of the first lifetime income withdrawal by the contractholder. These assumptions vary based on the product type, the age of the contractholder, and the age of the contract. The utilization rate varies by product, based on the availability of an enhanced guarantee after a certain waiting period. For example, the utilization rates for a product with the opportunity to double the guaranteed value after a 10, 12 or 20 year accumulation period are adjusted based on contractholder experience related to such enhancement. Generally, the Company assumes a certain percentage of contractholders will utilize the guaranteed benefit (depending on the product type, contractholder age and contract age) and will begin lifetime withdrawals at various time intervals from contract inception with the remaining contractholders either beginning lifetime withdrawals immediately or never utilizing the benefit. The impact of changes in these assumptions is highly dependent on the contract type and age of the contractholder at the time of the sale and the timing of the first lifetime income withdrawal. The Company's withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. Larger differences in the withdrawal rate assumption compared to the contractual guaranteed income withdrawal percentage, either positive or negative, will generally result in a decrease in the fair value of the liability. Prior to the exhaustion of the contractholder's total account value the Company assumes contractholders will withdraw a certain percentage of the maximum allowable amount under the contract and will withdraw the maximum once the contractholder account value is completely exhausted. Based on historical experience the Company applies a set of age specific mortality rate adjustments compared to standard industry tables. For newly issued contracts, lower mortality rates are assumed in early durations. A mortality improvement assumption is also incorporated into the overall mortality table. Since the variable annuity living benefits generally provide for a minimum withdrawal benefit for life, increases in mortality rates will decrease the fair value of the liability, with the reverse being true with decreases in mortality rates. Market volatility also impacts the estimate of future expected benefit payments. The Company uses an equity volatility curve based on third party inputs. The curve starts with first year implied volatility and grades to a long-term realized volatility. The first year implied volatility determines the overall slope of the equity volatility curve. An increase in implied volatility will generally increase future expected benefit payments, causing an increase in the fair value of the liability. Separate Account Assets - In addition to the significant internally-priced Level 3 assets and liabilities presented and described above, the Company also has internally-priced separate account assets reported within Level 3. Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company's Unaudited Interim Statement of Financial Position. As a result, changes in value associated with these investments do not impact the Company's Unaudited Interim Statement of Operations. In addition, fees earned by the Company related to the management of most separate account assets classified as Level 3 do not change due to changes in the fair value of these investments. Quantitative information about significant internally-priced Level 3 separate account assets is as follows: Other Invested Assets - Separate account assets include $6.1 million of investments in real estate fund as of September 30, 2012 that are classified as Level 3 and reported at fair value which is determined by the Company's equity in net assets of the entities. Fair value estimates of real estate are based on property appraisal reports prepared by independent real estate appraisers. Key inputs and assumptions to the appraisal process include rental income and expense amounts, related growth rates, discount rates and capitalization rates. Because of the subjective nature of inputs and the judgment involved in the appraisal process, real estate investments are typically included in the Level 3 Classification. Key unobservable inputs to real estate valuation include capitalization rates, which range from 5.5% to 9.5% (7.5% weighted average) and discount rates, which range from 7.0% to 11.5% (8.5% weighted average). Transfers between Levels 1 and 2 - During the nine months ended September 30, 2012, $2.7 million of equity securities, available for sale transferred from Level 1 to Level 2. The assets that transferred were mutual funds that were priced on a net asset value. This transfer was the result of an ongoing monitoring assessment of pricing inputs to ensure appropriateness of the level classification in the fair value hierarchy. There were no transfers between Levels 1 and 2 for the three and nine months ended September 30, 2011. 28 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Changes in Level 3 assets and liabilities - The following tables provide summaries of the changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.
Three Months Ended September 30, 2012 -------------------------------------------------------------------------- Fixed Maturity Fixed Available For Maturities Sale - Fixed Maturities Available For Commercial Trading Equity Available For Sale Sale - Asset- mortgage- Account Assets Securities, - Corporate Backed backed - Equity Available for Securities Securities securities Securities Sale ------------------ ------------- ------------- -------------- ------------- (in thousands) Fair Value, beginning of period assets/(liabilities).............................. $ 7,346 $16,129 $ 2,666 $1,564 $1,086 Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net........................... (218) -- -- -- (31) Asset management fees and other income.................................. -- -- -- (173) -- Interest credited to policyholders' account balances......... -- -- -- -- -- Included in other comprehensive income (loss)........................... 122 46 (170) -- 9 Net investment income............................ 7 77 -- -- -- Purchases........................................ 14 -- -- -- -- Sales............................................ -- -- -- -- -- Issuances........................................ -- -- -- -- -- Settlements...................................... (785) (2,119) (2,496) -- -- Transfers into Level 3 (2)....................... -- 200 -- -- -- Transfers out of Level 3 (2)..................... -- -- -- -- -- ------- ------- --------- ------ ------ Fair Value, end of period assets/(liabilities).............................. $ 6,486 $14,333 $ -- $1,391 $1,064 ======= ======= ========= ====== ====== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net........................... $ -- $ -- $ -- $ -- $ -- Asset management fees and other income.................................. $ -- $ -- $ -- $ (173) $ -- Interest credited to policyholders' account balances......... $ -- $ -- $ -- $ -- $ -- Three Months Ended September 30, 2012 --------------------------------------------- Separate Reinsurance Account Future Policy Recoverables Assets (1) Benefits ------------------ ------------- ------------- (in thousands) Fair Value, beginning of period assets/(liabilities).............................. $66,642 $ 6,039 $ (90,556) Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net........................... 23,057 -- (31,375) Asset management fees and other income.................................. -- -- -- Interest credited to policyholders' account balances......... -- 47 -- Included in other comprehensive income....... -- -- -- Net investment income............................ -- -- -- Purchases........................................ 7,687 -- -- Sales............................................ -- -- -- Issuances........................................ -- -- (9,726) Settlements...................................... -- -- -- Transfers into Level 3 (2)....................... -- -- -- Transfers out of Level 3 (2)..................... -- -- -- ------- ------- --------- Fair Value, end of period assets/(liabilities).............................. $97,386 $ 6,086 $(131,657) ======= ======= ========= Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net........................... $23,505 $ -- $ (31,923) Asset management fees and other income.................................. $ -- $ -- $ -- Interest credited to policyholders' account balances......... $ -- $ 46 $ --
29 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) --------------------------------------------------------------------------------
Nine Months Ended September 30, 2012 -------------------------------------------------------------------------- Fixed Maturities Fixed Available For Maturities Sale - Fixed Maturities Available For Commercial Trading Equity Available For Sale Sale - Asset- mortgage- Account Assets Securities, - Corporate Backed backed - Equity Available for Securities Securities securities Securities Sale ------------------ ------------- ------------- -------------- ------------- (in thousands) Fair Value, beginning of period assets/(liabilities).............................. $ 1,755 $18,627 $ -- $ 1,569 $1,144 Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net........................... (718) 76 -- -- (63) Asset management fees and other income.................................. -- -- -- (178) -- Interest credited to policyholders' account balances......... -- -- -- -- -- Included in other comprehensive income (loss)........................... 119 316 (127) -- (17) Net investment income............................ 4 275 -- -- -- Purchases........................................ 4,636 -- -- -- -- Sales............................................ (30) -- -- -- -- Issuances........................................ -- -- -- -- -- Settlements...................................... (1,082) (4,897) (2,496) -- -- Transfers into Level 3 (2)....................... 4,826 200 2,623 -- -- Transfers out of Level 3 (2)..................... (3,024) (264) -- -- -- ------- ------- ------- --------- ------ Fair Value, end of period assets/(liabilities).............................. $ 6,486 $14,333 $ -- $ 1,391 $1,064 ======= ======= ======= ========= ====== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net........................... $ -- $ -- $ -- $ -- $ -- Asset management fees and other income.................................. $ -- $ -- $ -- $ (179) $ -- Interest credited to policyholders' account balances......... $ -- $ -- $ -- $ -- $ -- Nine Months Ended September 30, 2012 ------------------------------------------------------------ Separate Other Long-Term Reinsurance Account Future Policy Investments Recoverables Assets (1) Benefits ------------------ ------------- ------------- -------------- (in thousands) Fair Value, beginning of period assets/(liabilities).............................. $ 18 $53,677 $ 5,995 $ (76,996) Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net........................... (18) 22,842 -- (27,839) Asset management fees and other income.................................. -- -- -- -- Interest credited to policyholders' account balances......... -- -- 91 -- Included in other comprehensive income....... -- -- -- -- Net investment income............................ -- -- -- -- Purchases........................................ -- 20,867 -- -- Sales............................................ -- -- -- -- Issuances........................................ -- -- -- (26,822) Settlements...................................... -- -- -- -- Transfers into Level 3 (2)....................... -- -- -- -- Transfers out of Level 3 (2)..................... -- -- -- -- ------- ------- ------- --------- Fair Value, end of period assets/(liabilities).............................. $ -- $97,386 $ 6,086 $(131,657) ======= ======= ======= ========= Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net........................... $ -- $23,273 $ -- $ (28,616) Asset management fees and other income.................................. $ -- $ -- $ -- $ -- Interest credited to policyholders' account balances......... $ -- $ -- $ 90 $ --
30 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) --------------------------------------------------------------------------------
Three Months Ended September 30, 2011 ------------------------------------------------------------------------- Fixed Maturities, Fixed Available For Maturities Sale - Fixed Maturities Available For Commercial Equity Trading Available For Sale - Asset- Mortgage- Securities, Account Assets Sale - Corporate Backed Backed Available for - Equity Securities Securities Securities Sale Securities ---------------- ------------- ------------- ------------- -------------- (in thousands) Fair Value, beginning of period assets/(liabilities)................................ $ 5,680 $21,670 $ 5,019 $ 1,762 $ -- Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net....................................... 2 -- (74) -- Asset management fees and other income.................................... -- -- -- -- 15 Interest credited to policyholders' account balances.......................... -- -- -- -- -- Included in other comprehensive income (loss)....................................... (45) (93) -- 43 -- Net investment income.............................. (4) 71 -- -- -- Purchases.......................................... -- -- -- 1,000 -- Sales.............................................. -- -- -- -- -- Issuances.......................................... 12 -- -- -- -- Settlements........................................ (32) (1,923) -- -- -- Transfers into Level 3 (2)......................... -- -- -- -- -- Transfers out of Level 3 (2)....................... (3,872) -- (5,019) -- -- Other (4).......................................... -- -- -- (1,530) 1,529 ------- ------- --------- ------- ------ Fair Value, end of period assets/(liabilities)........ $ 1,741 $19,725 $ -- $ 1,201 $1,544 ======= ======= ========= ======= ====== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net....................................... $ -- $ -- $ -- $ (74) $ -- Asset management fees and other income.................................... $ -- $ -- $ -- $ -- $ 15 Interest credited to policyholders' account balances.......................... $ -- $ -- $ -- $ -- $ -- Three Months Ended September 30, 2011 ------------------------------------------------------------------------- Separate Other Reinsurance Account Future Policy Long-Term Recoverables Assets (1) Benefits Investments ---------------- ------------- ------------- ------------- (in thousands) Fair Value, beginning of period assets/(liabilities)................................ $ 9,457 $ 5,703 $ 53,827 $ 34 Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net....................................... 16,992 -- (128,818) 12 Interest credited to policyholders' account balances.......................... 123 -- -- Included in other comprehensive income (loss)....................................... -- -- -- -- Net investment income.............................. -- -- -- -- Purchases.......................................... 321 -- -- -- Sales.............................................. -- -- -- -- Issuances.......................................... -- -- (6,236) -- Settlements........................................ -- -- -- -- Transfers into Level 3 (2)......................... -- -- -- -- Transfers out of Level 3 (2)....................... -- -- -- -- ------- ------- --------- ------- Fair Value, end of period assets/(liabilities)........ $26,770 $ 5,826 (81,227) 46 ======= ======= ========= ======= Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net....................................... $17,035 $ -- $(128,701) $ 12 Asset management fees and other income.................................... $ -- $ -- $ -- $ -- Interest credited to policyholders' account balances.......................... $ -- $ 123 $ -- $ --
31 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) --------------------------------------------------------------------------------
Nine Months Ended September 30, 2011 -------------------------------------------------------------------------- Fixed Maturities, Fixed Available For Maturities Sale - Fixed Maturities Available For Commercial Equity Available For Sale - Asset- Mortgage- Securities, Other Sale - Corporate Backed Backed Available for Long-Term Securities Securities Securities Sale Investments ---------------- ------------- ------------- ------------- --------------- (in thousands) Fair Value, beginning of period assets/(liabilities)................................ $ 3,636 $16,619 $ -- $ 255 $ -- Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net....................................... 2 -- -- (454) 46 Asset management fees and other income.................................... -- -- -- -- -- Included in other comprehensive income (loss)....................................... (97) 8 -- 394 -- Net investment income.............................. 62 191 -- -- -- Purchases.......................................... 1,297 11,089 5,019 1,000 -- Sales.............................................. (99) -- -- -- -- Issuances.......................................... 60 -- -- -- -- Settlements........................................ (148) (4,217) -- -- -- Transfers into Level 3 (2)......................... 900 -- -- 1,536 -- Transfers out of Level 3 (2)....................... (3,872) (3,965) (5,019) -- -- Other (4).......................................... -- -- -- (1,530) -- ------- ------- ------- --------- ------ Fair Value, end of period assets/(liabilities)........ $ 1,741 $19,725 $ -- $ 1,201 $ 46 ======= ======= ======= ========= ====== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net....................................... $ -- $ -- $ -- $ (454) $ 42 Asset management fees and other income.................................... $ -- $ -- $ -- $ -- $ -- Interest credited to policyholders' account balances.......................... $ -- $ -- $ -- $ -- $ -- Nine Months Ended September 30, 2011 -------------------------------------------------------------------------- Separate Trading Account Reinsurance Account Future Policy Assets - Equity Recoverables Other Assets Assets (1) Benefits Securities ---------------- ------------- ------------- ------------- --------------- (in thousands) Fair Value, beginning of period assets/(liabilities)................................ $11,108 $ 5,888 5,393 $ 41,316 $ -- Total gains (losses) (realized/unrealized): Included in earnings: Realized investment gains (losses), net....................................... 14,567 -- -- (105,847) -- Asset management fees and other income.................................... -- -- -- 15 Interest credited to policyholders' account balances.......................... -- 433 -- -- Included in other comprehensive income......... -- (13) -- -- -- Net investment income.............................. -- -- -- -- -- Purchases.......................................... 1,095 104 -- -- -- Sales.............................................. -- -- -- -- -- Issuances.......................................... -- -- -- (16,696) -- Settlements........................................ -- -- -- -- -- Transfers into Level 3 (2)......................... -- -- -- -- -- Transfers out of Level 3 (2)....................... -- (5,979) -- -- -- Other (4).......................................... -- -- -- -- 1,529 ------- ------- ------- --------- ------ Fair Value, end of period assets/(liabilities)........ $26,770 $ -- $ 5,826 (81,227) 1,544 ======= ======= ======= ========= ====== Unrealized gains (losses) for the period relating to those Level 3 assets that were still held at the end of the period (3): Included in earnings: Realized investment gains (losses), net....................................... $14,696 $ -- $ -- $(105,419) $ -- Asset management fees and other income.................................... $ -- $ -- $ -- $ -- $ 15 Interest credited to policyholders' account balances.......................... $ -- $ -- $ 433 $ -- $ --
(1)Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Unaudited Interim Statement of Financial Position. (2)Transfers into or out of Level 3 are generally reported as the value as of the beginning of the quarter in which the transfer occurs. (3)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. (4)Other primarily represents reclasses of certain assets between reporting categories. 32 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Transfers - Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of broker quotes (that cannot be validated) for which information from third party pricing services (that can be validated) was previously utilized. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. Other significant transfers into and/or out of Level 3 are discussed below: For the nine months ended September 30, 2011 the majority of the Equity Securities Available for Sale transfers into Level 3 were due to the determination that the pricing inputs for perpetual preferred stocks provided by third party pricing services were primarily based on indicative broker quotes which could not always be verified against directly observable market information. Perpetual preferred stocks were included in Equity Securities Available for Sale and subsequently transferred to Trading Account Assets. Fair Value of Financial Instruments The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. However, in some cases, as described below, the carrying amount equals or approximates fair value.
September 30, 2012 December 31, 2011 --------------------------------------------- ------------------- Carrying Carrying Fair Value Amount (1) Fair Value Amount ---------------------------------- ---------- ---------- -------- Level 1 Level 2 Level 3 Total Total Total Total ------- -------- -------- -------- ---------- ---------- -------- (in thousands) Assets: Commercial mortgage and other loans.................... $ -- $ -- $244,311 $244,311 $227,924 $247,865 $230,201 Policy loans........................................... -- -- 250,324 250,324 171,661 235,706 177,162 Cash................................................... 2,721 -- -- 2,721 2,721 2,342 2,342 Accrued investment income.............................. -- 14,856 -- 14,856 14,856 17,275 17,275 Other assets........................................... -- 26,038 -- 26,038 25,874 19,763 19,486 ------ -------- -------- -------- -------- -------- -------- Total assets....................................... $2,721 $ 40,894 $494,635 $538,250 $443,036 $522,951 $446,466 ====== ======== ======== ======== ======== ======== ======== Liabilities: Policyholders' Account Balances - Investment Contracts. -- 115,764 14,932 130,696 130,869 113,010 113,938 Cash collateral for loaned securities.................. -- 4,156 -- 4,156 4,156 17,012 17,012 Securities sold under agreement to repurchase.......... -- -- -- -- -- 3,216 3,216 Short-term debt........................................ -- 27,040 -- 27,040 27,010 26,027 26,000 Long-term debt......................................... -- 46,147 -- 46,147 44,000 44,266 44,000 Other liabilities...................................... -- 37,042 -- 37,042 37,042 30,728 30,728 ------ -------- -------- -------- -------- -------- -------- Total liabilities.................................. $ -- $230,149 $ 14,932 $245,081 $243,077 $234,259 $234,894 ====== ======== ======== ======== ======== ======== ========
(1)Carrying values presented herein differ from those in the Company's Unaudited Interim Statement of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments. Financial statement captions excluded from the above table are not considered financial instruments. The fair values presented above for those financial instruments have been determined by using available market information and by applying market valuation methodologies, as described in more detail below. 33 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Commercial Mortgage and Other Loans The fair value of most commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate plus an appropriate credit spread for similar quality loans. The quality ratings for these loans, a primary determinant of the credit spreads and a significant component of the pricing process, are based on an internally-developed methodology. Policy Loans The fair value of policy loans is calculated using a discounted cash flow model based upon current U.S. Treasury rates and historical loan repayment patterns. Cash, Accrued Investment Income and Other Assets The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value. These assets include: cash, accrued investment income, and other assets that meet the definition of financial instruments, including receivables, such as unsettled trades and accounts receivable. Also included in other assets is an affiliated note whose fair value is determined in the same manner as the underlying debt described below under "Short-Term and Long-Term Debt". Policyholders' Account Balances - Investment Contracts Only the portion of policyholders' account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities, payout annuities and other similar contracts without life contingencies, fair values are derived using discounted projected cash flows based on interest rates that are representative of the Company's financial strength ratings, and hence reflect the Company's own non-performance risk. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. Cash Collateral for Loaned Securities This represents the collateral received or paid in connection with loaning or borrowing securities. For these transactions, the carrying value of the related asset/liability approximates fair value as they equal the amount of cash collateral received/paid. Securities Sold under Agreements to Repurchase The Company receives collateral for selling securities under agreements to repurchase or pledges collateral under agreements to resell. Repurchase and resale agreements are also generally short-term in nature, and therefore, the carrying amounts of these instruments approximate fair value. Short-Term and Long-Term Debt The fair value of short-term and long-term debt is generally determined by either prices obtained from independent pricing services, which are validated by the Company, or discounted cash flow models. These fair values consider the Company's own non-performance risk. Discounted cash flow models predominately use market observable inputs such as the borrowing rates currently available to the Company for debt and financial instruments with similar terms and remaining maturities. For commercial paper issuances and other debt with a maturity of less than 90 days, the carrying value approximates fair value. Other Liabilities Other liabilities are primarily payables, such as drafts, escrow deposits and accrued expense payables. Due to the short term until settlement of most of these liabilities, the Company believes that carrying value approximates fair value. 5. DERIVATIVE INSTRUMENTS Types of Derivative Instruments and Derivative Strategies Interest Rate Contracts Interest rate swaps are used by the Company to manage interest rate exposures arising from mismatches between assets and liabilities (including duration mismatches) and to hedge against changes in the value of assets it anticipates acquiring and other anticipated transactions and commitments. Swaps may be attributed to specific assets or liabilities or may be used on a portfolio basis. Under interest rate swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty at each due date. 34 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Equity Contracts Equity index options are contracts which will settle in cash based on differentials in the underlying indices at the time of exercise and the strike price. The Company uses combinations of purchases and sales of equity index options to hedge the effects of adverse changes in equity indices within a predetermined range. These hedges do not qualify for hedge accounting. Foreign Exchange Contracts Currency derivatives, including currency swaps, are used by the Company to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company either holds or intends to acquire or sell. Under currency swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between one currency and another at an exchange rate and calculated by reference to an agreed principal amount. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. Credit Contracts Credit derivatives are used by the Company to enhance the return on the Company's investment portfolio by creating credit exposure similar to an investment in public fixed maturity cash instruments. With credit derivatives the Company can sell credit protection on an identified name, or a basket of names in a first to default structure, and in return receive a quarterly premium. With first to default baskets, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket. If there is an event of default by the referenced name or one of the referenced names in a basket, as defined by the agreement, then the Company is obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced defaulted security or similar security. See credit derivatives written section for discussion of guarantees related to credit derivatives written. In addition to selling credit protection, the Company may purchase credit protection using credit derivatives in order to hedge specific credit exposures in the Company's investment portfolio. Embedded Derivatives The Company sells variable annuity contracts that include certain optional living benefit features that are accounted for as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these embedded derivatives to an affiliate, Pruco Re. The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value. Mark-to-market changes in the fair value of the underlying contractual guarantees are determined using valuation models as described in Note 7, and are recorded in "Realized investment gains (losses), net." The fair value of the living benefit feature embedded derivatives included in "Future policy benefits" was a liability of $132 million and $77 million as of September 30, 2012 and December 31, 2011, respectively. The fair value of the embedded derivatives related to the reinsurance of certain of these benefits to Pruco Re included in "Reinsurance recoverables" was an asset of $97 million and $54 million as of September 30, 2012 and December 31, 2011, respectively. The Company invests in fixed maturities that, in addition to a stated coupon, provide a return based upon the results of an underlying portfolio of fixed income investments and related investment activity. The Company accounts for these investments as available-for-sale fixed maturities containing embedded derivatives. Such embedded derivatives are marked to market through "Realized investment gains (losses), net," based upon the change in value of the underlying portfolio. 35 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- The table below provides a summary of the gross notional amount and fair value of derivatives contracts, excluding embedded derivatives which are recorded with the associated host, by the primary underlying. Many derivative instruments contain multiple underlyings.
September 30, 2012 December 31, 2011 --------------------------- -------------------------- Fair Value Fair Value Notional ------------------ Notional ----------------- Primary Underlying Amount Assets Liabilities Amount Assets Liabilities ------------------ -------- ------- ----------- -------- ------ ----------- (in thousands) Qualifying Hedges........... Currency/Interest Rate... Currency Swaps........... $22,332 $ 390 $ (860) $ 14,972 $ 221 $ (846) ------- ------- ------- -------- ------ ------- Total Qualifying Hedges..... $22,332 $ 390 $ (860) $ 14,972 $ 221 $ (846) ======= ======= ======= ======== ====== ======= Non-Qualifying Hedges Interest................. Interest Rate Swaps...... $57,200 $ 9,746 $ -- $ 57,200 $8,442 $ -- Credit................... Credit Default Swaps..... 9,275 621 (383) 17,000 118 (339) Currency/Interest Rate... Currency Swaps........... 9,115 -- (860) 16,615 -- (909) Equity................... Equity Options........... 3 135 -- -- -- -- ------- ------- ------- -------- ------ ------- Total Non-Qualifying Hedges. 75,593 10,502 (1,243) 90,815 8,560 (1,248) ======= ======= ======= ======== ====== ======= Total Derivatives (1)....... $97,925 $10,892 $(2,103) $105,787 $8,781 $(2,094) ======= ======= ======= ======== ====== =======
(1)Excludes embedded derivatives which contain multiple underlyings. The fair value of these embedded derivatives was a liability of $134 million and $80 million as of September 30, 2012 and December 31, 2011, respectively, included in "Future policy benefits" and "Fixed maturities, available-for-sale." Cash Flow Hedges The Company uses currency swaps in its cash flow hedge accounting relationships. This instrument is only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, and equity or embedded derivatives in any of its cash flow hedge accounting relationships. The following tables provide the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, excluding the offset of the hedged item in an effective hedge relationship:
Three Months Ended September 30, 2012 --------------------------------------------- Accumulated Realized Net Other Investment Investment Other Comprehensive Gains/(Losses) Income Income Income(1) -------------- ---------- ------ ------------- (in thousands) Qualifying Hedges Cash flow hedges Currency/Interest Rate...... $ -- $11 $-- $(465) -------- --- --- ----- Total qualifying hedges..... -- 11 -- (465) -------- --- --- ----- Non-qualifying hedges Interest Rate............... 782 -- -- -- Currency.................... 2 -- -- -- Currency/Interest Rate...... (282) -- (5) -- Credit...................... 2 -- -- -- Equity...................... -- -- -- -- Embedded Derivatives........ (13,964) -- -- -- -------- --- --- ----- Total non-qualifying hedges. (13,460) -- (5) -- -------- --- --- ----- Total....................... $(13,460) $11 $(5) $(465) ======== === === =====
(1)Amounts deferred in "Accumulated other comprehensive income (loss)." 36 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) --------------------------------------------------------------------------------
Nine Months Ended September 30, 2012 ---------------------------------------------- Accumulated Realized Net Other Investment Investment Other Comprehensive Gains/(Losses) Income Income Income(1) -------------- ---------- ------ ------------- (in thousands) Qualifying Hedges Cash flow hedges Currency/Interest Rate...... $ -- $10 $14 $144 -------- --- --- ---- Total qualifying hedges..... -- 10 14 144 -------- --- --- ---- Non-qualifying hedges Interest Rate............... 2,912 -- -- -- Currency.................... 2 -- -- -- Currency/Interest Rate...... (171) -- (3) -- Credit...................... (220) -- -- -- Equity...................... -- -- -- -- Embedded Derivatives........ (11,511) -- -- -- -------- --- --- ---- Total non-qualifying hedges. (8,988) -- (3) -- -------- --- --- ---- Total....................... $ (8,988) $10 $11 $144 ======== === === ====
(1)Amounts deferred in "Accumulated other comprehensive income (loss)."
Three Months Ended September 30, 2011 ---------------------------------------------- Accumulated Realized Net Other Investment Investment Other Comprehensive Gains/(Losses) Income Income Income(1) -------------- ---------- ------ ------------- (in thousands) Qualifying Hedges Cash flow hedges Currency/Interest Rate...... $ -- $(46) $19 $346 --------- ---- --- ---- Total qualifying hedges..... -- (46) 19 346 --------- ---- --- ---- Non-qualifying hedges Interest Rate............... 7,321 -- -- -- Currency.................... -- -- -- -- Currency/Interest Rate...... 718 -- -- -- Credit...................... 556 -- -- -- Equity...................... -- -- -- -- Embedded Derivatives........ (112,391) -- -- -- --------- ---- --- ---- Total non-qualifying hedges. (103,796) -- -- -- --------- ---- --- ---- Total....................... $(103,796) $(46) $19 $346 ========= ==== === ====
(1)Amounts deferred in "Accumulated other comprehensive income (loss)."
Nine Months Ended September 30, 2011 ---------------------------------------------- Accumulated Realized Net Other Investment Investment Other Comprehensive Gains/(Losses) Income Income Income(1) -------------- ---------- ------ ------------- (in thousands) Qualifying Hedges Cash flow hedges Currency/Interest Rate...... $ -- $(30) $(12) $342 -------- ---- ---- ---- Total qualifying hedges..... -- (30) (12) 342 -------- ---- ---- ---- Non-qualifying hedges Interest Rate............... 8,565 -- -- -- Currency.................... -- -- -- -- Currency/Interest Rate...... 283 -- -- -- Credit...................... 222 -- -- -- Equity...................... -- -- -- -- Embedded Derivatives........ (91,496) -- -- -- -------- ---- ---- ---- Total non-qualifying hedges. (82,426) -- -- -- -------- ---- ---- ---- Total....................... $(82,426) $(30) $(12) $342 ======== ==== ==== ====
(1)Amounts deferred in "Accumulated other comprehensive income (loss)." 37 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- For the period ending September 30, 2012, the ineffective portion of derivatives accounted for using hedge accounting was not material to the Company's results of operations and there were no material amounts reclassified into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging. Presented below is a roll forward of current period cash flow hedges in "Accumulated other comprehensive income (loss)" before taxes: (in thousands) -------------- Balance, December 31, 2011...................................... $(630) Net deferred gains (losses) on cash flow hedges from January 1 to September 30, 2012......................................... 120 Amount reclassified into current period earnings................ 24 ----- Balance, September 30, 2012..................................... $(486) ===== As of September 30, 2012, the Company did not have any qualifying cash flow hedges of forecasted transactions other than those related to the variability of the payment or receipt of interest or foreign currency amounts on existing financial instruments. The maximum length of time for which these variable cash flows are hedged is 14 years. Income amounts deferred in "Accumulated other comprehensive income (loss)" as a result of cash flow hedges are included in "Net unrealized investment gains (losses)" in the Unaudited Interim Statements of Equity. Credit Derivatives Written The Company wrote credit derivatives under which the Company was obligated to pay the counterparty the referenced amount of the contract and receive in return the defaulted security or similar security. The Company's maximum amount at risk under these credit derivatives, assuming the value of the underlying referenced securities become worthless, was $0 million and $10 million notional of credit default swap ("CDS") selling protection with an associated fair value of $0 million, at September 30, 2012 and December 31, 2011, respectively. These credit derivatives generally had maturities of less than 5 years and consisted of corporate securities within the finance industry. At December 31, 2011, the underlying credits had an NAIC designation rating of 1. The Company holds certain externally managed investments in the European market which contain embedded derivatives whose fair value are primarily driven by changes in credit spreads. These investments are medium term notes that are collateralized by investment portfolios primarily consisting of investment grade European fixed income securities, including corporate bonds and asset-backed securities, and derivatives, as well as varying degrees of leverage. The notes have a stated coupon and provide a return based on the performance of the underlying portfolios and the level of leverage. The Company invests in these notes to earn a coupon through maturity, consistent with its investment purpose for other debt securities. The notes are accounted for under U.S. GAAP as available-for-sale fixed maturity securities with bifurcated embedded derivatives (total return swaps). Changes in the value of the fixed maturity securities are reported in Equity under the heading "Accumulated other comprehensive income" and changes in the market value of the embedded total return swaps are included in current period earnings in "Realized investment gains (losses), net." The Company's maximum exposure to loss from these interests was $7 million at both September 30, 2012 and December 31, 2011. The fair value of the embedded derivatives included in "Fixed maturities, available-for-sale" was a liability of $2 million and $3 million at September 30, 2012 and December 31, 2011, respectively. In addition to writing credit protection, the Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company's investment portfolio. As of September 30, 2012 and December 31, 2011, the Company had $9 million and $7 million of outstanding notional amounts, respectively, reported at fair value as a liability of less than $1 million for both periods. Counterparty Credit Risk The Company is exposed to credit-related losses in the event of non-performance by our counterparty to financial derivative transactions. Generally, the credit exposure of the Company's OTC derivative transactions is represented by the contracts with a positive fair value (market value) at the reporting date after taking into consideration the existence of netting agreements. The Company has credit risk exposure to an affiliate, Prudential Global Funding, LLC or ("PGF"), related to its OTC derivative transactions. PGF manages credit risk with external counterparties by entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties, and by obtaining collateral where appropriate, see Note 8. Under fair value measurements, the Company incorporates the market's perception of its own and the counterparty's non-performance risk in determining the fair value of the portion of its OTC derivative assets and liabilities that are uncollateralized. Credit spreads are applied to the derivative fair values on a net basis by counterparty. To reflect the Company's own credit spread a proxy based on relevant debt spreads is applied to OTC derivative net liability positions. Similarly, the Company's counterparty's credit spread is applied to OTC derivative net asset positions. 38 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- 6. COMMITMENTS, CONTINGENT LIABILITIES AND LITIGATION AND REGULATORY MATTERS Commitments The Company has made commitments to fund $18 million of commercial loans as of September 30, 2012. The Company also made commitments to purchase or fund investments, mostly private fixed maturities, of $3.4 million as of September 30, 2012. Contingent Liabilities On an ongoing basis, the Company's internal supervisory and control functions review the quality of sales, marketing and other customer interface procedures and practices and may recommend modifications or enhancements. From time to time, this review process results in the discovery of product administration, servicing or other errors, including errors relating to the timing or amount of payments or contract values due to customers. In certain cases, if appropriate, the Company may offer customers remediation and may incur charges, including the costs of such remediation, administrative costs and regulatory fines. The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements. For additional discussion of these matters, see "Litigation and Regulatory Matters" below. It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual period could be materially affected as a result of payments in connection with the matters discussed above or other matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that ultimate payments in connection with these matters, after consideration of applicable reserves and rights to indemnification, should not have a material adverse effect on the Company's financial position. Litigation and Regulatory Matters The Company is subject to legal and regulatory actions in the ordinary course of its business. Pending legal and regulatory actions include proceedings specific to the Company and proceedings generally applicable to business practices in the industry in which it operates. The Company is subject to class action lawsuits and other litigation involving a variety of issues and allegations involving sales practices, claims payments and procedures, premium charges, policy servicing and breach of fiduciary duty to customers. The Company is also subject to litigation arising out of its general business activities, such as its investments, contracts, leases and labor and employment relationships, including claims of discrimination and harassment, and could be exposed to claims or litigation concerning certain business or process patents. In some of the pending legal and regulatory actions, plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. In addition, the Company, along with other participants in the businesses in which it engages, may be subject from time to time to investigations, examinations and inquiries, in some cases industry-wide, concerning issues or matters upon which such regulators have determined to focus. In some of the Company's pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain. The following is a summary of certain pending proceedings. The Company establishes accruals for litigation and regulatory matters when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but the matter, if material, is disclosed, including matters discussed below. As of September 30, 2012, the aggregate range of reasonably possible losses in excess of accruals established is not currently estimable. The Company reviews relevant information with respect to its litigation and regulatory matters on a quarterly and annual basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews. In March 2012, a qui tam action on behalf of the State of Minnesota, Total Asset Recovery v. MetLife Inc., et al., Prudential Financial Inc., The Prudential Insurance Company of America and Prudential Holdings, Inc., filed in the Fourth Judicial District, Hennepin County, in the State of Minnesota was served on the Company. The complaint alleges that the Company failed to escheat life insurance proceeds to the State of Minnesota in violation of the Minnesota False Claims Act and seeks injunctive relief, compensatory damages, civil penalties, treble damages, prejudgment interest, attorneys' fees and costs. In June 2012, the Company filed a motion to dismiss the complaint. In January 2012, a qui tam action on behalf of the State of Illinois, Total Asset Recovery Services v. Met Life Inc, et al., Prudential Financial, Inc., The Prudential Insurance Company of America, and Prudential Holdings, LLC, filed in the Circuit Court of Cook County, Illinois, was served on the Company. The complaint alleges that the Company failed to escheat life insurance proceeds to the State of Illinois in violation of the Illinois False Claims Whistleblower Reward and Protection Act and seeks injunctive relief, compensatory damages, civil penalties, treble damages, prejudgment interest, attorneys' fees and costs. In April 2012, the Company filed a motion to dismiss the complaint. In September 2012, the complaint was withdrawn without prejudice. In January 2012, a Global Resolution Agreement entered into by the Company and a third party auditor became effective upon its acceptance by the unclaimed property departments of 20 states and jurisdictions. Under the terms of the Global Resolution Agreement, the third party auditor acting on behalf of the signatory states will compare expanded matching criteria to the Social Security Master Death File ("SSMDF") to identify deceased insureds and contract holders where a valid claim has not been made. In February 2012, a Regulatory Settlement Agreement entered into by the Company to resolve a multi-state market conduct examination regarding its adherence to state claim settlement practices became effective upon its acceptance by the insurance departments of 20 states and jurisdictions. The Regulatory Settlement Agreement applies prospectively and requires the 39 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Company to adopt and implement additional procedures comparing its records to the SSMDF to identify unclaimed death benefits and prescribes procedures for identifying and locating beneficiaries once deaths are identified. Other jurisdictions that are not signatories to the Regulatory Settlement Agreement are considering proposals that would apply prospectively and require life insurance companies to take additional steps to identify unreported deceased policy and contract holders. These prospective changes and any escheatable property identified as a result of the audits and inquiries could result in: (1) additional payments of previously unclaimed death benefits; (2) the payment of abandoned funds to U.S. jurisdictions; and (3) changes in the Company's practices and procedures for the identification of escheatable funds and beneficiaries, which would impact claim payments and reserves, among other consequences. The Company is one of several companies subpoenaed by the New York Attorney General regarding its unclaimed property procedures. Additionally, the New York Department of Financial Services ("NYDFS") has requested that 172 life insurers (including the Company) provide data to the NYDFS regarding use of the SSMDF. The New York Office of Unclaimed Funds recently notified the Company that it intends to conduct an audit of the Company's compliance with New York's unclaimed property laws. The Minnesota Attorney General has also requested information regarding the Company's use of the SSMDF and its claim handling procedures and the Company is one of several companies subpoenaed by the Minnesota Department of Commerce, Insurance Division. In February 2012, the Massachusetts Office of the Attorney General requested information regarding the Company's unclaimed property procedures. In July 2010, the Company, along with other life insurance industry participants, received a formal request for information from the State of New York Attorney General's Office in connection with its investigation into industry practices relating to the use of retained asset accounts. In August 2010, the Company received a similar request for information from the State of Connecticut Attorney General's Office. The Company is cooperating with these investigations. The Company has also been contacted by state insurance regulators and other governmental entities, including the U.S. Department of Veterans Affairs and Congressional committees regarding retained asset accounts. These matters may result in additional investigations, information requests, claims, hearings, litigation, adverse publicity and potential changes to business practices. The Company's litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that the Company's results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of the Company's litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on the Company's financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on the Company's financial position. 7. REINSURANCE The Company participates in reinsurance with its affiliates Prudential Insurance, Prudential Arizona Reinsurance Captive Company, or "PARCC", Pruco Re, Prudential Arizona Reinsurance Universal Company or "PAR U", and Prudential Arizona Reinsurance Term Company, or "PAR TERM", through various plans of reinsurance, primarily on a yearly renewable term and coinsurance basis. This reinsurance provides risk diversification, additional capacity for future growth and limits the maximum net loss potential. For coinsurance agreements, all significant risks are ceded to the reinsurer, including mortality, investment, and lapse risk. For yearly renewable term agreements, mortality risk is the primary risk ceded to the reinsurer. Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to the Company under the terms of the reinsurance agreements. The Company believes a material reinsurance liability resulting from such inability of reinsurers to meet their obligations is unlikely. The Company has entered into various reinsurance agreements with an affiliate, Pruco Re, to reinsure its living benefit features sold on certain of its annuities as part of its risk management and capital management strategies. For additional details on these agreements, see Note 8. Reinsurance premiums, commissions, expense reimbursements, benefits and reserves related to reinsured long-duration contracts are accounted for using assumptions consistent with those used to account for the underlying contracts. Amounts recoverable from reinsurers, for long duration reinsurance arrangements, are estimated in a manner consistent with the claim liabilities and policy benefits associated with the reinsured policies. The affiliated reinsurance agreements are described further in Note 8. Effective April 1, 2008, the Company entered into an agreement to reinsure certain variable Corporate Owned Life Insurance "COLI" policies with Pruco Life. 40 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Reinsurance amounts included in the Company's Unaudited Interim Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011 are below.
Three Months Ended Nine Months Ended September 30, September 30, ------------------ -------------------- 2012 2011 2012 2011 -------- -------- --------- --------- (in thousands) Premiums......................................................... $ 42,889 $ 41,610 $ 129,700 $ 125,004 Reinsurance ceded................................................ (39,559) (37,936) (119,619) (114,394) -------- -------- --------- --------- Premiums...................................................... $ 3,330 $ 3,674 $ 10,081 $ 10,610 ======== ======== ========= ========= Direct policy charges and fees................................... $ 59,701 $ 40,974 $ 151,062 $ 120,092 Reinsurance ceded................................................ (25,589) (17,589) (44,984) (35,705) -------- -------- --------- --------- Policy charges and fees....................................... $ 34,112 $ 23,385 $ 106,077 $ 84,387 ======== ======== ========= ========= Policyholders' benefits ceded.................................... $ 28,296 $ 25,304 $ 82,567 $ 77,701 ======== ======== ========= ========= Realized capital gains (losses) net, associated with derivatives. $ 22,154 $ 16,964 $ 20,877 $ 14,579 ======== ======== ========= =========
Realized investment gains and losses include the reinsurance of certain of the Company's embedded derivatives. Changes in the fair value of the embedded derivatives are recognized through "Realized investment gains (losses)." The Company has entered into reinsurance agreements to transfer the risk related to certain living benefit options to Pruco Re. The reinsurance agreements contain derivatives and have been accounted for in the same manner as an embedded derivative. See Note 5 for additional information related to the accounting for embedded derivatives. Reinsurance premiums ceded for interest-sensitive products is accounted for as a reduction of policy charges and fee income. Reinsurance ceded for term insurance products is accounted for as a reduction of premiums. Reinsurance recoverables included in the Company's Unaudited Interim Statements of Financial Position at September 30, 2012 and December 31, 2011 were as follows: September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Domestic life insurance-affiliated....... $734,845 $467,687 Domestic individual annuities-affiliated. 97,417 53,696 Domestic life insurance-unaffiliated..... 2,208 1,379 -------- -------- $834,470 $522,762 ======== ======== Substantially all reinsurance contracts are with affiliates as of September 30, 2012 and December 31, 2011. These contracts are described further in Note 8. The gross and net amounts of life insurance face amount in force as of September 30, 2012 and 2011 were as follows:
2012 2011 ------------ ------------ (in thousands) Gross life insurance face amount in force. $100,611,102 $ 97,305,225 Reinsurance ceded......................... (90,287,029) (87,543,227) ------------ ------------ Net life insurance face amount in force... $ 10,324,073 $ 9,761,998 ============ ============
8. RELATED PARTY TRANSACTIONS The Company has extensive transactions and relationships with Prudential Insurance and other affiliates. Although we seek to ensure that these transactions and relationships are fair and reasonable, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. Expense Charges and Allocations Many of the Company's expenses are allocations or charges from Prudential Insurance or other affiliates. These expenses can be grouped into general and administrative expenses and agency distribution expenses. The Company's general and administrative expenses are charged to the Company using allocation methodologies based on business processes. Management believes that the methodology is reasonable and reflects costs incurred by Prudential Insurance to process transactions on behalf of the Company. The Company operates under service and lease agreements whereby services of officers and employees, supplies, use of equipment and office space are provided by Prudential Insurance. The Company reviews its allocation methodology periodically which it may adjust accordingly. 41 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- General and administrative expenses include allocations of stock compensation expenses related to a stock option program and a deferred compensation program issued by Prudential Financial. The expense charged to the Company for the stock option program was less than $1 million for the third quarter of 2012 and 2011, and less than $1 million for the nine months ended September 30, 2012 and 2011. The expense charged to the Company for the deferred compensation program was less than $1 million for the third quarter of 2012 and 2011, and less than $1 million for the nine months ended September 30, 2012 and 2011. The Company is charged for its share of employee benefits expenses. These expenses include costs for funded and non-funded contributory and non-contributory defined benefit pension plans. Some of these benefits are based on final group earnings and length of service while others are based on an account balance, which takes into consideration age, service and earnings during career. The Company's share of net expense for the pension plans was less than $1 million for the third quarter of 2012 and 2011, and $1 million for the nine months ended September 30, 2012 and 2011. Prudential Insurance sponsors voluntary savings plans for its employees (401(k) plans). The plans provide for salary reduction contributions by employees and matching contributions by the Company of up to 4% of annual salary. The Company's expense for its share of the voluntary savings plan was less than $1 million for the third quarter of 2012 and 2011, and $1 million for the nine months ended September 30, 2012 and 2011. The Company is charged distribution expenses from Prudential Insurance's agency network for both its domestic life and annuity products through a transfer pricing agreement, which is intended to reflect a market based pricing arrangement. Corporate Owned Life Insurance The Company has sold two Corporate Owned Life Insurance, or "COLI", policies to Prudential Insurance and one to Prudential Financial. The cash surrender value included in separate accounts for these COLI contracts was $1,163 million and $1,068 million as of September 30, 2012 and December 31, 2011, respectively. Fees related to these COLI policies were $4 million for the third quarter of 2012 and 2011, and $12 million for the nine months ended September 30, 2012 and 2011. Pruco Life Effective April 1, 2008, the Company entered into an agreement to reinsure certain variable COLI policies with Pruco Life. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. Reinsurance amounts included in the Company's Unaudited Interim Statements of Financial Position at September 30, 2012 and December 31, 2011 were as follows: September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Reinsurance recoverables. $4,995 $6,716 Other liabilities........ 0 2,190 Reinsurance amounts included in the Company's Unaudited Interim Statements of Operations and Comprehensive Income (Loss) in the three and nine months ended September 30, 2012 and 2011 are as follows: Three Months Ended Nine Months Ended September 30, September 30, ---------------- ---------------- 2012 2011 2012 2011 ------- ------- ------- ------- (in thousands) Gross policy charges and fee income. $(5,776) $(5,446) $(5,769) $(5,447) Policyholders' benefits............. (3,799) (3,472) (928) (237) PARCC The Company reinsures 90% of the risks under its term life insurance policies, written prior to January 1, 2010, excluding My Term and Return of Premium Term Life, or ("ROP Term Life"), through an automatic coinsurance agreement with PARCC. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. 42 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Reinsurance amounts included in the Company's Unaudited Interim Statements of Financial Position at September 30, 2012 and December 31, 2011 were as follows: September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Reinsurance recoverables................. $431,879 $403,222 Deferred policy acquisition costs........ (92,822) (96,712) Other liabilities (reinsurance payables). 9,492 9,322 Reinsurance amounts included in the Company's Unaudited Interim Statements of Operations and Comprehensive Income (Loss) in the three and nine months ended September 30, 2012 and 2011 are as follows:
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2012 2011 2012 2011 -------- -------- -------- -------- (in thousands) Premiums.......................................... $(88,568) $(28,423) $(94,579) $(30,710) Policyholders' benefits........................... 27,334 19,537 82,874 78,607 Reinsurance expense allowances, net of capitalization and amortization................. 5,970 6,336 18,375 19,327
PAR TERM The Company reinsures 95% of the risks under its term life insurance policies issued on or after January 1, 2010, excluding My Term, through an automatic coinsurance agreement with PAR TERM. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. Reinsurance amounts included in the Company's Unaudited Interim Statements of Financial Position at September 30, 2012 and December 31, 2011 were as follows: September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Reinsurance recoverables................. $ 43,841 $ 27,704 Deferred policy acquisition costs........ (46,313) (31,443) Other liabilities (reinsurance payables). 3,531 2,515 Reinsurance amounts included in the Company's Unaudited Interim Statements of Operations and Comprehensive Income (Loss) in the three and nine months ended September 30, 2012 and 2011 are as follows:
Three Months Ended Nine Months Ended September 30, September 30, ----------------- ---------------- 2012 2011 2012 2011 ------- ------ ------- ------- (in thousands) Premiums.......................................... (10,359) (6,540) (28,787) (17,758) Policyholders' benefits........................... 7,207 4,148 19,666 12,046 Reinsurance expense allowances, net of capitalization and amortization................. 1,969 1,331 5,455 3,110
Prudential Insurance The Company has a yearly renewable term reinsurance agreement with Prudential Insurance and reinsures the majority of all mortality risks not otherwise reinsured. Effective July 1, 2012 the Company recaptured a portion of this agreement related to its universal life policies and now reinsures these risks with PAR U as discussed below. 43 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Reinsurance amounts included in the Company's Unaudited Interim Statements of Financial Position at September 30, 2012 and December 31, 2011 were as follows: September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Reinsurance recoverables................. $24,604 $30,045 Other liabilities (reinsurance payables). 2,028 3,389 Reinsurance amounts included in the Company's Unaudited Interim Statements of Operations and Comprehensive Income (Loss) in the three and nine months ended September 30, 2012 and 2011 are as follows:
Three Months Ended Nine Months Ended September 30, September 30, ---------------- ------------------ 2012 2011 2012 2011 ------- ------- -------- -------- (in thousands) Premiums............................................................... $ (776) $ (687) $ (2,264) $ (2,057) Gross policy charges and fee income.................................... (1,468) (9,857) (20,871) (27,974) Policyholders' benefits................................................ 1,290 17,188 18,771 33,900 Reinsurance expense allowances, net of capitalization and amortization. (3,058) (2,363) (8,474) (7,295)
PAR U Effective July 1, 2012, the Company, entered into an automatic coinsurance agreement with PAR U, an affiliated company, to reinsure an amount equal to 95% of all the risks associated with its universal protector and universal plus policies. The Company is not relieved of its primary obligation to the policyholder as a result of this agreement. Under this agreement, an initial reinsurance premium of $359 million less a ceding allowance of $194 million, was paid to PAR U. Consideration for the amount due to PAR U was transferred on September 28, 2012 and was treated as if settled on the effective date of the coinsurance agreement. The time elapsed between the effective date and the settlement date resulted in a derivative equal to the earned interest and changes in market values from the effective date through settlement date related to fixed maturity and commercial mortgage securities from an asset portfolio within the Company. The affiliated asset transfers which occurred in settlement of the initial reinsurance premium are described below under "Affiliated Asset Transfers." Reinsurance amounts included in the Company's Unaudited Interim Statements of Financial Position at September 30, 2012 and December 31, 2011 were as follows: September 30, December 31, 2012 2011 ------------- ------------ (in thousands) Reinsurance recoverables..................... $229,526 $0 Policy loans................................. (13,134) 0 Deferred policy acquisition costs............ (1,790) 0 Other liabilities (reinsurance payables) (1). 40,967 0 (1)Includes the unamortized portion of the deferred gain arising from the coinsurance agreement between the Company and PAR U of $22 million as of September 30, 2012. Reinsurance amounts included in the Company's Unaudited Interim Statements of Operations and Comprehensive Income (Loss) in the three and nine months ended September 30, 2012 and 2011 are as follows:
Nine Months Three Months Ended Ended September 30, September 30, ------------------ -------------- 2012 2011 2012 2011 -------- ---- -------- ---- Policy charges and fee income.......................................... $(15,729) $0 $(15,729) $0 Net investment income.................................................. (76) 0 (76) 0 Other income........................................................... 1,367 0 1,367 0 Interest credited to policyholders' account balance.................... 1,869 0 1,869 0 Policyholders' benefits................................................ 5,357 0 5,357 0 Reinsurance expense allowances, net of capitalization and amortization. 3,320 0 3,320 0
44 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- Pruco Re The Company uses reinsurance as part of its risk management and capital management strategies for certain of its optional living benefit features. The following table provides information relating to fees ceded to Pruco Re under these agreements which are included in "Realized investment (losses) gains, net" on the Unaudited Interim Statements of Operations and Comprehensive Income (Loss) for the dates indicated.
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2012 2011 2012 2011 ------ ---- ------- ------ (in thousands) Pruco Reinsurance Effective October 1, 2011............................... Highest Daily Lifetime Income ("HDI")............... $3,158 $ -- $ 7,371 $ -- Spousal Highest Daily Lifetime Income ("SHDI")...... 982 -- 2,267 -- Highest Daily Lifetime 6 Plus ("HD6+").............. 2,936 -- 8,694 -- Spousal Highest Daily Lifetime 6 Plus ("SHD6+")..... 1,168 -- 3,459 -- Effective Since 2006.................................... Spousal Lifetime Five ("SLT5")...................... 42 42 126 132 Effective Since 2005.................................... Lifetime Five ("LT5")............................... 303 305 914 950 ------ ---- ------- ------ Total Pruco Reinsurance.................................... $8,589 $347 $22,831 $1,082 ------ ---- ------- ------
Effective October 1, 2011, the Company ceded the HDI, SHDI, HD6+ and SHD6+ benefits to Pruco Re, as noted in the table above. The Company paid an initial premium of $62 million and established a reinsurance recoverable of $31 million resulting in an initial ceding loss of $32 million, recognized in "Realized investment gains (losses), net" in 2011. The Company's reinsurance recoverables related to the above product reinsurance agreements were $97 million and $54 million as of September 30, 2012 and December 31, 2011, respectively. Realized gains ( losses) were $22 million and $17 million in the third quarter of 2012 and 2011, respectively; and $21 million and $15 million in the first nine months of 2012 and 2011, respectively. Changes in realized gains ( losses) for the third quarter of 2012 and 2011 and the first nine months of 2012 and 2011 were primarily due to changes in market conditions in each respective period. The underlying assets are reflected in "Reinsurance recoverables" in the Company's Unaudited Interim Statements of Financial Position. Deferred Policy Acquisition Costs Ceded to Term Reinsurance Affiliates In 2009 when implementing a revision to the reinsurance treaties with PARCC and PAR TERM modifications were made affecting premiums. The related impact on the deferral of ceded reinsurance expense allowances did not reflect this change resulting in the understatement of deferred reinsurance expense allowances. During the second quarter 2011, the Company recorded the correction, charging $1 million to net DAC amortization which represented the cumulative impact of this change. These adjustments are not material to any previously reported quarterly or annual financial statements. Affiliated Asset Administration Fee Income The Company participates in a revenue sharing agreement with AST Investment Services, Inc, formerly known as American Skandia Investment Services, Inc, whereby the Company receives fee income calculated on contractholder separate account balances invested in the Advanced Series Trust, formerly known as American Skandia Trust. Income received from AST Investment Services, Inc. related to this agreement was $5 million and $3 million for the three months ended September 30, 2012 and 2011, respectively, and $14 million and $9 million for the nine months ended September 30, 2012 and 2011, respectively. These revenues are recorded as "Asset administration fees" in the Unaudited Interim Statements of Operations and Comprehensive Income (Loss). The Company participates in a revenue sharing agreement with Prudential Investments LLC, whereby the Company receives fee income from policyholders' account balances invested in The Prudential Series Fund ("PSF"). Income received from Prudential Investments LLC, related to this agreement was $2 million and $2 million for the three months ended September 30, 2012 and 2011, respectively, and $5 million and $5 million for the nine months ended September 30, 2012 and 2011, respectively. These revenues are recorded as "Asset administration fees" in the Unaudited Interim Statements of Operations and Comprehensive Income (Loss). Affiliated Asset Transfers The Company buys and sells assets to and from affiliated companies. In December 2011, the Company purchased commercial loans from its parent company, Pruco Life. These securities had an amortized cost of $10 million and a fair market value of $11 million. The difference between amortized cost and fair market value of these transfers was accounted for as a decrease of $1 million to additional paid-in capital, net of taxes in 2011. 45 PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY Notes to Unaudited Interim Financial Statements - (Continued) -------------------------------------------------------------------------------- In December 2011, the Company sold fixed maturity securities to its parent company, Pruco Life. These securities had an amortized cost of $13 million and a fair market value of $14 million. The difference between amortized cost and fair market of these transfers was accounted for as an increase of $1 million to additional paid-in capital, net of taxes in 2011. In September 2012, the Company transferred fixed maturity securities and commercial mortgage loans to PAR U, an affiliated company, as consideration for the coinsurance agreement with this affiliate. These investments had an amortized cost of $142 million and a fair market value of $156 million. The net difference between amortized cost and the fair value was $14 million and was recorded as a realized investment gain on the Company's financial statements. The time elapsed between the effective date and the settlement date of the coinsurance agreement with PAR U resulted in a derivative loss of $5 million reflecting changes in market values of the consideration from the effective date through settlement date. In September 2012, the Company sold fixed maturity securities to its ultimate parent company, Prudential Financial, Inc. These securities had an amortized cost of $41 million and a fair market value of $46 million. The difference between amortized cost and fair market was accounted for as an increase of $3 million to additional paid-in capital, net of taxes in 2012. Debt Agreements The Company is authorized to borrow funds up to $200 million from affiliates to meet its capital and other funding needs. The Company had $27 million in short term debt as of September 30, 2012, including $16 million with Prudential Funding, LLC and $11 million with Prudential Financial, and $26 million in short-term debt as of December 31, 2011. Total interest expense on this short-term affiliated debt to the Company was $0.1 million and $0 million for the three and nine months ended September 30, 2012 and 2011, respectively. On December 16, 2011 the Company entered into a series of four $11 million borrowings with Prudential Financial, totaling $44 million. The loans have fixed interest rates ranging from 2.65% to 3.61% and maturity dates staggered one year apart, from December 16, 2013 to December 16, 2016. The total interest expense on these borrowings was $0.3 million and $1.0 million for the three and nine months ended September 30, 2012, respectively. Contributed Capital In June 2011, the Company received a capital contribution from Pruco Life in the amount of $21 million to fund acquisition costs for sales of variable annuities. In December 2011, the Company received a capital contribution from Pruco Life in the amount of $17 million to fund acquisition costs for sales of variable annuities. Derivative Trades In the ordinary course of business, the Company enters into over-the-counter ("OTC") derivative contracts with an affiliate, Prudential Global Funding, LLC. For these OTC derivative contracts, Prudential Global Funding, LLC has a substantially equal and offsetting position with external counterparties. 46 PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) FINANCIAL STATEMENTS (1) Financial Statements of the subaccounts of Pruco Life of New Jersey Flexible Premium Variable Annuity Account (Registrant) consisting of the Statements of Net Assets as of December 31, 2011; the Statements of Operations for the period ended December 31, 2011; the Statements of Changes in Net Assets for the periods ended December 31, 2011 and December 31, 2010; and the Notes relating thereto appear in the Statement of Additional Information (Part B of the Registration Statement). (2) Preliminary unaudited financial data of the subaccounts of Pruco Life of New Jersey Flexible Premium Variable Annuity Account (Registrant) consisting of the Statements of Net Assets as of December 31, 2012; the Statements of Operations for the period ended December 31, 2012; the Statements of Changes in Net Assets for the periods ended December 31, 2012 and December 31, 2011; and the Notes relating thereto appear in the Statement of Additional Information (Part B of the Registration Statement). The preliminary unaudited financial data included in this registration statement has been prepared by and is the responsibility of Prudential Life Insurance Company's management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary unaudited financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. (3) Financial Statements of Pruco Life Insurance Company of New Jersey (Depositor) consisting of the Statements of Financial Position as of December 31, 2011 and 2010; and the Related Statements of Operations, Changes in Stockholder's Equity and Cash Flows for the years ended December 31, 2011, 2010 and 2009; and the Notes to the Financial Statements appear in the Statement of Additional Information (Part B of the Registration Statement). (4) Financial Statements of Pruco Life Insurance Company of New Jersey (Depositor) consisting of Unaudited Interim Consolidated Statements of Financial Position, as of September 30, 2012 and December 31, 2011; Unaudited Interim Consolidated Statements of Equity, nine months ended September 30, 2012 and 2011; and Unaudited Interim Consolidated Statements of Cash Flows, nine months ended September 30, 2012; and any Notes relating thereto appear in the Statement of Additional Information . (Part B of the Registration Statement). (b) Exhibits: (1) Resolution of the Board of Directors of Pruco Life Insurance Company of New Jersey establishing the Pruco Life of New Jersey Flexible Premium Variable Annuity Account (Note 2) (2) Agreements for custody of securities and similar investments--Not Applicable. (3) (a) Distribution and Underwriting Agreement by and among Pruco Life Insurance Company of New Jersey (Depositor) and Prudential Annuities Distributors, Inc. "PAD" (Underwriter). (Note 3) (b) (1) Specimen Affiliated Insurer Amendment to Selling Agreement. (Note 6) (b) (2) List of Broker Dealers selling under Original Selling Agreement. (Note 8) (b) (3) List of Broker Dealers that executed Amendment to Selling Agreement. (Note 8) (4)(a) Specimen Variable Annuity Contract (including schedule pages) (P-BBND(2/13)-NY). (Note 11) (4)(b) Specimen Lifetime Income with Death Benefit Rider (including schedule pages) (P-RID-LI-DB(2/13)-NY). (Note 11) (4)(c) Specimen Medically Related Surrender Endorsement (P-END-MRS(2/13)-NY). (Note 11) (4)(d) Specimen Individual Retirement Annuity Endorsement P-END-IRA (2/10) - NY. (Note 10) (4)(e) Specimen Roth Individual Retirement Annuity Endorsement P-END-ROTH (2/10) - NY. (Note 10) (4)(f) Specimen Beneficiary Individual Retirement Annuity Endorsement P-END-IRABEN (2/10) - NY. (Note 10) (4)(g) Specimen Beneficiary Roth Individual Retirement Annuity Endorsement P-END-ROTHBEN (2/10) - NY. (Note 10) (4)(h) Specimen 403(b) Annuity Endorsement (P-END-403 (2/10) - NY. (Note 10) (5) Application for Variable Annuity Contract (including schedule pages) (P-BBND-APP(2/13)-NY). (Note 11) (6) (a) Articles of Incorporation of Pruco Life of New Jersey Insurance Company, as amended. (Note 4) (b) By-laws of Pruco Life Insurance Company of New Jersey. (Note 5) (7) Copy of reinsurance contract in connection with Variable Annuity Contracts - Not applicable (8) Other material contracts performed in whole or in part after the date the registration statement is filed: (a) Copy of AST Fund Participation Agreement. (Note 6) (b) Shareholder Information Agreement (Sample Rule 22C-2). (Note 7) (9) Opinion of Counsel. (Note 11) (10) Written Consent of Independent Registered Public Accounting Firm. (Note 1) (11) All financial statements omitted from Item 23, Financial Statements--Not Applicable. (12) Agreements in consideration for providing initial capital between or among Registrant, Depositor, Underwriter, or initial Contract owners--Not Applicable. (13) Powers of Attorney:- (a) Robert M. Falzon (Note 9) (b) Yanela C. Frias (Note 1) (c) Bernard J. Jacob (Note 9) (d) Robert F. O'Donnell (Note 9) (e) Richard F. Lambert (Note 11) (f) Kent D. Sluyter (Note 11) (Note 1) Filed Herewith. (Note 2) Incorporated by reference to Form N-4, Registration No. 333-18117, filed December 18, 1996 on behalf of the Pruco Life of New Jersey Flexible Premium Variable Annuity Account. (Note 3) Incorporated by reference to Post-Effective Amendment No. 9, Form N-4, Registration No. 333-131035, filed December 18, 2007 on behalf of Pruco Life of New Jersey Flexible Premium Variable Annuity Account. (Note 4) Incorporated by reference to Form S-6, Registration No. 002-89780, filed April 28,1997 on behalf of the Pruco Life of New Jersey Variable Appreciable Account. (Note 5) Incorporated by reference to Form S-6, Registration No. 333-85117 filed August 13, 1999 on behalf of the Pruco Life of New Jersey Variable Appreciable Account. (Note 6) Incorporated by reference to Pre-Effective Amendment No. 1 to Registration No. 333-162678, filed February 3, 2010 on behalf of Pruco Life of New Jersey Flexible Premium Variable Annuity Account. (Note 7) Incorporated by reference to Post-Effective Amendment No. 3, Form N-4, Registration No. 333-131035, filed April 19, 2007 on behalf of Pruco Life of New Jersey Flexible Premium Variable Annuity Account. (Note 8) Incorporated by reference to Post-Effective Amendment No. 1 to Registration No. 333-162678, filed April 19, 2010 on behalf of Pruco Life of New Jersey Flexible Premium Variable Annuity Account. (Note 9) Incorporated by reference to the initial Registration Statement on Form N-4, File No. 333-184542, filed October 22, 2012 on behalf of Pruco Life of New Jersey Flexible Premium Variable Annuity Account. (Note 10) Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4, Registration No. 333-162678, as filed February 3, 2010 on behalf of the Pruco Life of New Jersey Flexible Premium Variable Annuity Account. (Note 11) Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4, Registration No. 333-184542, filed January 31, 2013 on behalf of Pruco Life of New Jersey Flexible Premium Variable Annuity Account. Item 25. Directors and Officers of the Depositor (engaged directly or indirectly in Registrant's variable annuity business) : Name and Principal Business Address Position and Offices with Depositor ----------------------------------- ------------------------------------- Kent D. Sluyter Director and Senior Vice President 213 Washington Street Newark, New Jersey 07102-2992 Yanela C. Frias Vice President, Director, 213 Washington Street Chief Accounting Officer, and Newark, New Jersey J 07102-2992 Chief Financial Officer Joseph D. Emanuel Vice President, Chief Legal Officer, One Corporate Drive and Secretary Shelton, Connecticut 06484-6208 Robert M. Falzon Director and Treasurer 213 Washington Street Newark, New Jersey J 07102-2992 Sarah J. Hamid Senior Vice President, Chief Actuary, 751 Broad Street and Appointed Actuary Newark, New Jersey 07102-3714 Bernard J. Jacob Director 213 Washington Street Newark, New Jersey 07102-2992 Richard F. Lambert Director 751 Broad Street Newark, New Jersey 07102-3714 John Chieffo Director 751 Broad Street Newark, New Jersey 07102-3714 James M. O'Connor Senior Vice President and Actuary 200 Wood Avenue South Iselin, New Jersey 08830-2706 Robert F. O'Donnell Director, Chief Executive Officer, One Corporate Drive and President Shelton, Connecticut 06484-6208 Item 26. Persons Controlled by or under Common Control with the Depositor or Registrant The Registrant separate account may be deemed to be under common control (or where indicated, identical to) the following registered separate accounts that are sponsored either by the depositor or an insurer that is an affiliate of the depositor: The Prudential Discovery Premier Group Variable Contract Account, The Prudential Variable Appreciable Account, The Prudential Individual Variable Contract Account, The Prudential Variable Contract Account GI-2, The Prudential Qualified Individual Variable Contract Account, The Prudential Variable Contract Account-24, The Prudential Discovery Select Group Variable Annuity Contract Account (separate accounts of Prudential); the Pruco Life PRUvider Variable Appreciable Account; the Pruco Life Variable Universal Account, the Pruco Life Variable Insurance Account, the Pruco Life Variable Appreciable Account, the Pruco Life Single Premium Variable Life Account, the Pruco Life Single Premium Variable Annuity Account; the Pruco Life of New Jersey Variable Insurance Account, the Pruco Life of New Jersey Variable Appreciable Account, the Pruco Life of New Jersey Single Premium Variable Life Account, and the Pruco Life of New Jersey Single Premium Variable Annuity Account. Pruco Life, a life insurance company organized under the laws of Arizona, is a direct wholly-owned subsidiary of The Prudential Insurance Company of America and an indirect wholly-owned subsidiary of Prudential Financial, Inc. Pruco Life of New Jersey, a life insurance company organized under the laws of New Jersey, is a direct wholly-owned subsidiary of Pruco Life, and an indirect wholly-owned subsidiary of Prudential Financial, Inc. The subsidiaries of Prudential Financial Inc. ("PFI") are listed in the Exhibits to the Annual Report on Form 10-K of PFI (Registration No. 001-16707), filed on February 24, 2012, the text of which is hereby incorporated by reference. In addition to those subsidiaries, Prudential holds all of the voting securities of Prudential's Gibraltar Fund, Inc., a Maryland corporation, in three of its separate accounts. Prudential's Gibraltar Fund, Inc. is registered as an open-end, diversified, management investment company under the Investment Company Act of 1940 (the "Act"). The separate accounts listed above are registered as unit investment trusts under the Act. Registrant may also be deemed to be under common control with The Prudential Variable Contract Account-2, The Prudential Variable Contract Account-10, and The Prudential Variable Account Contract Account-11, (separate accounts of The Prudential Insurance Company of America which are registered as open-end, diversified management investment companies). Item 27. Number of Contract Owners As of this date, the Registrant has not commenced sales of the contracts under this Registration Statement. Therefore, there are no contract owners of contracts offered by the Registrant under this Registration Statement. Item 28. Indemnification The Registrant, in conjunction with certain of its affiliates, maintains insurance on behalf of any person who is or was a trustee, director, officer, employee, or agent of the Registrant, or who is or was serving at the request of the Registrant as a trustee, director, officer, employee or agent of such other affiliated trust or corporation, against any liability asserted against and incurred by him or her arising out of his or her position with such trust or corporation. New Jersey, being the state of organization of Pruco Life Insurance Company of New Jersey ("PLNJ"), permits entities organized under its jurisdiction to indemnify directors and officers with certain limitations. The relevant provisions of New Jersey law permitting indemnification can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-law, Article V, which relates to indemnification of officers and directors, is incorporated by reference to Exhibit 1A(6)(c) to Form S-6 filed August 13, 1999 on behalf of the Pruco Life of New Jersey Variable Appreciable Account. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. Item 29. Principal Underwriters (a) Prudential Annuities Distributors, Inc. (PAD) PAD serves as principal underwriter for variable annuities issued by each of Pruco Life Insurance Company, Pruco Life Insurance Company of New Jersey, and Prudential Annuities Life Assurance Corporation. Each of those insurers is part of Prudential Annuities, a business unit of Prudential Financial, that primarily issues individual variable annuity contracts. The separate accounts of those insurance companies, through which the bulk of the variable annuities are issued, are the Pruco Life Flexible Premium Variable Annuity Account, the Pruco Life of New Jersey Flexible Premium Variable Annuity Account, and Prudential Annuities Life Assurance Corporation Variable Account B. (b) Information concerning the directors and officers of PAD is set forth below: POSITIONS AND OFFICES NAME WITH UNDERWRITER ---- ------------------------------------- Timothy S. Cronin Senior Vice President One Corporate Drive Shelton, Connecticut 06484-6208 Yanela C. Frias Director 213 Washington Street Newark, New Jersey 07102-2992 Robert Falzon Treasurer 751 Broad Street Newark, New Jersey 07102-3714 Bruce Ferris Executive Vice One Corporate Drive President and Director Shelton, Connecticut 06484-6208 George M. Gannon President, Chief 2101 Welsh Road Executive Officer, Dresher, Pennsylvania Chief Operations 19025-5001 Officer and Director Jacob M. Herschler Senior Vice President One Corporate Drive and Director Shelton, Connecticut 06484-6208 Patricia L. Kelley Senior Vice President, One Corporate Drive Chief Compliance Shelton, Connecticut Officer and Director 06484-6208 Steven P. Marenakos Senior Vice President One Corporate Drive and Director Shelton, Connecticut 06484-6208 Yvonne Rocco Senior Vice President 213 Washington Street Newark, New Jersey 07102-2992 Steven Weinreb Chief Financial Officer 213 Washington Street and Controller Newark, New Jersey 07102-2917 William D. Wilcox Vice President, One Corporate Drive Secretary and Chief Shelton, Connecticut Legal Officer 06484-6208 (c) Commissions received by PAD during 2012 with respect to all individual annuities issued by Pruco Life of New Jersey. Net Underwriting Name of Principal Discounts and Compensation on Brokerage Underwriter Commissions Redemption Commissions Compensation ----------------- ---------------- --------------- ----------- ------------ Prudential Annuities Distributors, Inc.* $106,497,788 $-0- $-0- $-0- * PAD did not retain any of these commissions. Item 30. Location of Accounts and Records All accounts, books or other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder are maintained by the Registrant through The Prudential Insurance Company of America, at its offices in Shelton, Connecticut and Fort Washington, Pennsylvania. Item 31. Management Services Summary of any contract not discussed in Part A or Part B of the registration statement under which management-related services are provided to the Registrant--Not Applicable. Item 32. Undertakings (a) Registrant undertakes to file a post-effective amendment to this Registrant Statement as frequently as is necessary to ensure that the audited financial statements in the Registration Statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a statement of additional information, or (2) a postcard or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a statement of additional information. (c) Registrant undertakes to deliver any statement of additional information and any financial statements required to be made available under this Form promptly upon written or oral request. (d) Restrictions on withdrawal under Section 403(b) Contracts are imposed in reliance upon, and in compliance with, a no-action letter issued by the Chief of the Office of Insurance Products and Legal Compliance of the U.S. Securities and Exchange Commission to the American Council of Life Insurance on November 28, 1988. (e) Pruco Life Insurance Company of New Jersey hereby represents that the fees and charges deducted under the contracts described in this Registration Statement are in the aggregate reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Pruco Life Insurance Company of New Jersey. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf in the City of Newark and State of New Jersey on this 12/th/ day of February, 2013. PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT REGISTRANT BY: PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY DEPOSITOR /s/ Robert F. O'Donnell ------------------------- Robert F. O'Donnell President and Chief Executive Officer PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY DEPOSITOR By: /s/ Robert F. O'Donnell ------------------------- Robert F. O'Donnell President and Chief Executive Officer SIGNATURES As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. SIGNATURE TITLE DATE --------- ----------------------------- ------------------ Robert F. O'Donnell* --------------------- Director, President and Chief Robert F. O'Donnell Executive Officer February 12, 2013 Yanela C. Frias* Chief Financial Officer, --------------------- Chief Accounting Officer, Yanela C. Frias Vice President and Director February 12, 2013 --------------------- John Chieffo Director Robert M. Falzon* --------------------- Robert M. Falzon Director February 12, 2013 Bernard J. Jacob* --------------------- Bernard J. Jacob Director February 12, 2013 Richard F. Lambert* -------------------- Richard F. Lambert Director February 12, 2013 Kent D. Sluyter* -------------------- Kent D. Sluyter Director February 12, 2013 By:. /s/Lynn K. Stone ------------------------- Lynn K. Stone * Executed by Lynn K. Stone on behalf of those indicated pursuant to Power of Attorney. EXHIBITS (10) Written Consent of Independent Registered Public Accounting Firm (13)(b) Power of Attorney - Yanela C. Frias