-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T4CWF9FQk81p4d5u/TcboQQ37Qsp56QVerOhySzg2y7VcaoO2MgLEvNhCKRNBWtq 2BlVJVMrPcWxUPQvMx14/Q== 0000950110-97-000964.txt : 19970520 0000950110-97-000964.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950110-97-000964 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUCO LIFE INSURANCE CO CENTRAL INDEX KEY: 0000777917 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 221944557 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-37587 FILM NUMBER: 97609351 BUSINESS ADDRESS: STREET 1: 213 WASHINGTON ST STREET 2: 111 DURHAM AVENUE CITY: NEWARK STATE: NJ ZIP: 07102 BUSINESS PHONE: 2018026000 MAIL ADDRESS: STREET 1: 213 WASHINGTON STREET CITY: NEWARK STATE: NJ ZIP: 07102 10-Q 1 FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q ---------- (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 33-37587 PRUCO LIFE INSURANCE COMPANY ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Arizona 22-1944557 ------------------------------ ------------------- (State or other jurisdiction, (IRS Employer incorporation or organization) Identification No.) 213 Washington Street, Newark, New Jersey 07102 --------------------------------------------------- (Address of principal executive offices) (Zip Code) (201) 802-3780 ---------------------------------------------------- (Registrant's Telephone Number, including area code) Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- State the aggregate market value of the voting stock held by non-affiliates of the registrant: NONE Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of March 31, 1997. Common stock, par value of $10 per share: 250,000 shares outstanding ================================================================================ PRUCO LIFE INSURANCE COMPANY INDEX TO FINANCIAL STATEMENTS INDEX PAGE NO. -------- COVER PAGE 1 INDEX 2 PART I -- FINANCIAL STATEMENTS ITEM 1. PRUCO LIFE INSURANCE COMPANY CONSOLIDATED FINANCIAL STATEMENTS: STATEMENTS OF FINANCIAL POSITION -- MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996 3 STATEMENTS OF OPERATIONS (UNAUDITED) -- THREE MONTHS ENDED MARCH 31, 1997 AND 1996 4 STATEMENTS OF STOCKHOLDER'S EQUITY -- THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996 5 STATEMENTS OF CASH FLOWS (UNAUDITED) -- THREE MONTHS ENDED MARCH 31, 1997 AND 1996 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 9 ITEM 2. CHANGE IN SECURITIES 9 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 9 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9 ITEM 5. OTHER INFORMATION 9 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9 SIGNATURE PAGE 11 2 PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996 MARCH 31, DECEMBER 31, 1997 1996 ----------- ---------- (000'S) ASSETS Fixed maturities Held to maturity $ 372,690 $ 405,731 Available for sale 2,050,982 2,236,817 Equity securities 7,899 3,748 Mortgage loans 43,038 46,915 Policy loans 654,951 639,782 Other long term investments 1,417 4,528 Short term investments 415,196 169,830 ----------- ---------- Total invested assets 3,546,173 3,507,351 ----------- ---------- Cash 186,150 73,766 Deferred policy acquisition costs 648,168 633,159 Premiums due 8,912 9,084 Accrued investment income 61,882 62,110 Receivable from affiliates 10,500 1,901 Federal income tax receivable 539 7,191 Reinsurance recoverable on unpaid losses 27,014 27,014 Other assets 90,700 20,000 Separate Account assets 5,576,568 5,336,851 ----------- ---------- TOTAL ASSETS $10,156,606 $9,678,427 =========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES Future policy benefits and other policyholders' liabilities $ 560,106 $ 557,351 Policyholders' account balances 2,181,626 2,188,862 Deferred federal income tax payable 149,768 148,960 Payable to affiliate 74,729 51,729 Other liabilities 239,325 55,090 Separate Account liabilities 5,546,151 5,277,454 ----------- ---------- TOTAL LIABILITIES 8,751,705 8,279,446 ----------- ---------- CONTINGENCIES STOCKHOLDER'S EQUITY Common Stock, $10 par value; 1,000,000 shares, authorized; 250,000 shares, issued and outstanding at March 31, 1997 and December 31, 1996 2,500 2,500 Paid-in-capital 439,582 439,582 Net unrealized investment (losses) gains (less deferred income tax) (1,197) 12,402 Retained earnings 964,016 944,497 ----------- ---------- TOTAL STOCKHOLDER'S EQUITY 1,404,901 1,398,981 ----------- ---------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $10,156,606 $9,678,427 =========== ========== 3 PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (UNAUDITED) THREE MONTHS ENDED MARCH 31, ----------------------- 1997 1996 -------- -------- (000'S) REVENUES Premiums $ 12,243 $ 10,555 Policy charges and fee income 76,333 78,805 Net investment income 59,221 60,851 Realized investment gains 4,919 7,175 Other income 5,850 2,739 -------- -------- TOTAL REVENUES 158,566 160,125 -------- -------- BENEFITS AND EXPENSES Policyholders' benefits 49,332 39,822 Interest credited to policyholders' account balances 24,704 28,809 Other operating costs and expenses 52,305 32,051 -------- -------- TOTAL BENEFITS AND EXPENSES 126,341 100,682 -------- -------- Income before income tax provision 32,225 59,443 -------- -------- Income tax provision 12,706 20,805 -------- -------- NET INCOME $ 19,519 $ 38,638 ======== ======== 4 PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY MARCH 31, 1997 (UNAUDITED) AND DECEMBER 31, 1996 THREE MONTHS ENDED YEAR ENDED MARCH 31, DECEMBER 31, 1997 1996 ---------- ---------- (000'S) COMMON STOCK Balance, beginning of year $ 2,500 $ 2,500 Issued during period -- -- ---------- ---------- Balance, end of period 2,500 2,500 ---------- ---------- PAID IN CAPITAL Balance, beginning of year 439,582 439,582 Paid in during period -- -- ---------- ---------- Balance, end of period 439,582 439,582 ---------- ---------- NET UNREALIZED INVESTMENT (LOSSES) GAINS (LESS DEFERRED INCOME TAX) Balance, beginning of year 12,402 30,836 Net change in unrealized investment (losses) gains (13,599) (18,434) ---------- ---------- Balance, end of period (1,197) 12,402 ---------- ---------- RETAINED EARNINGS Balance, beginning of year 944,497 795,275 Net income 19,519 149,222 ---------- ---------- Balance, end of period 964,016 944,497 ---------- ---------- TOTAL STOCKHOLDER'S EQUITY $1,404,901 $1,398,981 ========== ========== 5 PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 1996 --------- --------- (000'S) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 19,519 $ 38,638 Adjustments to reconcile net income to net cash from operating activities: Increase in future policy benefits and other policyholders' liabilities 2,755 15,988 General account policy fee income (6,786) (13,427) Interest credited to policyholders' account balances 24,704 28,809 Net decrease (increase) in Separate Accounts 28,980 (7,067) Net realized investment gains (4,919) (7,175) Amortization and other non-cash items 17,756 18,753 Change in: Accrued investment income 228 2,177 Premiums due 172 (82) Receivable from affiliates (8,599) 550 Deferred policy acquisition costs (15,009) (11,770) Federal income tax receivable 6,652 13,660 Other assets (70,700) (1,149) Payable to affiliate 23,000 (15,068) Deferred federal income tax payable 808 (4,012) Other liabilities 184,235 34,781 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES 202,796 93,606 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the sale/maturity of: Fixed maturities: Held to maturity 35,890 26,584 Available for sale 719,943 888,902 Equity securities -- 21 Mortgage loans 3,957 1,839 Other long term investments 3,148 3 Investment real estate -- (7) Payments for the purchase of: Fixed maturities: Held to maturity (3,150) (45,037) Available for sale (560,311) (839,841) Equity securities (4,163) (840) Other long term investments (37) (501) Policy loans (15,169) (17,750) Net payments of short term investments (245,366) (75,599) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES (65,258) (62,226) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Policyholders' account balances: Deposits 330,710 83,407 Withdrawals (net of transfers to/from separate accounts) (355,864) (109,684) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES (25,154) (26,277) --------- --------- Net increase in Cash 112,384 5,103 Cash, beginning of year 73,766 41,435 --------- --------- CASH, END OF PERIOD $ 186,150 $ 46,538 ========= =========
6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES MARCH 31, 1997 (UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES A. PRINCIPLES OF CONSOLIDATION The accompanying unaudited consolidated financial statements include the accounts of Pruco Life Insurance Company (Pruco Life), a stock life insurance company, and its subsidiaries (collectively, the Company). Pruco Life has two subsidiaries, Pruco Life Insurance Company of New Jersey and The Prudential Life Insurance Company of Arizona. Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of America (Prudential), a mutual life insurance company. The Company markets individual life insurance and deferred annuities primarily through Prudential's sales force in the United States, and in Taiwan. All significant intercompany balances and transactions have been eliminated in consolidation. B. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and do not include all of the other information and disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1996 included in the Company's Annual Report on Form 10-K for that year. The accompanying consolidated financial statements have not been audited by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management such financial statements include all adjustments, consisting only of normal recurring accruals, necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the three months ended March 31, 1997 may not be indicative of the results that may be expected for the year ending December 31, 1997. C. RECLASSIFICATIONS To facilitate comparisons with the current year, certain amounts in the prior years have been reclassified. 2. CONTINGENCIES Several actions have been brought against the Company on behalf of those persons who purchased life insurance policies based on complaints about sales practices engaged in by Prudential, the Company and agents appointed by Prudential and the Company. Prudential has agreed to indemnify the Company for any and all losses resulting from such litigation. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Pruco Life Insurance Company consists of Pruco Life Insurance Company and its subsidiaries (collectively, the Company). Pruco Life Insurance Company is a wholly owned subsidiary of The Prudential Insurance Company of America (Prudential). The Company markets individual life insurance primarily through Prudential's sales force in the United States and in Taiwan. The company held $10.2 billion in assets at March 31, 1997, $5.6 billion of which were held in Separate Accounts under variable life insurance policies and variable annuity contracts. The remaining assets were held in the general account for investment primarily in bonds, short-term investments and policy loans. The business climate in the insurance industry remained unchanged during the first quarter as compared to 1996. Regulatory changes which opened the insurance industry to other financial institutions, particularly banks and mutual funds, continued to heighten competition in investment type products since those institutions were positioned to deliver the same products through large, stable distribution channels. In addition, the industry has been beset by negative publicity following the discovery of unacceptable sales practices that resulted in investigations of most large insurers, including Prudential. The Company's assets were $10.2 billion at March 31, 1997 compared to $9.7 billion at December 31, 1996. Net income amounted to $19.5 million, a decrease of $19.1 million compared to the $38.6 million earned in first quarter of 1996. 1. RESULTS OF OPERATIONS (a) 1997 versus 1996 Premiums increased by $1.7 million for the three months of 1997 from $10.5 million in 1996 to $12.2 million for the same period in 1997. This change is primarily due to increased sales related to traditional life insurance products in our Taiwan branch which continued to expand its business throughout 1997, along with a steady flow of renewals in the US. Other income increased $3.1 million for the quarter ended March 31, 1997 from the same period in 1996. This increase is due to an increase in separate account net gains. Policyholders' benefits increased $9.5 million during the current quarter to $49.3 million. This increase is attributable to the mortality costs associated with the Company's products. Additionally, increase in reserves associated with new sales of annuity products including Discovery Preferred and Discovery Select, which was introduced to the market in October 1996. Other operating expenses increased $20.2 million for the quarter ended March 31, 1997 compared to the same period for 1996. To increase competitive positioning in the market place, technological advancements are being made in the annuity processing and customer service areas. Also enhanced product developments and marketing strategies were created to better suit our customers needs. Implementation of these strategies has increased current costs, but will create higher future sales and revenues. In addition, operational expenses associated with the introduction of Discovery Select increased costs. 2. LIQUIDITY For an insurance company, cash needs, for the purpose of paying current benefits, making policy loans, and paying expenses, are met primarily from premiums and investment income. Benefit expenses incurred in the three months ended March 31, 1997, and 1996 were $126.3 million, and $100.7 million, respectively. Cash flows are anticipated to be sufficient to meet the Company's liquidity needs for the foreseeable future. 3. CAPITAL RESOURCES The primary components of the Company's total assets of $10.2 billion at March 31, 1997 are as follows (as a percentage of total assets): fixed income securities 23.9%, separate account assets (fixed income and equity securities) 54.9%, policy loans 6.5%, and other assets 14.7%. 8 PART II ITEM 1 LEGAL PROCEEDING Pruco Life Insurance Company is not involved in any litigation that is expected to have a material effect. ITEM 2 CHANGES IN SECURITIES Not Applicable ITEM 3 DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5 OTHER INFORMATION Not Applicable. ITEM 6 EXHIBITS AND REPORTS ON FORM 8K (a)(1) and (2) financial Statements of registrant and subsidiaries are listed on pages 3-6 hereof and are filed as part of this Report. (a)(3) Exhibits Regulation S-K 2. Not Applicable 3. Documents Incorporated by Reference (i) The Articles of Incorporation of Pruco Life, as amended October 13, 1993, are incorporated herein by reference to Exhibit 14(3) of the Pruco Life Insurance Company Form 10-K for the fiscal year ended December 31, 1993; (ii) Bylaws of Pruco Life, as amended June 14, 1983, are incorporated herein by reference to Post-Effective Amendment No. 13 to Form S-6, Registration No. 2-89558, filed March 2, 1989 on behalf of the Pruco Life Variable Annuity Account. 4. Exhibits Modified Guaranteed Annuity Contract, incorporated by reference to Registrant's Form S-1 Registration Statement, Registration No. 33-37587, filed November 2, 1990. Market-Value Adjustment Annuity Contract, incorporated by reference to Registrant's Form S-1 Registration Statement, Registration No. 33-61143, filed November 17, 1995. 10. None. 11. Not Applicable. 15. Not Applicable. 18. None. 19. Not Applicable. 9 20. Not Applicable. 22. None. 23. None. 24. Not Applicable. 25. Not Applicable. 27. Exhibit 27, Financial Data Schedule appended to this form in accordance with EDGAR instructions. 99. None 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized. ...................PRUCO LIFE INSURANCE COMPANY (Registrant) SIGNATURE TITLE DATE - --------- ----- ---- /s/ESTHER H. MILNES President and Director May 15, 1997 - ------------------------ Esther H. Milnes /s/LINDA S. DOUGHERTY Vice President and Comptroller May 15, 1997 - ------------------------ Linda S. Dougherty and Chief Accounting Officer 11 EX-27 2 FDS --
7 Exhibit 27 FINANCIAL DATA SCHEDULE Article 7 of Regulation S-X Pruco Life Insurance Company 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 2,050,982 372,690 379,228 7,899 43,038 0 3,546,173 186,150 27,014 648,168 10,156,606 2,181,626 0 560,106 0 0 0 0 2,500 1,402,401 10,156,606 12,243 59,221 4,919 5,850 74,036 11,665 40,640 32,225 12,706 19,519 0 0 0 19,519 0 0 0 0 0 0 0 0 0
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