-----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, PixEC+fpIuRyA2/qnFc6+jBevV1WY4UZSt/FoabpBNuuPq+CutUn9zMlHUMPRVWK vYCDYWcH+Teb+d7kcmwx7A== 0000950123-01-502541.txt : 20010516 0000950123-01-502541.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950123-01-502541 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONY LIFE INSURANCE COMPANY OF AMERICA CENTRAL INDEX KEY: 0000835357 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-65423 FILM NUMBER: 1637361 BUSINESS ADDRESS: STREET 1: 1740 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10017 MAIL ADDRESS: STREET 1: 1740 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10019 10-Q 1 y49171e10-q.txt MONY LIFE INSURANCE COMPANY OF AMERICA 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 333-65423 MONY LIFE INSURANCE COMPANY OF AMERICA (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ARIZONA 86-0222062 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1740 BROADWAY NEW YORK, NEW YORK 10019 (212) 708-2000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) NONE (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) 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 [ ] As of March 31, 2001, there were 3064 holders of the Registrant's guaranteed interest account with market value adjustment contracts. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 MONY LIFE INSURANCE COMPANY OF AMERICA INDEX TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS TABLE OF CONTENTS
PAGE ---- PART 1 FINANCIAL INFORMATION ITEM 1: Unaudited interim condensed balance sheets as of March 31, 2001 and December 31, 2000.................................. 3 Unaudited interim condensed statements of income and comprehensive income for the three-month periods ended March 31, 2001 and 2000........................................... 4 Unaudited interim condensed statement of changes in shareholder's equity for the three-month period ended March 31, 2001.................................................... 5 Unaudited interim condensed statements of cash flows for the three-month periods ended March 31, 2001 and 2000........... 6 Notes to unaudited interim condensed financial statements... 7 ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 10 Investments................................................. 15 ITEM 3: Quantitative and Qualitative Disclosures About Market Risk........................................................ 20 PART II OTHER INFORMATION ITEM 1: Legal Proceedings........................................... 21 ITEM 2: Changes in Securities....................................... 21 SIGNATURES............................................................. S-1
1 3 FORWARD-LOOKING STATEMENTS The Company's management has made in this report, and from time to time may make in its public filings and press releases as well as in oral presentations and discussions, forward-looking statements concerning the Company's operations, economic performance, prospects and financial condition. Forward-looking statements include, among other things, discussions concerning the Company's potential exposure to market risks, as well as statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions, as indicated by words such as "believes," "estimates," "intends," "anticipates," "expects," "projects," "should," "probably," "risk," "target," "goals," "objectives," or similar expressions. The Company claims the protection afforded by the safe harbor for forward-looking statements as set forth in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to many risks and uncertainties. Actual results could differ materially from those anticipated by forward-looking statements due to a number of important factors including those discussed elsewhere in this report and in the Company's other public filings, press releases, oral presentations and discussions and the following: venture capital gains or losses could differ significantly from our assumptions because of further significant changes in equity values; fees from assets under management could be significantly higher or lower than we have assumed if there are further major movements in the equity markets; the value of our overall investment portfolio could fluctuate significantly as a result of additional major changes in the equity and debt markets generally; actual death claims experience could differ significantly from our mortality assumptions; we may have as-yet unascertained tax liabilities; sales of variable products, mutual funds and equity securities could differ materially from our assumptions because of further unexpected developments in the equity markets and changes in demand for such products; major changes in interest rates could affect our earnings; we could have liability from as-yet unknown or unquantified litigation and claims; pending or known litigation or claims could result in larger settlements or judgments than we anticipate; the Company may have higher operating expenses than anticipated; changes in law or regulation, including tax laws, could materially affect the demand for the Company's products and the Company's net income after tax; the Company may not achieve the assumed economic benefits of consolidating acquired enterprises. The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. 2 4 ITEM 1: MONY LIFE INSURANCE COMPANY OF AMERICA UNAUDITED INTERIM CONDENSED BALANCE SHEETS MARCH 31, 2001 AND DECEMBER 31, 2000
MARCH 31, DECEMBER 31, 2001 2000 --------- ------------ ($ IN MILLIONS) ASSETS Investments: Fixed maturity securities available-for-sale, at fair value..................................................... $1,038.8 $1,014.7 Mortgage loans on real estate............................... 97.0 116.1 Policy loans................................................ 72.1 69.4 Real estate................................................. 5.5 5.4 Other invested assets....................................... 7.9 3.4 -------- -------- 1,221.3 1,209.0 -------- -------- Cash and cash equivalents................................... 110.8 104.8 Accrued Investment Income................................... 19.7 19.2 Amounts due from reinsurers................................. 33.8 30.7 Deferred policy acquisition costs........................... 487.0 483.5 Current federal income taxes receivable..................... 26.6 14.9 Other assets................................................ 13.3 4.4 Separate account assets..................................... 3,606.3 4,064.4 -------- -------- Total assets...................................... $5,518.8 $5,930.9 ======== ======== LIABILITIES AND SHAREHOLDER'S EQUITY Future policy benefits...................................... $ 138.1 $ 134.8 Policyholders' account balances............................. 1,149.2 1,154.9 Other policyholders' liabilities............................ 77.0 68.9 Accounts payable and other liabilities...................... 53.1 33.2 Note payable to affiliate (Note 5).......................... 46.3 46.9 Deferred federal income taxes............................... 63.2 48.3 Separate account liabilities................................ 3,606.3 4,064.4 -------- -------- Total liabilities................................. $5,133.2 $5,551.4 -------- -------- Commitments and contingencies (Note 4) Common stock $1.00 par value; 5,000,000 shares authorized, 2,500,000 issued and outstanding.......................... $ 2.5 $ 2.5 Capital in excess of par.................................... 249.7 249.7 Retained earnings........................................... 128.9 128.3 Accumulated other comprehensive loss........................ 4.5 (1.0) -------- -------- Total shareholder's equity........................ 385.6 379.5 -------- -------- Total liabilities and shareholder's equity........ $5,518.8 $5,930.9 ======== ========
See accompanying notes to unaudited interim condensed financial statements. 3 5 MONY LIFE INSURANCE COMPANY OF AMERICA UNAUDITED INTERIM CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME THREE-MONTH PERIODS ENDED MARCH 31, 2001 AND 2000
2001 2000 ------ ------ ($ IN MILLIONS) REVENUES: Universal life and investment-type product policy fees...... $40.1 $38.1 Premiums.................................................... 12.5 4.9 Net investment income (loss)................................ 23.9 23.7 Net realized (losses)/gains on investments.................. 1.7 (0.1) Other income................................................ 2.9 3.3 ----- ----- Total revenues.............................................. 81.1 69.9 ----- ----- BENEFITS AND EXPENSES: Benefits to policyholders................................... 25.0 12.5 Interest credited to policyholders' account balances........ 16.5 16.1 Amortization of deferred policy acquisition costs........... 10.6 12.9 Other operating costs and expenses.......................... 28.2 23.1 ----- ----- Total benefits and expense.................................. 80.3 64.6 ----- ----- Income before income taxes.................................. 0.8 5.3 Income tax expense.......................................... 0.2 1.9 ----- ----- Net income.................................................. 0.6 3.4 Other comprehensive income (loss), net...................... 5.5 (0.7) ----- ----- Comprehensive income........................................ $ 6.1 $ 2.7 ===== =====
See accompanying notes to unaudited interim condensed financial statements. 4 6 MONY LIFE INSURANCE COMPANY OF AMERICA UNAUDITED INTERIM CONDENSED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY THREE-MONTH PERIOD ENDED MARCH 31, 2001
ACCUMULATED CAPITAL OTHER TOTAL COMMON IN EXCESS RETAINED COMPREHENSIVE SHAREHOLDER'S STOCK OF PAR EARNINGS INCOME/(LOSS) EQUITY ------ --------- -------- ------------- ------------- Balance, December 31, 2000............... $2.5 $249.7 $128.3 $(1.0) $379.5 Comprehensive income: Net income............................. 0.6 0.6 Other comprehensive income(1).......... Comprehensive income................ 5.5 5.5 ---- ------ ------ ----- ------ Balance, March 31, 2001.................. $2.5 $249.7 $128.9 $ 4.5 $385.6 ==== ====== ====== ===== ======
- --------------- (1) Represents unrealized losses on investments, net of unrealized gains, reclassification adjustments, and taxes. See accompanying notes to unaudited interim condensed financial statements. 5 7 MONY LIFE INSURANCE COMPANY OF AMERICA UNAUDITED INTERIM CONDENSED STATEMENTS OF CASH FLOWS THREE-MONTH PERIODS ENDED MARCH 31, 2001 AND 2000
2001 2000 ------- ------- ($ IN MILLIONS) NET CASH (USED IN) OPERATING ACTIVITIES..................... $ (0.7) $ 9.7 CASH FLOWS FROM INVESTING ACTIVITIES: Sales, maturities or repayments of: Fixed maturities.......................................... 45.0 56.3 Mortgage loans on real estate............................. 33.1 3.2 Acquisitions of investments: Fixed maturities.......................................... (49.3) (29.0) Mortgage loans on real estate............................. (12.8) (3.7) Real estate............................................... (0.2) (0.3) Other invested assets..................................... (2.4) (0.1) Policy loans, net......................................... (2.7) (4.1) ------- ------- Net cash provided by/(used in) investing activities......... $ 10.7 $ 22.3 ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of note to affiliate.............................. (0.6) (0.5) Receipts from annuity and universal life policies credited to policyholders' account balances........................ 200.4 467.9 Return of policyholders' account balances on annuity and universal life policies................................... (203.8) (490.4) ------- ------- Net cash provided by financing activities................... (4.0) (23.0) ------- ------- Net increase in cash and cash equivalents................... 6.0 9.0 Cash and cash equivalents, beginning of year................ 104.8 28.9 ------- ------- Cash and cash equivalents, end of period.................... $ 110.8 $ 37.9 ======= =======
See accompanying notes to unaudited interim condensed financial statements. 6 8 MONY LIFE INSURANCE COMPANY OF AMERICA NOTES TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS 1. ORGANIZATION AND DESCRIPTION OF BUSINESS MONY Life Insurance Company of America (the "Company"), an Arizona stock life insurance company, is a wholly-owned subsidiary of MONY Life Insurance Company of New York ("MONY Life"), formerly The Mutual Life Insurance Company of New York, which converted from a mutual life insurance company to a stock life insurance company (the "Demutualization"). MONY Life is a wholly-owned subsidiary of The MONY Group, Inc. (the "MONY Group"). The Company's primary business is to provide asset accumulation and life insurance products to business owners, growing families, and pre-retirees. The Company's insurance and financial products are marketed and distributed directly to individuals primarily through MONY Life's career agency sales force. These products are sold in 49 states (not including New York), the District of Columbia, the U.S. Virgin Islands and Puerto Rico. 2. BASIS OF PRESENTATION The accompanying unaudited interim condensed financial statements are prepared in conformity with generally accepted accounting principles ("GAAP") which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, these statements include all adjustments which were normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2000 in the Company's 2000 Annual Report on Form 10-K. The results of operations for the three-month period ending March 31, 2001 are not necessarily indicative of the results to be expected for the full year. 3. FEDERAL INCOME TAXES Federal income taxes for interim periods have been computed using an estimated annual effective tax rate. 4. COMMITMENTS AND CONTINGENCIES Since late 1995 a number of purported class actions have been commenced in various state and federal courts against the Company (and The Mutual Life Insurance Company of New York) alleging that it engaged in deceptive sales practices in connection with the sale of whole and universal life insurance policies from the early 1980s through the mid 1990s. Although the claims asserted in each case are not identical, they seek substantially the same relief under essentially the same theories of recovery (i.e., breach of contract, fraud, negligent misrepresentation, negligent supervision and training, breach of fiduciary duty, unjust enrichment and violation of state insurance and/or deceptive business practice laws). Plaintiffs in these cases seek primarily equitable relief (e.g., reformation, specific performance, mandatory injunctive relief prohibiting the Company from canceling policies for failure to make required premium payments, imposition of a constructive trust and creation of a claims resolution facility to adjudicate any individual issues remaining after resolution of all class-wide issues) as opposed to compensatory damages, although they also seek compensatory damages in unspecified amounts. The Company has answered the complaints in each action (except for one being voluntarily held in abeyance). The Company has denied any wrongdoing and has asserted numerous affirmative defenses. On June 7, 1996, the New York State Supreme Court certified one of those cases, Goshen v. The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (now known as DeFilippo, et al v. The Mutual Life Insurance Company of New York and MONY Life Insurance Company of 7 9 MONY LIFE INSURANCE COMPANY OF AMERICA NOTES TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) America), the first of the class actions filed, as a nationwide class consisting of all persons or entities who have, or at the time of the policy's termination had, an ownership interest in a whole or universal life insurance policy issued and sold on an alleged "vanishing premium" basis during the period January 1, 1982 to December 31, 1995. On March 27, 1997, we filed a motion to dismiss or, alternatively, for summary judgment on all counts of the complaint. All of the other punative class actions have been consolidated and transferred by the Judicial Panel on Multidistrict Litigation to the United States District Court for the District of Massachusetts and/or are being held in abeyance pending the outcome of the Goshen case. On October 21, 1997, the New York State Supreme Court granted our motion for summary judgment and dismissed all claims filed in the Goshen case. On December 20, 1999, the New York State Court of Appeals affirmed the dismissal of all but one of the claims in the Goshen case (a claim under New York's General Business Law), which has been remanded back to the New York State Supreme Court for further proceedings consistent with the opinion. The New York State Supreme Court has subsequently reaffirmed that, for purposes of the remaining New York General Business Law claim, the class is now limited to New York purchasers only, and has further held that the New York General Business Law claims of all class members whose claims accrued prior to November 29, 1992 are barred by the applicable statute of limitations. The Company intends to defend itself vigorously against the sole remaining claim. There can be no assurance, however, that the present litigation relating to sales practices will not have a material adverse effect on the Company. In addition to the matters discussed above, the Company is involved in various other legal actions and proceedings (some of which involve demands for unspecified damages) in connection with its business. In the opinion of management of the Company, resolution of contingent liabilities, income taxes and other matters will not have a material adverse effect on the Company's statutory surplus or results of operations. Insurance companies are subject to assessments up to statutory limits, by state guaranty funds for losses of policyholders of insolvent insurance companies. In the opinion of management, such assessments will not have a material adverse effect on the financial position and the results of operations of the Company. At March 31, 2001, the Company had commitments to issue $3.9 million of fixed rate agricultural loans with periodic interest rate reset dates. The initial interest rates on such loans range from approximately 7.4% to 8.2%. The Company had commitments outstanding to purchase $8.5 million of private fixed maturity securities as of March 31, 2001 with interest rates ranging from 7.46% to 7.92%. 5. NOTE PAYABLE TO AFFILIATE On March 5, 1999, the Company borrowed $50.5 million from MONY Benefits Management Corp. ("MBMC"), an affiliate, in exchange for a note payable in the same amount. The note bears interest at 6.8% per annum and matures on March 5, 2014. Principal and interest are payable quarterly to MBMC. The carrying value of the note as of March 31, 2001 is $46.3 million. 6. INTERCOMPANY REINSURANCE AGREEMENTS The Company entered into a modified coinsurance agreement with U.S. Financial Life Insurance Company ("USFL"), an affiliate, effective January 1, 1999, whereby the Company agrees to reinsure 90% of all level term life insurance policies written by USFL after January 1, 1999. Under the agreement, the Company will share in all premiums and benefits for such policies based on the 90% quota share percentage, after consideration of existing reinsurance agreements previously in force on this business. In addition, the Company will reimburse USFL for its quota share of expense allowances, as defined in the agreement. The Company amended that agreement effective January 1, 2000 to add all other term life policies and all universal life policies written by USFL on or after January 1, 2000. At March 31, 2001 the Company recorded 8 10 MONY LIFE INSURANCE COMPANY OF AMERICA NOTES TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) a payable of $3.3 million to USFL in connection with this agreement which is included in Accounts Payable and Other Liabilities in the balance sheet. Effective September 1, 1999, the Company recaptured its reinsurance agreements with MONY Life for all in force and new business. The Company simultaneously entered into new reinsurance agreements with third party reinsurers which reinsured the same block of business as that previously reinsured by MONY Life. Under the new reinsurance agreements, the Company increased its retention limits on new business for any one person for individual products from $0.5 million to $4.0 million and on last survivor products from $0.5 million to $6.0 million. 7. NEW ACCOUNTING PRONOUNCEMENTS In the first quarter of 2001, the Company adopted SFAS 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 requires all derivatives to be recognized in the statement of financial position as either assets or liabilities and measured at fair value. The corresponding derivative gains and losses should be reported based on the hedge relationship that exists, if there is one. Changes in the fair value of derivatives that are not designated as hedges or that do not meet the hedge accounting criteria in SFAS 133, are required to be reported in earnings. SFAS 133 did not have a material affect on the Company's financial position or results of operations. In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of SFAS No. 125." SFAS No. 140 specifies the accounting and reporting requirements for securitizations and other transfers of financial assets and collateral, recognition and measurement of servicing assets and liabilities and the extinguishment of liabilities. SFAS No. 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001 and is to be applied prospectively with certain exceptions. This statement is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. Adoption of the new requirements did not have a significant impact on the Company's consolidated financial position or earnings. 9 11 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion addresses financial condition and results of operations of the Company for the periods indicated. This discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's unaudited interim condensed financial statements and the related notes to the unaudited interim condensed financial statements included elsewhere herein, and with the Management's Discussion and Analysis of Financial Condition and Results of Operations section included in the Company's 2000 Annual Report on Form 10-K. The Company is a stock life insurance company organized in the state of Arizona. The Company is a wholly-owned subsidiary of MONY Life Insurance Company, a stock life insurance company domiciled in the state of New York. MONY Life, formerly The Mutual Life Insurance Company of New York converted from a mutual life insurance company to a stock life insurance company (the "Demutualization"). MONY Life is a wholly-owned subsidiary of The MONY Group; a Delaware Corporation organized to be the parent holding company of MONY Life. The Company's primary business is to provide asset accumulation and life insurance products to business owners, growing families, and pre-retirees. The Company's insurance and financial products are marketed and distributed directly to individuals primarily through MONY Life's career agency sales force. These products are sold in 49 states (not including New York), the District of Columbia, the U.S. Virgin Islands and Puerto Rico. The following table presents the Company's results of operations for the three-month periods ended March 31, 2001 and 2000. RESULTS OF OPERATIONS
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, ------------------- 2001 2000 ----- ----- ($ IN MILLIONS) REVENUES: Universal life and investment-type product policy fees...... $40.1 $38.1 Premiums.................................................... 12.5 4.9 Net investment income....................................... 23.9 23.7 Net realized gains on investments........................... 1.7 (0.1) Other income................................................ 2.9 3.3 ----- ----- Total revenues.................................... 81.1 69.9 BENEFITS AND EXPENSES: Benefits to policyholders................................... 25.0 12.5 Interest credited to policyholders' account balances........ 16.5 16.1 Amortization of deferred policy acquisition costs........... 10.6 12.9 Other operating costs and expenses.......................... 28.2 23.1 ----- ----- Total benefits and expenses....................... 80.3 64.6 ----- ----- Income before income taxes.................................. $ 0.8 $ 5.3 ===== =====
10 12 For the Three-Month Period Ended March 31, 2001 Compared to the Three-Month Period Ended March 31, 2000 Universal life ("UL") and investment-type product fees were $40.1 million for the three-month period ended March 31, 2001, a increase of $2.0 million, or 5.2%, from $38.1 million reported in the comparable prior year period. The principal reasons for the change from period to period are as follows: Variable universal life ("VUL") and corporate sponsored variable universal life ("CSVUL") product fees were $12.5 million, for the three-month period ended March 31, 2001, an increase of $0.4 million, from $12.1 million reported in the comparable prior year period. Flexible premium variable annuity ("FPVA") product fees were $13.7 million for the three-month period ended March 31, 2001, a decrease of $3.2 million, from $16.9 million reported in the prior period. The decrease is primarily attributable to a decrease in M&E charges and surrender charges of $1.0 million and $2.1 million respectively. The decrease in surrender charges is due to positive results of the conservation unit and other efforts designed to reduce surrenders. The increase in VUL & CSVUL fees resulted primarily from the increase in new sales of such business and the growing in-force block. In the first quarter of 2001, under the amended modified coinsurance agreement ("MODCO") treaty between USFL and the Company, the Company assumed $3.1 million of UL business in addition to term life insurance. (See note 6 in Unaudited Interim Condensed Financial Statements). Premium revenue was $12.5 million for the three-month period ended March 31, 2001, an increase of $7.6 million, from $4.9 million reported in the comparable prior year period. The increase was primarily the result of a modified coinsurance treaty ("MODCO") between U.S. Financial Life and the Company, which went into effect in the fourth quarter 1999 (see Note 6 in Unaudited Interim Condensed Financial Statements). Net investment income was $23.9 million for the three-month period ended March 31, 2001, an increase of $0.2 million, or 0.8%, from $23.7 million reported in the comparable prior year period. The increase was primarily related to an increase in portfolio yields, partially offset by a decrease in the average balances of invested assets. Net realized gains on investments were $1.7 million for the three-month period ended March 31, 2001, an increase of $1.8 million, from a net realized loss of $0.1 million reported in the comparable prior year period. The following table sets forth the components of net realized gains (losses) by investment category for the three-month period ended March 31, 2001 compared to the three-month period ended March 31, 2001.
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, ------------------- 2001 2000 ----- ----- Fixed securities............................................ $ 0.7 $(0.3) Mortgage loans.............................................. 1.1 0.2 Real estate................................................. (0.1) 0.0 ----- ----- $ 1.7 $(0.1) ===== =====
Other income was $2.9 million for the three-month period ended March 31, 2001, a decrease of $0.4 million, or 12.1%, as compared to $3.3 million in the comparable prior year period. The decrease was primarily due to lower revenues from reinsurance allocations. Benefits to policyholders were $25.0 million for the three-month period ended March 31, 2001, an increase of $12.5 million, or 100.0%, from $12.5 million reported in the comparable prior year period. The increase was primarily a result of (i) increased assumed benefits of $5.3 million from the new MODCO reinsurance treaty with USFL (see Note 6 in Unaudited Interim Condensed Financial Statements), (ii) death benefits on traditional products of $3.0 million at March 31, 2001 compared to $0.5 million at March 31, 2000, a $2.5 million increase. Universal Life ("UL"), Variable Universal Life ("VUL"), 11 13 Corporate Sponsored Life Insurance ("COLI"), and Group Universal Life ("GUL") had benefit expenses of $15.6 million at March 31, 2001 compared to $8.5 million at March 31, 2000, an increase of $7.1 million primarily due to higher death benefits. Offsetting the higher death benefit expenses was a decrease in traditional reserves of $1.1 million, which were $(0.2) million at March 31, 2001 compared to $0.9 million at March 31, 2000, and higher reinsurance claims of $4.4 million at March 31, 2001 compared to $1.7 million at March 31, 2000, an increase of $2.7 million, which also reduced expenses. Interest credited to policyholders' account balances was $16.5 million for the three-month period ended March 31, 2001, an increase of $0.4 million, or 2.5%, from $16.1 million reported in the comparable prior year period. The increase was primarily the result of an increase of $1.9 million in interest crediting on corporate sponsored variable universal life business ("CSVUL"), due to an increase in general account funds, offset by decreases in single premium deferred annuities ("SPDA") and other annuity products of $1.5 million due to the continued runoff of these products. Amortization of deferred policy acquisition costs ("DAC") was $10.6 million for the three-month period ended March 31, 2001, a decrease of $2.3 million, or 17.8%, from $12.9 million reported in the comparable prior year period. The decrease was a result of lower amortization on VUL and UL of $2.1 million due to higher death claims, and a decrease in amortization on FPVA of $0.9 million, primarily due to a decline in inforce business offset by an increase of $0.7 million as a result of the new MODCO treaty with USFL (See Note 6 in Unaudited Interim Condensed Financial Statements). Other operating costs and expenses were $28.2 million for the three-month period ended March 31, 2001, an increase of $5.1 million, or 22.1%, from $23.1 million reported in the comparable prior year period. The increase was due to higher allocated expenses from MONY LIFE of $29.3 million compared to $27.0 million from the prior year and higher non-dacable charges as a result of the USFL MODCO treaty which was $1.7 million, compared to $0.4 million at March 31, 2000, an increase of $1.3 million. LIQUIDITY AND CAPITAL RESOURCES The Company's cash inflows are provided mainly from annuity considerations and deposit funds, investment income and maturities and sales of invested assets and life insurance premiums. Cash outflows primarily relate to the liabilities associated with its various annuity and life insurance products, operating expenses, income taxes, acquisitions of invested assets, and principal and interest on its outstanding debt obligations. The annuity and life insurance liabilities relate to the Company's obligation to make benefit payments under its annuity and insurance contracts, as well as the need to make payments in connection with policy surrenders, withdrawals and loans. The Company develops an annual cash flow projection which shows expected asset and liability cash flows on a monthly basis. At the end of each quarter actual cash flows are compared to projections, projections for the balance of the year are adjusted in light of the actual results, if appropriate, and investment strategies are also changed, if appropriate. The quarterly cash flow reports contain relevant information on all of the following: new product sales and deposits versus projections, existing liability cash flow versus projections and asset portfolio cash flow versus projections. An interest rate projection is a part of the initial annual cash flow projections for both assets and liabilities. Actual changes in interest rates during the year and, to a lesser extent, changes in rate expectations will impact the changes in projected asset and liability cash flows during the course of the year. When the Company is formulating its cash flow projections it considers, among other things, its expectations about sales of the Company's products, its expectations concerning customer behavior in light of current and expected economic conditions, its expectations concerning competitors and the general outlook for the economy and interest rates. The events most likely to cause an adjustment in the Company's investment policies are: (i) a significant change in its product mix, (ii) a significant change in the outlook for either the economy in general or for interest rates in particular and (iii) a significant reevaluation of the prospective risks and returns of various asset classes. 12 14 The following table sets forth the withdrawal characteristics and the surrender and withdrawal experience of the Company's total annuity reserves and deposit liabilities at March 31, 2001 and December 31, 2000. WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND DEPOSIT LIABILITIES
AMOUNT AT AMOUNT AT MARCH 31, PERCENT DECEMBER 31, PERCENT 2001 OF TOTAL 2000 OF TOTAL --------- -------- ------------ -------- ($ IN MILLIONS) Not subject to discretionary withdrawal provisions...................................... $ 51.3 1.4% $ 54.5 1.4% Subject to discretionary withdrawal -- with market value adjustment or at carrying value less surrender charge................................ 3,157.1 88.3% 3,577.7 89.1% -------- ----- -------- ----- Subtotal.......................................... 3,208.4 89.7% 3,632.2 90.5% Subject to discretionary withdrawal -- without adjustment at carrying value.................... 366.9 10.3% 382.2 9.5% -------- ----- -------- ----- Total annuity reserves and deposit liabilities (gross of reinsurance).......................... $3,575.3 100.0% $4,014.4 100.0% ======== ===== ======== =====
The following table sets forth by product line the actual amounts paid in connection with surrenders and withdrawals for the periods indicated. SURRENDERS AND WITHDRAWALS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, --------------------- 2001 2000 ------ ------ ($ IN MILLIONS) PRODUCT LINE: Variable and universal life................................. $ 27.3 $ 9.9 Annuities(1)................................................ 111.2 209.0 ------ ------ TOTAL............................................. $138.5 $218.9 ====== ======
- --------------- (1) Excludes amounts relating to surrenders associated with an exchange program offered by the Company wherein contractholders surrendered old FPVA contracts and reinvested the proceeds therefrom in a new enhanced FPVA product offered by the Company. Annuity surrenders have decreased for the three-month period ended March 31, 2001 compared to the comparable prior year period reflecting the Company's conservation efforts and positive effects of the exchange program. During the three month period ended March 31, 2001 the Company reported cash used in operations of $(.7) million a decrease of $10.4 million from March 31, 2000 of $9.7 million. The decrease is primarily due to higher death benefit payments and higher insurance expenses. For the three month period ended March 31, 2001 net cash flow used in financing activities was $(4.0) million an increase of $19.0 as compared to the prior year. This increase is primarily due to lower annuity surrenders in the first quarter of 2001 as compared to the first quarter of 2000. The Company's liquid assets include U.S. Treasury holdings, short-term money market investments and marketable long-term fixed maturity securities. Management believes that the Company's sources of liquidity are adequate to meet its anticipated needs. As of March 31, 2001, the Company had readily marketable fixed maturity securities with a carrying value of $1,038.8 million, which were comprised of $487.3 million of public and $551.5 million of private fixed maturity securities. At that date, approximately 87.9% of the Company's fixed maturity securities were designated in NAIC rating categories 1 and 2 13 15 (considered investment grade, with a rating of "Baa" or higher by Moody's or "BBB" or higher by S&P). In addition, at March 31, 2001, the Company had cash and cash equivalents of $110.8 million. At March 31, 2001, the Company had commitments outstanding of $3.9 million for fixed rate agricultural loans with periodic interest rate reset dates. The initial interest rates on the agricultural loans range between 7.4% and 8.2%. There were no commercial mortgage commitments outstanding as of March 31, 2001. The Company had commitments outstanding to purchase $8.5 million of private fixed maturity securities as of March 31, 2001 with interest rates ranging from 7.46% to 7.92%. Of the $29.0 million commercial mortgage loans in the Company's investment portfolio at March 31, 2001, $1.6 million, $8.7 million, $0.0 million, and $0.0 million are scheduled to mature in 2001, 2002, 2003, and 2004, respectively. At March 31, 2001, aggregate maturities of long-term debt based on required remaining principal payments for 2001 and the succeeding four years are $1.7 million, $2.4 million, $2.6 million, $2.8 million and $3.0 million, respectively, and $33.8 million thereafter. Aggregate contractual debt service payments on the Company's debt at March 31, 2001, for the remainder of 2001 and the succeeding four years are $4.0 million, $5.4 million, $5.4 million, $5.4 million and $5.4 million respectively, and $44.4 million thereafter. At March 31, 2001, the adjusted RBC capital ratios of all the Company's insurance subsidiaries were in excess of the minimum capital requirements of the RBC guidelines. 14 16 INVESTMENTS The following table illustrates the net investment income yields based on average annual asset carrying values, excluding unrealized gains (losses) in the fixed maturity category. Equity real estate income is shown net of operating expenses and depreciation. Total investment income includes non-cash income from amortization, and payment-in-kind distributions. Investment expenses include mortgage servicing fees and other miscellaneous fee income. INVESTMENT RESULTS BY ASSET CATEGORY
AS OF THE THREE-MONTHS ENDED MARCH 31, --------------------------------------------------------------- 2001 2000 ------------------------------ ------------------------------ NET INVESTMENT AVERAGE ASSET NET INVESTMENT AVERAGE ASSET INCOME YIELD BALANCES INCOME YIELD BALANCES -------------- ------------- -------------- ------------- Fixed Maturities.......................... 7.4% $1,020.9 7.0% $1,062.7 Mortgage loans on real estate............. 8.1 106.6 7.7 165.4 Policy loans.............................. 9.1 70.6 9.9 60.8 Real estate............................... 8.3 5.5 5.7 7.0 Other invested assets..................... 7.4 5.7 16.7 2.4 Cash and cash equivalents................. 6.1 116.9 6.0 33.4 -------- -------- Total invested assets before investment expenses............................. 7.4% $1,326.2 7.2% $1,331.7 ======== ======== Investment expenses..................... (0.2) (0.1) ---- ---- Total invested assets after investment expenses............................. 7.2% 7.1% ==== ====
The yield on general account invested assets (including net realized gains and losses on investments) was 7.7% and 7.1% for the three-month period ended March 31, 2001 and 2000, respectively. FIXED MATURITIES Fixed maturities consist of publicly traded debt securities and privately placed debt securities, and represented 78.0% and 77.2% of total invested assets at March 31, 2001 and December 31, 2000, respectively. The Securities Valuation Office of the NAIC evaluates the bond investments of insurers for regulatory reporting purposes and assigns securities to one of six investment categories called "NAIC Designations". The NAIC Designations closely mirror the Nationally Recognized Securities Rating Organizations' credit ratings for marketable bonds. NAIC Designations 1 and 2 include bonds considered investment grade ("Baa" or higher by Moody's, or "BBB" or higher by S&P) by such rating organizations. NAIC Designations 3 through 6 are referred to as below investment grade ("Ba" or lower by Moody's, or "BB" or lower by S&P). Of the Company's total portfolio of fixed maturity securities at March 31, 2001, 87.9% were investment grade and 12.1% were below investment grade. The Company reviews all fixed maturity securities at least once each quarter and identifies investments that management concludes require additional monitoring. Among the criteria are: (i) violation of financial covenants, (ii) public securities trading at a substantial discount as a result of specific credit concerns and (iii) other subjective factors relating to the issuer. The Company defines problem securities in the fixed maturity category as securities (i) as to which principal and/or interest payments are in default or are to be restructured pursuant to commenced negotiations or (ii) are issued by a company that went into bankruptcy subsequent to the acquisition of such securities or (iii) are deemed to have other than temporary impairments to value. 15 17 The Company defines potential problem securities in the fixed maturity category as securities that are deemed to be experiencing significant operating problems or difficult industry conditions. Typically these credits are experiencing or anticipating liquidity constraints, having difficulty meeting projections/budgets and would most likely be considered a below investment grade risk. The Company defines restructured securities in the fixed maturity category as securities where a concession has been granted to the borrower related to the borrower's financial difficulties that the Company would not have otherwise considered. The Company restructures certain securities in instances where a determination was made that greater economic value will be realized under the new terms than through liquidation or other disposition. The terms of the restructure generally involve some or all of the following characteristics: a reduction in the interest rate, an extension of the maturity date and a partial forgiveness of principal and/or interest. The following table sets forth the total carrying values of the Company's fixed maturity portfolio, as well as its problem, potential problem and restructured fixed maturities as of the dates indicated: PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED FIXED MATURITIES AT FAIR VALUE
AS OF AS OF MARCH 31, DECEMBER 31, 2001 2000 --------- ------------ ($ IN MILLIONS) Total fixed maturities (public and private)................. $1,038.8 $1,014.7 ======== ======== Problem fixed maturities.................................... 12.9 12.5 Potential problem fixed maturities.......................... 1.4 6.2 Restructured fixed maturities............................... 0.0 0.0 -------- -------- Total problem, potential problem & restructured fixed maturities................................................ $ 14.3 $ 18.7 ======== ======== Total problem, potential problem & restructured fixed maturities as a percent of total fixed maturities......... 1.4% 1.8% ======== ========
At March 31, 2001, the Company's largest unaffiliated single concentration of fixed maturities was $40.5 million of Federal Home Loan Mortgage Corporation ("FHLMC") which represents 3.0% of total invested assets. No other individual non-government issuer represents more than 2.6% of invested assets. The Company held approximately $218.4 million and $219.6 million of mortgage-backed and asset-backed securities as of March 31, 2001 and December 31, 2000, respectively. Of such amounts, $51.7 million and $59.3 million, or 23.7% and 27.0%, respectively, represented agency-issued pass-through and collateralized mortgage obligations ("CMOs") secured by Federal National Mortgage Association, FHLMC and Government National Mortgage Association. The balance of such amounts was comprised of other types of mortgage-backed and asset-backed securities. The Company believes that its active monitoring of its portfolio of mortgage-backed securities and the limited extent of its holdings of more volatile types of mortgage-backed securities mitigate the Company's exposure to losses from prepayment risk associated with interest rate fluctuations for this portfolio. At March 31, 2001 and December 31, 2000, 75.4% and 75.3%, respectively, of the Company's mortgage-backed and asset-backed securities were assigned a NAIC Designation of 1. In addition, the Company believes that it holds a relatively low percentage of CMOs compared to other life insurance companies. 16 18 The following table presents the types of mortgage-backed securities ("MBSs"), as well as other asset-backed securities, held by the Company as of the dates indicated. MORTGAGE AND ASSET-BACKED SECURITIES
AS OF AS OF MARCH 31, DECEMBER 31, 2001 2000 --------- ------------ ($ IN MILLIONS) CMOs........................................................ $ 94.3 $103.4 Asset-backed securities..................................... 119.5 111.7 Commercial MBSs............................................. 4.6 4.6 Pass-through securities..................................... 0.0 0.0 ------ ------ Total MBSs and asset-backed securities............ $218.4 $219.7 ====== ======
The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity dates (excluding scheduled sinking funds), as of March 31, 2001 and December 31, 2000 is as follows: FIXED MATURITY SECURITIES BY CONTRACTUAL MATURITY DATES
AS OF AS OF MARCH 31, 2001 DECEMBER 31, 2000 ---------------------- ---------------------- AMORTIZED ESTIMATED AMORTIZED ESTIMATED COST FAIR VALUE COST FAIR VALUE --------- ---------- --------- ---------- ($ IN MILLIONS) Due in one year or less...................... $ 49.6 $ 50.0 $ 46.6 $ 46.8 Due after one year through five years........ 266.2 270.3 263.4 263.2 Due after five years through ten years....... 420.2 425.6 414.0 406.1 Due after ten years.......................... 72.9 74.5 79.2 79.0 -------- -------- -------- -------- Subtotal........................... 808.9 820.4 803.2 795.1 Mortgage-backed and other asset-backed securities................................. 213.6 218.4 216.1 219.6 -------- -------- -------- -------- Total.............................. $1,022.5 $1,038.8 $1,019.3 $1,014.7 ======== ======== ======== ========
MORTGAGE LOANS Mortgage loans comprised 7.3% and 8.8% of total invested assets as of March 31, 2001 and December 31, 2000, respectively. Mortgage loans consist of commercial and agricultural loans. As of March 31, 2001 and December 31, 2000, commercial mortgage loans comprised $29.0 million and $49.0 million or 29.9% and 42.2% of total mortgage loan investments, respectively. Agricultural loans comprised $68.0 million and $67.1 million, or 70.1% and 57.8% of total mortgage loan investments at March 31, 2001 and December 31, 2000, respectively. COMMERCIAL MORTGAGE LOANS For commercial mortgages, the carrying value of the largest amount loaned on any one single property aggregated $10.0 million and represented 0.8% of general account invested assets as of March 31, 2001. No other mortgage loan represents more than 0.5% of invested assets. Total mortgage loans to the 5 largest borrowers accounted in the aggregate for 82.0% of the total carrying value of the commercial loan portfolio and less than 1.8% of total invested assets at March 31, 2001. 17 19 The following table presents the Company's commercial mortgage loan maturity profile for the periods indicated. COMMERCIAL MORTGAGE LOAN PORTFOLIO MATURITY PROFILE
AS OF AS OF MARCH 31, DECEMBER 31, 2001 2000 ---------------- ---------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL -------- ----- -------- ----- ($ IN MILLIONS) Due in one year or less.............................. $ 1.6 5.4% $ 3.7 7.4% Due after one year through five years................ 11.5 39.2 39.1 79.9 Due after five years through ten years............... 6.2 21.3 6.2 12.7 Due after ten years.................................. 9.9 34.1 0.0 0.0 ----- ----- ----- ----- Total...................................... $29.2 100.0% $49.0 100.0% ===== ===== ===== =====
Problem, Potential Problem and Restructured Commercial Mortgages Loans that are delinquent and loans in process of foreclosure are categorized by the Company as "problem" loans. Loans with valuation allowances, but that are not currently delinquent, and loans which are on watchlist are categorized by the Company as "potential problem" loans. Loans for which the original terms of the mortgages have been modified or for which interest or principal payments have been deferred are categorized by the Company as "restructured" loans. The following table presents the carrying amounts of problem, potential problem and restructured commercial mortgage loans relative to the carrying value of all commercial mortgage loans as of the dates indicated. The table also presents the valuation allowances and writedowns recorded by the Company relative to commercial mortgages defined as problem, potential problem and restructured as of each of the dates indicated. PROBLEM AND RESTRUCTURED COMMERCIAL MORTGAGES AT CARRYING VALUE
AS OF AS OF MARCH 31, DECEMBER 31, 2001 2000 --------- ------------ ($ IN MILLIONS) Total commercial mortgages.................................. $29.0 $49.0 ===== ===== Restructured commercial mortgages........................... $ 8.3 $ 8.2 ----- ----- Total problem and restructured commercial mortgages......... $ 8.3 $ 8.2 ===== ===== Valuation allowances/writedowns Restructured loans.......................................... $ 0.1 $ 0.2 ----- ----- Total valuation allowances/writedowns....................... $ 0.1 $ 0.2 ===== ===== Total valuation allowances/writedowns as a percent of problem and restructured commercial mortgages at carrying value before valuation allowances and writedowns.......... 1.2% 2.4% ===== =====
In addition to valuation allowances and impairment writedowns recorded on specific commercial mortgage loans classified as problem, potential problem, and restructured mortgage loans, the Company records a non-specific estimate of expected losses on all other such mortgage loans based on its historical loss experience for such investments. As of March 31, 2001 and December 31, 2000, such reserves were $0.3 million and $0.6 million, respectively. 18 20 AGRICULTURAL MORTGAGE LOANS Problem, Potential Problem and Restructured Agricultural Mortgages The Company defines problem, potential problem and restructured agricultural mortgages in the same manner as it does for commercial mortgages. The following table presents the carrying amounts of problem, potential problem and restructured agricultural mortgages relative to the carrying value of all agricultural mortgages as of each of the dates indicated. PROBLEM, POTENTIAL PROBLEM AND RESTRUCTURED AGRICULTURAL MORTGAGES AT CARRYING VALUE
AS OF AS OF MARCH 31, DECEMBER 31, 2001 2000 --------- ------------ ($ IN MILLIONS) Total agricultural mortgages................................ $68.0 $67.1 ===== ===== Problem agricultural mortgages(1)........................... $ 4.3 $ 4.0 Restructured agricultural mortgages......................... 0.9 0.9 ----- ----- Total problem, potential problem & restructured agricultural mortgages(2).............................................. $ 5.2 $ 4.9 ===== ===== Total problem, potential problem & restructured agricultural mortgages percent of total agricultural mortgages......... 7.6% 7.3% ===== =====
- --------------- (1) Problem agricultural mortgages included delinquent mortgage loans of $4.3 million and $4.0 million at March 31, 2001 and December 31, 2000, respectively. There were no mortgage loans in the process of foreclosure at March 31, 2001 and December 31, 2000. (2) At both March 31, 2001 and December 31, 2000, there were no valuation allowances/writedowns relating to problem, potential problem and restructured agricultural mortgages. In addition to valuation allowances and impairments writedowns recorded on specific agricultural mortgage loans classified as problem, potential problem, and restructured mortgage loans, the Company records a non-specific estimate of expected losses on all other agricultural mortgage loans based on its historical loss experience for such investments. At both March 31, 2001 and December 31, 2000, such reserves were $0.6 million. EQUITY REAL ESTATE The Company holds real estate as part of its general account investment portfolio. The Company has adopted a policy of not investing new funds in equity real estate except to safeguard values in existing investments or to honor outstanding commitments. As of March 31, 2001 and December 31, 2000, the carrying value of the Company's real estate investments was $5.5 million and $5.4 million, respectively, or 0.4% and 0.4%, respectively, of general account invested assets. The Company owns investment real estate and real estate acquired upon foreclosure and real estate joint ventures. Equity real estate is categorized as either "Real estate held for investment" or "Real estate to be disposed of". Real estate to be disposed of consists of properties for which the Company has commenced marketing efforts. The carrying value of real estate held for investment totaled $3.2 million and $3.1 million as of March 31, 2001 and December 31, 2000, respectively. The carrying value of real estate to be disposed of was $2.3 million and $2.3 million as of March 31, 2001 and December 31, 2000, respectively. 19 21 INVESTMENT IMPAIRMENTS AND VALUATION ALLOWANCES The cumulative asset specific impairment adjustments and provisions for valuation allowances that were recorded as of the end of each period are shown in the table below and are reflected in the corresponding asset values discussed above. CUMULATIVE IMPAIRMENT ADJUSTMENTS AND PROVISIONS FOR VALUATION ALLOWANCES ON INVESTMENTS
AS OF MARCH 31, 2001 AS OF DECEMBER 31, 2000 -------------------------------- -------------------------------- IMPAIRMENT VALUATION IMPAIRMENT VALUATION ADJUSTMENTS ALLOWANCES TOTAL ADJUSTMENTS ALLOWANCES TOTAL ----------- ---------- ----- ----------- ---------- ----- Fixed maturities...................... $3.1 $0.0 $3.1 $3.1 $0.0 $3.1 Mortgages............................. 0.0 1.0 1.0 0.0 1.4 1.4 Real estate(1)........................ 1.0 0.2 1.2 1.0 0.2 1.2 ---- ---- ---- ---- ---- ---- Total....................... $4.1 $1.2 $5.3 $4.1 $1.6 $5.7 ==== ==== ==== ==== ==== ====
- --------------- (1) Includes $0.7 million at both March 31, 2001 and December 31, 2000, relating to impairments taken upon foreclosure of mortgage loans. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Refer to the Company's 2000 Annual Report on Form 10-K for a description of the Company's exposures to market risk, as well as the Company's objectives, policies and strategies relating to the management of such risks. The relative sensitivity to changes in fair value from interest rates and equity prices at March 31, 2001 is not materially different from that presented in the Company's 2000 Annual Report on Form 10-K at December 31, 2000. 20 22 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See Note 4 of the Financial Statements. In addition to the matters discussed therein, in the ordinary course of its business the Company is involved in various other legal actions and proceedings (some of which involve demands for unspecified damages), none of which is expected to have a material adverse effect on the Company. ITEM 2. EXHIBITS AND REPORTS ON 8-K (a) Exhibits 21 23 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 by the undersigned thereunto duly authorized. MONY LIFE INSURANCE COMPANY OF AMERICA By: /s/ RICHARD DADDARIO ------------------------------------ Richard Daddario Director, Vice President and (Authorized Financial Officer) Signatory and Principal Date: May 14, 2001 S-1 -----END PRIVACY-ENHANCED MESSAGE-----