AS FILED WITH THE SEC ON _________________. REGISTRATION NO. 2-99260
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 20
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
---------------
PRUCO LIFE
SINGLE PREMIUM
VARIABLE LIFE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 445-4571
(Address and telephone number of principal executive offices)
---------------
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
Copy to:
JEFFREY C. MARTIN
SHEA & GARDNER
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20036
Flexible Premium Variable Life Insurance Contracts--The Registrant has
registered an indefinite amount of securities pursuant to Rule 24f-2 under the
Investment Company Act of 1940. The Rule 24f-2 notice for fiscal year 1995 was
filed on March 4, 1996.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[x] on May 1, 1996 pursuant to paragraph (b) of Rule 485
-----------
(date)
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on pursuant to paragraph (a) of Rule 485
-----------
(date)
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY FORM N-8B-2)
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract and Sales Commissions
5. Pruco Life Single Premium Variable Life Account
6. Pruco Life Single Premium Variable Life Account
7. Not Applicable
8. Not Applicable
9. Litigation
10. Brief Description of the Contract; Short-Term
Cancellation Right or "Free Look"; Pruco Life Single
Premium Variable Life Account; Transfers; Surrenders;
Loans; Amount of Life Insurance; Lapse and
Reinstatement; When Proceeds are Paid; Voting Rights;
Substitution of Series Fund Shares
11. Brief Description of the Contract; Pruco Life Single
Premium Variable Life Account; Amount of Life
Insurance
12. Not Applicable
13. Brief Description of the Contract; Allocation of the
Premium Payment; Charges; Additional Premium
Payments; Sale of the Contract and Sales Commissions
14. Brief Description of the Contract; Short-Term
Cancellation Right or "Free Look"; Requirements for
Issuance of a Contract
15. Brief Description of the Contract; Allocation of the
Premium Payment; Additional Premium Payments
16. Cover Page; Brief Description of the Contract; General
Information About Pruco Life Insurance Company, Pruco
Life Single Premium Variable Life Account, and The
Variable Investment Options Available Under the
Contract
17. Transfers; Surrenders; When Proceeds are Paid
18. Brief Description of the Contract; Pruco Life Single
Premium Variable Life Account; Amount of Life
Insurance
19. Reports to Contract Owners
20. Not Applicable
21. Loans
22. Not Applicable
23. Not Applicable
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
24. Other General Contract Provisions
25. Pruco Life Insurance Company
26. Charges
27. Pruco Life Insurance Company; The Prudential Series
Fund, Inc.
28. Pruco Life Insurance Company; Directors and Officers
29. Pruco Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Pruco Life Insurance Company
36. Not Applicable
37. Not Applicable
38. Sale of the Contract and Sales Commissions
39. Sale of the Contract and Sales Commissions
40. Not Applicable
41. Sale of the Contract and Sales Commissions
42. Not Applicable
43. Not Applicable
44. Brief Description of the Contract; The Prudential
Series Fund, Inc.; Charges; Pruco Life Single Premium
Variable Life Account; Amount of Life Insurance;
Additional Premium Payments
45. Not Applicable
46. Brief Description of the Contract; Pruco Life Single
Premium Variable Life Account; The Prudential Series
Fund, Inc.
47. Pruco Life Single Premium Variable Life Account
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Series Fund Shares
53. Federal Tax Status
54. Not Applicable
55. Not Applicable
56. Not Applicable
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
57. Not Applicable
58. Not Applicable
59. Financial Statements; Financial Statements of Pruco
Life Single Premium Variable Life Account; Consolidated
Financial Statements of Pruco Life Insurance Company
and Subsidiaries
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PROSPECTUS
May 1, 1996
PRUCO LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE ACCOUNT
VARIABLE LIFE INSURANCE ACCOUNT
This prospectus describes the DISCOVERY(R) Life Plus Contract*, a variable life
insurance contract (the "Contract") issued by Pruco Life Insurance Company
("Pruco Life"), a stock life insurance company that is a wholly-owned subsidiary
of The Prudential Insurance Company of America ("The Prudential"). The Contract
requires payment of a premium of at least $10,000 upon issuance.
The Contract provides lifetime insurance coverage, as long as the Contract is
not surrendered or in default beyond its days of grace, and also provides a cash
surrender value if the Contract is surrendered during the insured's lifetime.
The death benefit will be the face amount of insurance stated in the Contract or
under certain circumstances a higher amount. The cash surrender value of the
Contract varies daily to reflect investment performance, and the imposition of
charges. There is no guaranteed minimum cash surrender value, and if investment
performance is sufficiently poor for a sufficiently long time, the cash
surrender value could decline to zero.
Following a deduction for applicable premium taxes, the premium payment will be
allocated as the owner directs in one or more of the following ways. It may be
allocated to one or more of the subaccounts of the Pruco Life Single Premium
Variable Life Account (the "Account"), to a FIXED-RATE OPTION or to a real
estate investment option funded by another separate account of Pruco Life. The
assets of each subaccount will be invested in a corresponding portfolio of The
Prudential Series Fund, Inc. (the "Series Fund"). The attached prospectus for
the Series Fund and the Series Fund's statement of additional information
describe the investment objectives of and risks of investing in the fifteen
portfolios of the Series Fund currently available to Contract owners: the MONEY
MARKET PORTFOLIO, the DIVERSIFIED BOND PORTFOLIO, the GOVERNMENT INCOME
PORTFOLIO, two ZERO COUPON BOND PORTFOLIOS with different liquidation
dates--2000 and 2005, the CONSERVATIVE BALANCED PORTFOLIO, the FLEXIBLE MANAGED
PORTFOLIO, the HIGH YIELD BOND PORTFOLIO, the STOCK INDEX PORTFOLIO, the EQUITY
INCOME PORTFOLIO, the EQUITY PORTFOLIO, the PRUDENTIAL JENNISON PORTFOLIO, the
SMALL CAPITALIZATION STOCK PORTFOLIO, the GLOBAL PORTFOLIO, and the NATURAL
RESOURCES PORTFOLIO. Interest is credited daily upon any portion of the premium
payment allocated to the fixed-rate option at a rate periodically declared by
Pruco Life in its sole discretion. The fixed-rate option is not available to
Contracts issued in Texas. Selection of the real estate investment option
involves allocation of part or all of the premium payment to the Pruco Life
Variable Contract Real Property Account (the "REAL PROPERTY ACCOUNT"), a
separate account of Pruco Life that, through a partnership, invests primarily in
income-producing real property. The Real Property Account is described in a
prospectus that is attached to this one. This prospectus describes the Contract
generally and the Pruco Life Single Premium Variable Life Account.
The Contract is a Modified Endowment Contract under federal tax law. Any policy
loan, surrender or other pre-death distribution may result in adverse tax
consequences, and, if the insured is less than age 59 1/2, a 10% tax penalty.
-----------------------------------
This prospectus provides information a prospective investor should know before
deciding to purchase a Contract. It may not be advantageous to replace existing
insurance with a Contract described in this prospectus, and if a prospective
investor already owns a flexible premium life insurance contract, the benefits
and costs of purchasing additional insurance under the existing Contract should
be compared with the benefits and costs of purchasing the Contract described
herein. In making this comparison, a qualified tax advisor should be consulted.
-----------------------------------
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ATTACHED TO
A CURRENT PROSPECTUS FOR THE SERIES FUND, INC. IT IS ALSO ATTACHED TO A CURRENT
PROSPECTUS FOR THE PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRUCO LIFE INSURANCE COMPANY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 445-4571
*DISCOVERY is a registered mark of The Prudential.
SPVL-1 Ed 5-96
Catalog No. 6401654
<PAGE>
PROSPECTUS CONTENTS
Page
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS......................... 1
BRIEF DESCRIPTION OF THE CONTRACT............................................ 2
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY, PRUCO LIFE SINGLE
PREMIUM VARIABLE LIFE ACCOUNT, AND THE VARIABLE INVESTMENT OPTIONS
AVAILABLE UNDER THE CONTRACT............................................... 5
PRUCO LIFE INSURANCE COMPANY............................................... 5
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT............................ 5
THE PRUDENTIAL SERIES FUND, INC............................................ 5
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT......................... 6
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS......................... 7
REQUIREMENTS FOR ISSUANCE OF A CONTRACT.................................... 7
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"............................... 7
ALLOCATION OF THE PREMIUM PAYMENT.......................................... 7
TRANSFERS ................................................................. 8
SURRENDERS ................................................................ 8
LOANS ..................................................................... 8
CHARGES ................................................................... 9
AMOUNT OF LIFE INSURANCE................................................... 11
LAPSE AND REINSTATEMENT.................................................... 12
ADDITIONAL PREMIUM PAYMENTS................................................ 12
LIVING NEEDS BENEFIT....................................................... 12
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS,
AND ACCUMULATED PREMIUMS................................................. 13
WHEN PROCEEDS ARE PAID..................................................... 15
REPORTS TO CONTRACT OWNERS................................................. 15
TAX TREATMENT OF CONTRACT BENEFITS......................................... 15
THE FIXED-RATE OPTION...................................................... 16
VOTING RIGHTS.............................................................. 17
SALE OF THE CONTRACT AND SALES COMMISSIONS................................. 17
SUBSTITUTION OF SERIES FUND SHARES......................................... 18
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS........ 18
OTHER GENERAL CONTRACT PROVISIONS.......................................... 18
STATE REGULATION........................................................... 19
ADDITIONAL INFORMATION..................................................... 19
EXPERTS ................................................................... 19
LITIGATION ................................................................ 19
FINANCIAL STATEMENTS....................................................... 19
DIRECTORS AND OFFICERS....................................................... 20
FINANCIAL STATEMENTS OF PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT...... A1
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY AND
SUBSIDIARIES............................................................... B1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR THE
SERIES FUND, AND THE PROSPECTUS FOR THE REAL PROPERTY ACCOUNT.
<PAGE>
DEFINITIONS OF SPECIAL TERMS USED IN THIS
PROSPECTUS
AMOUNT CREDITED UNDER THE CONTRACT--See Contract fund below.
CASH SURRENDER VALUE--The amount payable to the Contract owner upon surrender of
the Contract, equal to the Contract fund minus any applicable contingent
deferred sales charge and any Contract debt.
CONTRACT ANNIVERSARY--The same day and month as the Contract date in each later
year.
CONTRACT DATE--The date Pruco Life received the premium for the Contract.
CONTRACT FUND--The total value attributable to a specific Contract representing
amounts in all the subaccounts, amounts allocated to the fixed-rate option,
amounts invested under the real estate option, and the principal amount of any
Contract loan. At times throughout this prospectus, when an alternative
identification may be desirable for complete clarity or to further describe the
role of the Contract fund, we refer to the Contract fund as "the amount credited
under the Contract". The term should not be confused with The Prudential Series
Fund, Inc. (the "Series Fund") defined below.
CONTRACT OWNER--The person who purchases a DISCOVERY Life Plus Contract and pays
the premium.
CONTRACT YEAR--A year that starts on the Contract date or on a Contract
anniversary.
DISCOVERY LIFE--A fixed life insurance contract issued by Pruco Life that is
similar to DISCOVERY Life Plus except that the owner may not invest the Contract
fund in variable investment options.
FACE AMOUNT--The initial amount of life insurance as shown on the cover page of
the Contract.
FIXED-RATE OPTION--An investment option under which Pruco Life guarantees that
interest will be added to the amount deposited at a rate declared periodically
in advance.
MONTHLY DATE--The Contract date and the same date in each subsequent month.
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT (THE "ACCOUNT")--A separate
account of Pruco Life registered as a unit investment trust under the
Investment Company Act of 1940.
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT (THE "REAL PROPERTY
ACCOUNT")--A separate account of Pruco Life which, through a partnership,
invests primarily in income-producing real property.
SUBACCOUNT--A division of the Account, the assets of which are invested in
shares of the corresponding portfolio of the Series Fund.
TARGET LOAN AMOUNT--The amount, equal to 10% of the initial premium for each
completed Contract year, that may be borrowed as a first loan in any year at the
most favorable net cost to the Contract owner.
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND")--A mutual fund with
separate portfolios, one or more of which may be chosen as an underlying
investment for the Contract.
VALUATION PERIOD--The period of time from one determination of the value of the
amount invested in a subaccount to the next. Such determinations are made when
the net asset values of the portfolios of the Series Fund are calculated, which
is generally at 4:15 p.m. New York City time on each day during which the New
York Stock Exchange is open.
VARIABLE INVESTMENT OPTIONS--The subaccounts and the Real Property Account.
1
<PAGE>
BRIEF DESCRIPTION OF THE CONTRACT
The DISCOVERY Life Plus Contract (the "Contract") provides a way to invest in
one or more securities portfolios with different investment objectives, while at
the same time providing lifetime insurance protection. The DISCOVERY Life Plus
Contract is a variable whole life insurance contract. It is called a "variable"
contract because the value of the Contract depends upon the investment results
of the investment option[s] selected. Under current law, no tax is payable upon
any increase in the value of the Contract until amounts are distributed under
the Contract. The owner may surrender the Contract in full and in that way
withdraw the full cash surrender value of the Contract. Neither partial
surrenders nor Contract splits are permitted. The Contract owner may, however,
borrow against the value of the Contract. See LOANS, page 8.
Because the Contract is a Modified Endowment Contract under federal tax law,
loans and other distributions made during the insured's lifetime are includible
in gross income on an income-first basis. A 10% penalty tax may be imposed on
income distributed before the insured attains age 59 1/2. See TAX TREATMENT OF
CONTRACT BENEFITS, page 15.
The Contract is purchased by making an initial premium payment. Generally, the
minimum initial payment is $10,000. For insureds aged 76 through 85, the minimum
initial payment is $50,000. Pruco Life Insurance Company ("Pruco Life") deducts
the amount needed to pay state and/or local premium taxes attributable to the
Contract and allocates the remainder to the variable investment option[s]
selected by the owner and/or to the fixed-rate option. The assets of each
subaccount are invested in a corresponding portfolio of The Prudential Series
Fund, Inc. (the "Series Fund"), a series mutual fund for which The Prudential
Insurance Company of America ("The Prudential") is the investment advisor. The
Series Fund currently has fifteen portfolios available for investment by
Contract owners. The MONEY MARKET PORTFOLIO is invested in short-term debt
obligations similar to those purchased by money market funds; the DIVERSIFIED
BOND PORTFOLIO (formerly the Bond Portfolio) is invested primarily in high
quality medium-term corporate and government debt securities; the GOVERNMENT
INCOME PORTFOLIO (formerly the Government Securities Portfolio) is invested
primarily in U.S. Government securities including intermediate and long-term
U.S. Treasury securities and debt obligations issued by agencies of or
instrumentalities established, sponsored or guaranteed by the U.S. Government;
the ZERO COUPON BOND PORTFOLIOS 2000 and 2005 are invested primarily in debt
obligations of the United States Treasury and investment grade corporations that
have been issued without interest coupons or stripped of their unmatured
interest coupons, interest coupons that have been stripped from such debt
obligations, and receipts and certificates for such stripped debt obligations
and stripped coupons; the CONSERVATIVE BALANCED PORTFOLIO (formerly the
Conservatively Managed Flexible Portfolio) is invested in a mix of money market
instruments, fixed income securities, and common stocks, in proportions believed
by the investment manager to be appropriate for an investor who desires
diversification of investment who prefers a relatively lower risk of loss and a
correspondingly reduced chance of high appreciation; the FLEXIBLE MANAGED
PORTFOLIO (formerly the Aggressively Managed Flexible Portfolio) is invested in
a mix of money market instruments, fixed income securities, and common stocks,
in proportions believed by the investment manager to be appropriate for an
investor desiring diversification of investment who is willing to accept a
relatively high level of loss in an effort to achieve greater appreciation; the
HIGH YIELD BOND PORTFOLIO is invested primarily in high yield fixed income
securities of medium to lower quality, also known as high risk bonds; the STOCK
INDEX PORTFOLIO is invested in common stocks selected to duplicate the price and
yield performance of the Standard & Poor's 500 Composite Stock Price Index; the
EQUITY INCOME PORTFOLIO (formerly the High Dividend Stock Portfolio) is invested
primarily in common stocks and convertible securities that provide favorable
prospects for investment income returns above those of the Standard & Poor's 500
Stock Index or the NYSE Composite Index; the EQUITY PORTFOLIO (formerly the
Common Stock Portfolio) is invested primarily in common stocks; the PRUDENTIAL
JENNISON PORTFOLIO (formerly the Growth Stock Portfolio) is invested primarily
in equity securities of established companies with above-average growth
prospects; the SMALL CAPITALIZATION STOCK PORTFOLIO is invested primarily in
equity securities of publicly-traded companies with small market capitalization;
the GLOBAL PORTFOLIO (formerly the Global Equity Portfolio) is invested
primarily in common stocks and common stock equivalents (such as convertible
debt securities) of foreign and domestic issuers; and the NATURAL RESOURCES
PORTFOLIO is invested primarily in common stocks and convertible securities of
natural resource companies, and in securities (typically debt securities or
preferred stock) the terms of which are related to the market value of a natural
resource. Further information about the Series Fund portfolios can be found
under THE PRUDENTIAL SERIES FUND, INC. on page 5.
The Contract owner may also invest a portion of the premium payment in The Pruco
Life Variable Contract Real Property Account (the "Real Property Account"),
which, through a partnership, invests primarily in income-producing real
property. If a Contract owner elects to invest in the real estate investment
option, the assets will be maintained in a subaccount of the Real Property
Account related to the Contract that provides the mechanism and maintains the
records whereby various Contract charges are made. The investment objectives of
the Real Property Account and the partnership are described briefly under PRUCO
LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT on page 6.
2
<PAGE>
All of the premium payment may be allocated to one subaccount, to the fixed-rate
option funded by Pruco Life's general account or to the Real Property Account.
Alternatively, the premium payment may be divided among any of the subaccounts,
the fixed-rate option, and the Real Property Account.
The value of the Contract will vary to reflect the investment results of the
variable investment option[s] in which money is invested and the amount of
interest credited on amounts allocated to the fixed-rate option. The total
amount attributable to a Contract held in the variable investment options and
under the fixed-rate option, plus the principal amount of any Contract loan, is
referred to herein interchangeably as the "Contract fund" or "the amount
credited under the Contract".
The purchaser of a Contract decides what the amount of the initial premium will
be (so long as it is at least $10,000; $50,000 for issue ages 76 through 85) and
from this amount the initial amount of life insurance (i.e., the face amount) is
determined. Although the cash surrender value of the Contract (i.e., the
Contract fund minus any Contract debt and any applicable sales charge deducted
upon surrender) will begin to vary immediately to reflect the investment results
of any amount invested in the variable investment options, the amount of life
insurance will ordinarily not change for several years and may not change at
all. If investment results are sufficiently favorable, however, the amount of
insurance will eventually increase and thereafter will vary in amount reflecting
investment results and the application of factors that vary with the insured's
attained age. But it will never be less than the face amount. See AMOUNT OF LIFE
INSURANCE, page 11.
Pruco Life deducts certain charges from premium payments and from the amounts
held in the designated investment options. In addition, Pruco Life makes certain
additional charges if a Contract is surrendered during the first 6 Contract
years. All these charges, which are largely designed to cover insurance costs
and risks as well as sales and administrative expenses, are fully described
under CHARGES on page 9. In brief, and subject to that fuller description, the
following diagram outlines the charges which may be made:
3
<PAGE>
------------------------------------------------------
PREMIUM PAYMENT
------------------------------------------------------
-------------------------------------------------
o Less charge for premium taxes. (Under certain
circumstances, this charge may be reduced or
eliminated, see item 1 under CHARGES, page 9)
-------------------------------------------------
----------------------------------------------------------------------------
INVESTED PREMIUM AMOUNT
o To be invested in one or a combination of:
o One or more of the fifteen available portfolios of the Series Fund.
o The Real Property Account.
o The Fixed Rate Option.
----------------------------------------------------------------------------
DAILY CHARGES
o A daily charge equivalent to an annual rate of up to 0.35% is deducted
from the assets of each of the variable investment options for
administrative expenses.
o A daily charge equivalent to an annual rate of up to 0.9% is deducted from
the assets of each of the variable investment options for mortality and
expense risks.
o Management fees and expenses are deducted from the assets of the Series
Fund and the Real Property Account.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
MONTHLY CHARGES
o A charge for insurance protection is deducted monthly. Generally, this
charge is imposed in an amount equal to 0.05% of the Contract fund per
month. However, if the Contract fund falls so low as to make a charge of
0.05% per month inadequate, the charge may be increased to the amount
permitted by the 1980 Commissioners Standard Ordinary Mortality Table
("1980 CSO Table").
----------------------------------------------------------------------------
----------------------------------------------------------------------------
POSSIBLE ADDITIONAL CHARGES
o If the Contract is surrendered during the first 6 years, a contingent
deferred sales charge is assessed; the maximum contingent deferred sales
charge during the first year is 9% of the amount credited under the
Contract. Thereafter, this charge decreases by one percent per year until,
in the sixth Contract year, it is equal to 4% of the amount credited under
the Contract. In the seventh and subsequent Contract years there is no
charge. The sales charge will never be greater than 9% of the initial
premium payment.
----------------------------------------------------------------------------
Because of the charges listed above, and in particular because of the
significant charges deducted upon early surrender, prospective purchasers should
purchase a Contract only if they intend and have the financial capability to
keep it in force for a substantial period.
Funds may be transferred among the subaccounts and to the fixed-rate option and
the Real Property Account up to four times each year. There are limitations on
transfers out of the fixed-rate option and into and out of the Real Property
Account. See TRANSFERS, page 8.
For a limited time, a Contract may be returned for a refund in accordance with
the terms of its "free-look" provision. See SHORT-TERM CANCELLATION RIGHT OR
"FREE LOOK", page 7.
This Brief Description of the Contract is intended to provide a broad overview
of the more significant features of the Contract. More detailed information will
be found in subsequent sections of this prospectus and in the Contract document.
That document, together with its attached application, constitutes the entire
agreement between the owner and Pruco Life and should be retained by the owner.
4
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE
INSURANCE COMPANY, PRUCO LIFE SINGLE PREMIUM
VARIABLE LIFE ACCOUNT, AND THE VARIABLE
INVESTMENT OPTIONS AVAILABLE UNDER THE
CONTRACT
PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company,
organized in 1971 under the laws of the State of Arizona. It is licensed to sell
life insurance and annuities in the District of Columbia, Guam, and in all
states except New York. These Contracts are not offered in any state in which
the necessary approvals have not yet been obtained.
Pruco Life is a wholly-owned subsidiary of The Prudential, a mutual insurance
company founded in 1875 under the laws of the State of New Jersey. As of
December 31, 1995, The Prudential has invested over $442 million in Pruco Life
in connection with Pruco Life's organization and operation. The Prudential
intends from time to time to make additional capital contributions to Pruco Life
as needed to enable it to meet its reserve requirements and expenses in
connection with its business. The Prudential is under no obligation to make such
contributions and its assets do not back the benefits payable under the
Contract. Pruco Life's consolidated financial statements begin on page B1 and
should be considered only as bearing upon Pruco Life's ability to meet its
obligations under the Contracts.
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
The Pruco Life Single Premium Variable Life Account (the "Account") was
established on April 15, 1985 under Arizona law as a separate investment
account. The Account meets the definition of a "separate account" under the
federal securities laws. The Account holds assets that are segregated from all
of Pruco Life's other assets.
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Pruco Life. Pruco Life is also the legal
owner of the assets in the Account. Pruco Life will at all times maintain assets
in the Account with a total market value at least equal to the reserve and other
liabilities relating to the variable benefits attributable to the Account. These
assets may not be charged with liabilities which arise from any other business
Pruco Life conducts. In addition to these assets, the Account's assets may
include funds contributed by Pruco Life to commence operation of the Account and
may include accumulations of the charges Pruco Life makes against the Account.
From time to time these additional assets will be transferred to Pruco Life's
general account. Before making any such transfer, Pruco Life will consider any
possible adverse impact the transfer might have on the Account.
The Account is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve any
supervision by the SEC of the management or investment policies or practices of
the Account. For state law purposes, the Account is treated as a part or
division of Pruco Life. There are currently fifteen subaccounts within the
Account, each of which invests in a single corresponding portfolio of the Series
Fund. Additional subaccounts may be added in the future. The Account's financial
statements begin on page A1.
THE PRUDENTIAL SERIES FUND, INC.
The Prudential Series Fund, Inc. (the "Series Fund") is registered under the
1940 Act as an open-end diversified management investment company. Its shares
are currently sold only to separate accounts of The Prudential and certain other
insurers that offer variable life insurance and variable annuity contracts. On
October 31, 1986, the Pruco Life Series Fund, Inc., an open-end, diversified
management investment company which sold its shares only to separate accounts of
Pruco Life and Pruco Life Insurance Company of New Jersey, was merged into the
Series Fund. Prior to that date, the Account invested only in shares of the
Pruco Life Series Fund, Inc. The Account will purchase and redeem shares from
the Series Fund at net asset value. Shares will be redeemed to the extent
necessary for Pruco Life to provide benefits under the Contract and to transfer
assets from one subaccount to another, as requested by Contract owners. Any
dividend or capital gain distribution received from a portfolio of the Series
Fund will be reinvested immediately at net asset value in shares of that
portfolio and retained as assets of the corresponding subaccount.
The Prudential is the investment advisor for the assets of each of the
portfolios of the Series Fund. The Prudential's principal business address is
Prudential Plaza, Newark, New Jersey 07102-3777. The Prudential has a Service
Agreement with its wholly-owned subsidiary The Prudential Investment Corporation
("PIC"), which provides that, subject to The Prudential's supervision, PIC will
furnish investment advisory services in connection with the
5
<PAGE>
management of the Series Fund. In addition, The Prudential has entered into a
Subadvisory Agreement with its wholly-owned subsidiary Jennison Associates
Capital Corp. ("Jennison"), under which Jennison furnishes investment advisory
services in connection with the management of the Prudential Jennison Portfolio.
Further detail is provided in the prospectus and statement of additional
information for the Series Fund. The Prudential, PIC, and Jennison are
registered as investment advisors under the Investment Advisers Act of 1940.
As an investment advisor, The Prudential charges the Series Fund a daily
investment management fee as compensation for its services. The following table
shows the investment management fee charged for each portfolio of the Series
Fund available for investment by Contract owners.
-------------------------------------------------------------------------
ANNUAL INVESTMENT
PORTFOLIO MANAGEMENT FEE AS
A PERCENTAGE OF AVERAGE
DAILY NET ASSETS
-------------------------------------------------------------------------
MONEY MARKET PORTFOLIO 0.40%
DIVERSIFIED BOND PORTFOLIO 0.40%
GOVERNMENT INCOME PORTFOLIO 0.40%
ZERO COUPON BOND PORTFOLIOS 0.40%
CONSERVATIVE BALANCED PORTFOLIO 0.55%
FLEXIBLE MANAGED PORTFOLIO 0.60%
HIGH YIELD BOND PORTFOLIOS 0.55%
STOCK INDEX PORTFOLIO 0.35%
EQUITY INCOME PORTFOLIO 0.40%
EQUITY PORTFOLIO 0.45%
PRUDENTIAL JENNISON PORTFOLIO 0.60%
SMALL CAPITALIZATION STOCK PORTFOLIO 0.40%
GLOBAL PORTFOLIO 0.75%
NATURAL RESOURCES PORTFOLIO 0.45%
--------------------------------------------------------------------------
Some investment management fees and expenses charged to the Series Fund may be
higher than those that were previously charged to the Pruco Life Series Fund,
Inc. (0.4%), in which the Account previously invested. For the Money Market,
Diversified Bond, Zero Coupon Bond 2000, Conservative Balanced, Flexible
Managed, Zero Coupon Bond Portfolio 2005, and Equity Portfolios, Pruco Life will
make daily adjustments that will offset the effect on Contract owners of any
higher investment management fees and expenses charged against the Series Fund.
Pruco Life also makes, on a non-guaranteed basis, daily adjustments to ensure
that the portfolio expenses indirectly borne by a Contract owner investing in
the Zero Coupon Bond Portfolio 2005 will not exceed the investment management
fee. Without such adjustments the portfolio expenses indirectly borne by a
Contract owner, expressed as a percentage of the average daily net assets by
portfolio, would have been 0.44% for the Money Market Portfolio, 0.44% for the
Diversified Bond Portfolio, 0.48% for the Zero Coupon Bond Portfolio 2000, 0.49%
for the Zero Coupon Bond Portfolio 2005, 0.58% for the Conservative Balanced
Portfolio, 0.63% for the Flexible Managed Portfolio, and 0.48% for the Equity
Portfolio in 1995. Pruco Life does not intend to discontinue the adjustments for
the Zero Coupon Bond Portfolio 2005 in the future, although it retains the right
to do so. No such offset will be made with respect to the remaining portfolios.
It is conceivable that in the future it may become disadvantageous for both
variable life insurance and variable annuity contract separate accounts to
invest in the same underlying mutual fund. Although neither the companies which
invest in the Series Fund, nor the Series Fund currently foresees any such
disadvantage, the Series Fund's Board of Directors intends to monitor events in
order to identify any material conflict between variable life insurance and
variable annuity contract owners and to determine what action, if any, should be
taken in response thereto. Material conflicts could result from such things as:
(1) changes in state insurance law; (2) changes in federal income tax law; (3)
changes in the investment management of any portfolio of the Series Fund; or (4)
differences between voting instructions given by variable life insurance and
variable annuity contract owners.
A FULL DESCRIPTION OF THE SERIES FUND, ITS INVESTMENT OBJECTIVES, MANAGEMENT,
POLICIES, AND RESTRICTIONS, ITS EXPENSES, THE RISKS ATTENDANT TO INVESTMENT
THEREIN--INCLUDING ANY RISKS ASSOCIATED WITH INVESTMENT IN THE HIGH YIELD BOND
PORTFOLIO, AND ALL OTHER ASPECTS OF ITS OPERATION IS CONTAINED IN THE ATTACHED
PROSPECTUS FOR THE SERIES FUND AND IN ITS STATEMENT OF ADDITIONAL INFORMATION,
WHICH SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS. THERE IS NO ASSURANCE
THAT THE INVESTMENT OBJECTIVES WILL BE MET.
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
The Pruco Life Variable Contract Real Property Account (the "Real Property
Account") is a separate account of Pruco Life that, through a general
partnership formed by The Prudential and two of its subsidiaries, invests
primarily
6
<PAGE>
in income-producing real property such as office buildings, shopping centers,
agricultural land, hotels, apartments or industrial properties. It also invests
in mortgage loans and other real estate-related investments, including
sale-leaseback transactions. The objectives of the Real Property Account and the
partnership are to preserve and protect capital, provide for compounding of
income as a result of reinvestment of cash flow from investments, and provide
for increases over time in the amount of such income through appreciation in the
value of assets.
The partnership has entered into an investment management agreement with The
Prudential, under which The Prudential selects the properties and other
investments held by the partnership. The Prudential charges the partnership a
daily fee for investment management which amounts to 1.25% per year of the
average daily gross assets of the partnership.
A FULL DESCRIPTION OF THE REAL PROPERTY ACCOUNT, ITS MANAGEMENT, POLICIES, AND
RESTRICTIONS, ITS CHARGES AND EXPENSES, THE RISKS ATTENDANT TO INVESTMENT
THEREIN, THE PARTNERSHIP'S INVESTMENT OBJECTIVES, AND ALL OTHER ASPECTS OF THE
REAL PROPERTY ACCOUNT'S AND THE PARTNERSHIP'S OPERATIONS IS CONTAINED IN THE
ATTACHED PROSPECTUS FOR THE REAL PROPERTY ACCOUNT, WHICH SHOULD BE READ TOGETHER
WITH THIS PROSPECTUS BY ANY CONTRACT OWNER CONSIDERING THE REAL ESTATE
INVESTMENT OPTION. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE
MET.
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
For insureds below the age of 76, the minimum initial premium payment is
$10,000. For insureds aged 76 through 85, the minimum initial premium payment is
$50,000. Before issuing any Contract, Pruco Life requires evidence of
insurability which may include a medical examination. The Contract will only be
issued on insureds who are classified as standard risks following Pruco Life's
regular underwriting process. Insurance protection will begin on the date the
initial payment and completed application are received. On the date the initial
payment is received in the Pruco Life Home Office, the amount credited under the
Contract begins to vary to reflect the investment results of the variable
investment option[s] which have been chosen or the interest rate declared for
the fixed-rate option. If the application is not approved, because the current
underwriting requirements are not met, the premium payment will promptly be
returned. The Company reserves the right to change these requirements on a
non-discriminatory basis.
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"
Generally, a Contract may be returned for a refund within 10 days after it is
received by the Contract owner, within 45 days after Part I of the application
for insurance is signed or within 10 days after Pruco Life mails or delivers a
Notice of Withdrawal Right, whichever is latest. Some states allow a longer
period of time during which a Contract may be returned for a refund. A refund
can be requested by mailing or delivering the Contract to the representative who
sold it or to the Pruco Life Home Office specified in the Contract. A Contract
returned according to this provision shall be deemed void from the beginning.
The Contract owner will then receive a refund of all premium payments made, plus
or minus any change due to investment experience in the value of the invested
portion of the premiums, calculated as if no charges had been made against the
Account or the Series Fund. However, if applicable law so requires, the Contract
owner who exercises his or her short-term cancellation right will receive a
refund of all premium payments made, with no adjustment for investment
experience.
ALLOCATION OF THE PREMIUM PAYMENT
The Contract owner determines how the initial premium payment, after the
deduction for any applicable state and/or local premium taxes, will be allocated
among the subaccounts, the fixed-rate option, and the Real Property Account. The
owner may choose to allocate nothing to a particular subaccount or to the
fixed-rate option or the Real Property Account, but any allocation made must be
at least 10% and may not be a fractional percent.
Additionally, a feature called Dollar Cost Averaging is available to Contract
owners who make an allocation to the Money Market Subaccount. Under this
feature, automatic flat dollar amounts will be transferred monthly from the
Money Market Subaccount into other investment options available under the
Contract, excluding the fixed-rate option, but including the Real Property
Account. At issue, the minimum amount initially designated for transfer under
this feature must be the greater of $10,000 and 10% of the initial premium
payment. After issue, Pruco Life will accept an amount less than $10,000
provided it brings the balance in any current Dollar Cost Averaging account up
to $10,000. Monthly transfers must be at least 3% of the amount allocated to the
Dollar Cost Averaging account, with a minimum of $20 transferred into any one
investment option. These amounts are subject to change at Pruco Life's
discretion. The minimum transfer amount will only be recalculated upon an
increase in the amount allocated to the feature.
7
<PAGE>
Each automatic monthly transfer will take effect as of the end of the valuation
period on the Monthly Date, provided the New York Stock Exchange ("NYSE") is
open on that date. If the NYSE is not open on the Monthly Date, the transfer
will take effect as of the end of the valuation period on the next day that the
NYSE is open. If the Monthly Date does not occur in a particular month (e.g.,
February 30), the transfer will take effect as of the end of the valuation
period on the last day of the month that the NYSE is open. Automatic monthly
transfers will continue until the amount designated for Dollar Cost Averaging
has been transferred, or until the Contract owner gives notification of a change
in allocation or cancellation of the feature. Currently, there is no charge for
using the Dollar Cost Averaging feature.
Transfers
The Contract owner may transfer the portion of the Contract fund allocated to
any of the subaccounts, the fixed-rate option or the Real Property Account
without charge and without any federal income tax liability. Transfers must be
in amounts of $300 or more or the total amount in the subaccounts, if less, and
must not cause the amount credited in any subaccount to be less than $300,
unless the entire amount in that subaccount is transferred. The Contract owner
may transfer amounts by proper written notice to a Pruco Life Home Office, or by
telephone, provided the Contract owner is enrolled to use the Telephone Transfer
System. A Contract owner will automatically be enrolled to use the Telephone
Transfer System unless the Contract owner elects not to have this privilege.
Pruco Life has adopted procedures designed to ensure that requests by telephone
are genuine. Pruco Life will not be held liable for following telephone
instructions that it reasonably believes to be genuine. Pruco Life cannot
guarantee that owners will be able to get through to complete a telephone
transfer during peak periods such as periods of drastic economic or market
change.
Transfers among subaccounts will take effect as of the end of the valuation
period in which a proper transfer request is received at a Pruco Life Home
Office. The owner may make up to four transfers a year, either among the
subaccounts or from the subaccounts to the fixed-rate option or the Real
Property Account.
In addition, the entire amount of the Contract fund in the subaccounts may be
transferred to the fixed-rate option at any time. A Contract owner who wishes to
convert his or her variable Contract to a fixed-benefit Contract must request a
complete transfer of funds to the fixed-rate option and should also change his
or her allocation instructions regarding any future premiums. The fixed-rate
option is not available for Contracts issued in Texas. However, for Contracts
issued in Texas, a Contract owner may convert his or her variable Contract to a
comparable fixed-benefit policy during the first 2 Contract years.
On the liquidation date of a Zero Coupon Bond Subaccount, all the shares held by
it in the corresponding portfolio of the Series Fund will be redeemed and the
proceeds of the redemption applicable to each Contract will be transferred to
the Money Market Subaccount unless the Contract owner directs that it be
transferred to another subaccount. Affected Contract owners will be notified in
writing and given the opportunity to transfer their proceeds to another
subaccount prior to the liquidation date. A transfer that occurs upon the
liquidation date of a Zero Coupon Bond Subaccount will not be counted as one of
the four permissible transfers in a Contract year.
Transfers from the fixed-rate option to the subaccounts are currently permitted
once each Contract year and only during the 30-day period beginning on the
Contract anniversary. The maximum amount which may currently be transferred out
of the fixed-rate option each year is the greater of: (a) 25% of the amount in
the fixed-rate option and (b) $5,000. Such transfer requests received prior to
the Contract anniversary will be effected on the Contract anniversary. Transfer
requests received within the 30-day period beginning on the Contract anniversary
will be effected as of the end of the valuation period in which a proper
transfer request is received at a Pruco Life Home Office. These limits are
subject to change in the future. Transfers to and from the Real Property Account
are subject to restrictions described in a separate prospectus for that
investment option.
SURRENDERS
The Contract owner may surrender the Contract at any time for its full cash
surrender value (which takes into account the contingent deferred sales charge,
if any, and any Contract debt). Neither partial surrenders nor Contract splits
are permitted. To surrender a Contract, the owner must deliver or mail it,
together with a written request in a form that meets Pruco Life's needs, to a
Pruco Life Home Office. The cash surrender value of the surrendered Contract
will be determined as of the date such notice is received in the Home Office.
See WHEN PROCEEDS ARE PAID, page 15. Surrender of the Contract may have tax
consequences. See TAX TREATMENT OF CONTRACT BENEFITS, page 15.
LOANS
The Contract owner may borrow from Pruco Life up to the "loan value" of the
Contract using only the Contract as security for the loan. Contractually, loans
will be made only on or after the first Contract anniversary. However, as an
administrative practice, Pruco Life allows loans to be made during the first
Contract year. This practice may
8
<PAGE>
change. The loan value of a Contract is 90% of an amount equal to its Contract
fund, reduced by any charges due upon surrender. However, Pruco Life will, on a
non-contractual basis, increase the loan value by permitting a Contract owner to
borrow up to 100% of the portion of the Contract fund attributable to the
fixed-rate option (or any portion of the Contract fund attributable to a prior
loan supported by the fixed-rate option), reduced by any charges due upon
surrender. Loans will be treated as distributions for tax purposes. See TAX
TREATMENT OF CONTRACT BENEFITS, page 15.
When a loan is taken, the amounts allocated to the subaccount[s], the fixed-rate
option or the Real Property Account will be reduced by the amount of any loan.
The reduction will generally be made in the same proportions as the value in
each subaccount, the fixed-rate option, and the Real Property Account bears to
the total value of the Contract. As explained below, however, the principal
amount of the loan continues to be part of the Contract owner's total Contract
fund.
Pruco Life will charge interest at the rate of 6% per year on any outstanding
loan and, if the interest is not paid on the Contract anniversary, the amount of
the interest will be added to the loan. Although the amount of the loan will be
withdrawn from the variable investment options and the fixed-rate option, Pruco
Life will nevertheless credit the amount withdrawn with interest daily at an
effective annual rate of either 5.5% or 4%. The loan plus the interest credited
thereon to the Contract owner remain part of the Contract fund. Determination of
the applicable interest rate credited to the Contract owner on the loan amount
is made as follows. The loan amount is divided into two parts, the "target loan
amount" and the remainder. The target loan amount for any Contract year is 10%
of the initial premium for each Contract year. Thus in the first year it is 10%
of the premium payment, in the second year 20% of the premium payment, and so
on. Any borrowed amount that is part of the target loan amount is credited with
interest daily at an effective annual rate of 5.5%. Amounts borrowed in excess
of the target loan amount, and second loans in any year, are credited daily with
interest at an effective annual rate of 4%. Thus the net cost of the loan to the
Contract owner is about 0.5% per year on the target loan amount and 2% per year
on amounts in excess of the target loan amount and on second loans in any year;
however, since the amount borrowed is not invested in the variable investment
option[s] the cash surrender value does not, to that extent, participate in
either favorable or unfavorable investment performance. Upon each Contract
anniversary any outstanding loan up to the new target loan amount will be
credited interest at the 5.5% rate even if some of that loan had been credited
interest at 4% in the prior year.
Repayment of a loan does not restore the Contract fund or cash surrender value
to what it would have been had no loan been taken, since the loaned amount did
not reflect investment experience during the period the loan was outstanding.
This may also have an effect on the death benefit.
In addition, it should be recognized that a Contract loan will increase the
difference between the gross investment return in the underlying portfolio[s] of
the Series Fund and the net return in the selected subaccount[s]. This is
because the cost of insurance charge (see item 4 under CHARGES, below) is not
reduced by the making of a Contract loan while the amount in the subaccount[s]
from which such charges are deducted is reduced by the amount of the loan.
CHARGES
1. DEDUCTION FROM PREMIUM PAYMENTS. Upon purchase of this Contract, a premium
tax is generally payable. Pruco Life will deduct the amount of premium taxes
applicable to the particular Contract from the initial premium payment. These
taxes vary from state to state and also vary in some states by municipalities
and counties. The most common premium tax rate is 2% of the premium. The tax
rates in those jurisdictions that impose a tax generally range from 0.75% to
5%(but in some instances may exceed 5%). The amount remaining after the
deduction of premium taxes will be allocated to the investment option[s] as the
owner directs. However, if (a) the sum of the initial premiums under the
Contract and all other DISCOVERY Life Plus and DISCOVERY Life Contracts issued
on the same insured equal $50,000 or more, or (b) Contracts are purchased on all
children of a parent or all grandchildren of a grandparent, each Contract has an
initial premium of $25,000 or more and the total initial premiums add up to
$50,000 or more, Pruco Life will deduct for initial and additional premium taxes
only the portion of the applicable state premium taxes which is in excess of 4%
of the premium, and any applicable local premium taxes. If total premiums under
the Contract and all other DISCOVERY Life Plus and DISCOVERY Life Contracts
issued on the same insured equal or exceed $50,000, any premium taxes previously
deducted will be used to increase the Contract fund on the most recent Contract.
Thus, in many cases, if a Contract is purchased with an initial premium of
$50,000 or more, there will be no deduction from the payment and the entire
amount will be invested as the owner directs. During 1995 and 1994, Pruco Life
received a total of approximately $0 and $6,481 respectively, in charges for
payment of premium taxes.
2. SALES CHARGES ON SURRENDERS. A contingent deferred sales charge may be
imposed upon surrender of this Contract. This charge compensates Pruco Life for
paying all of the expenses of selling and distributing the Contracts, including
sales commissions, printing of prospectuses, preparation of sales literature,
and other
9
<PAGE>
promotional activities. As stated earlier, on page 3, no sales charge will be
made if the Contract is surrendered after the sixth Contract year. If the
Contract is surrendered in the first year, the charge will be 9% of the amount
credited under the Contract. For each year after the first that the Contract is
in effect, the contingent deferred sales charge as a percentage of the Contract
fund is reduced by 1% until it reaches 4% in year 6. However, in no event will
the sales charge be greater than 9% of the initial premium payment. If there is
an outstanding loan, the amount of any deferred sales charge will be computed as
if the loan had been repaid immediately before the surrender. No deferred sales
charge is applicable to the death benefit, no matter when that may become
payable. During 1995 and 1994, Pruco Life received a total of approximately
$64,204 and $3,710,081, respectively, in sales charges on surrenders of the
Contracts.
3. ADMINISTRATIVE CHARGE. There is a charge imposed to reimburse Pruco Life for
the expenses it incurs in administering the Contracts, which includes such
things as underwriting the Contract, conducting any medical examinations,
establishing and maintaining records, and providing reports to Contract owners.
This charge will be assessed by deducting, from the assets of each of the
variable investment options, a percentage of those assets equivalent to an
effective annual rate of up to 0.35% (.00095723%, daily). During 1995 and 1994,
Pruco Life received a total of approximately $951,203 and $937,022,
respectively, in annual administrative charges under the Contracts.
This administrative charge is guaranteed never to be increased above an
effective annual rate of 0.35% over the life of the Contracts and is intended to
cover the average anticipated administrative expenses to be incurred over the
periods these Contracts are in force. This fee contains no element of
anticipated profit. Because this administrative charge is a percentage of
assets, however, there is no necessary relationship between the amount of the
charge imposed on a particular Contract and the amount of administrative
expenses that may be attributable to that Contract.
4. CHARGE FOR INSURANCE PROTECTION. Immediately after the Contract is issued the
amount of insurance payable upon death of the insured (the face amount) will be
substantially higher than the initial premium payment. As the insured grows
older, and if investment results (or interest credited) have been reasonably
favorable, the difference between the Contract fund and the amount payable to
the beneficiary in the event of the insured's death will become smaller. But the
death benefit will always be higher than the Contract fund. To enable Pruco Life
to pay this additional amount, it makes a monthly charge commencing on the
Contract date, the date the Contract is issued. The National Association of
Insurance Commissioners publishes mortality tables from which it can be
determined what an appropriate monthly charge for this purpose should be,
depending upon the insured's age and sex (except where unisex rates apply). One
set of such tables is known as the 1980 CSO Table. Although Pruco Life has the
contractual right to charge maximum cost of insurance rates, based on the 1980
CSO Table, the actual cost of insurance charge will generally be lower than that
specified by the 1980 CSO Table. Except as explained in the next paragraph, the
charge will be imposed on each of the Contract's Monthly dates (i.e., the
Contract date and the same day of each succeeding month) in an amount equal to
0.05% per month of the Contract fund on such dates. The sum of 12 monthly
mortality charges is likely to be between 0.6% and 0.65% per Contract year of
the Contract fund. The exact percentage is uncertain because the Contract fund
varies in amount daily. If the Contract fund remains level throughout the entire
Contract year, the sum of the charges would be 0.6% of the Contract fund. If the
Contract fund declined uniformly throughout the year, the sum would be less than
0.6%. If the Contract fund increased uniformly throughout the year, the sum
would be greater than 0.6%. (For example, at a 12% gross rate of return, the sum
of the monthly charges would be approximately 0.65%.)
The monthly insurance charge generally will be assessed at a rate of 0.05% per
month of the Contract fund, unless as a result of very unfavorable investment
experience, the Contract fund falls so low as to make a monthly charge based
upon a rate of 0.05% per month inadequate. In that event, the charge may be
increased to the amount permitted by the 1980 CSO Table. This higher charge
would generally be assessed only when the Contract fund is at least 40% lower
than that which would exist were a net rate of 6% earned in the applicable
variable investment option[s] and maximum mortality charges based on the 1980
CSO Table deducted. In practice, this will require that the return average
somewhat less than 6% for several years or that a substantial depreciation in
the Contract fund occur in a particular year. For example, for a male who buys a
Contract at age 35, investment results could average a net return of 2.22% per
year for about 19 years before Pruco Life will make a higher cost of insurance
charge. As another example, for a male who buys a Contract at age 40 and
experiences an average net return of 6% per year for 8 years, it would take a
loss of about 43% in the ninth year (which could occur if the assets were held
in the Equity Subaccount and there was a substantial market drop) in order to
bring about an increase in the insurance charge.
5. CHARGES FOR ASSUMING MORTALITY AND EXPENSE RISKS. Pruco Life makes a charge
for assuming the risk that its estimates of longevity and of the expenses it
expects to incur, over the lengthy periods that this Contract may be in
effect--estimates that are the basis for the level of the other charges it makes
under the Contracts--will turn out to be incorrect. The mortality and expense
risk charge will be made by deducting daily, from the assets of each of the
subaccounts and/or the Real Property Account, a percentage of those assets
equivalent to an effective
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annual rate of up to 0.9% (.00245475%, daily). During 1995 and 1994, Pruco Life
received a total of approximately $2,439,304 and $2,402,939, respectively, in
mortality and expense risk charges under the Contracts.
6. EXPENSES INCURRED BY THE SERIES FUND. Subject to certain caps and offsets,
the charges and expenses of the Series Fund are indirectly borne by the Contract
owners. Investment management fees for the available Series Fund portfolios are
briefly described under THE PRUDENTIAL SERIES FUND, INC. on page 5. Further
detail about management fees and other Series Fund expenses is provided in the
attached prospectus for the Series Funds and its statement of additional
information. Higher charges and expenses are incurred if the Real Property
Account is selected, as described in the attached prospectus for the Real
Property Account.
7. TOTAL CHARGES AND CONTRACT VALUES. As may be seen from the foregoing
description, the amount credited under the Contract at the outset of the
Contract will be less than the initial premium payment by the amount of the
premium tax payable, unless the initial premium payment satisfies Pruco Life's
standards for elimination or reduction of the premium tax charge as explained in
item 1 above. Thereafter, assuming a total Series Fund expense ratio of 0.51%
(taking into account any applicable offsets described under THE PRUDENTIAL
SERIES FUND, INC. on page 5), a cost of insurance charge of 0.05% per month and
no Contract debt, the amount credited under the Contract will vary at a rate
that is approximately 2.36% to 2.41% lower than the gross investment return of
the underlying portfolio of the Series Fund in which the assets held under the
Contract are invested.
AMOUNT OF LIFE INSURANCE
As stated earlier, when the Contract is issued Pruco Life will determine what
the initial amount of life insurance will be for the initial premium payment.
That amount will be shown on the cover page of the Contract and is called the
"face amount". The face amount will be calculated by Pruco Life as the amount of
whole life insurance that can be provided for the insured by the initial
premium, after the deduction of any applicable state and local premium taxes.
This calculation is based on the 1980 CSO Table and an interest rate of at least
6%. The amount payable to the beneficiary upon the insured's death will never be
less than the face amount as long as the Contract remains in force, except that
it will be reduced by the amount of any outstanding loan plus interest. But the
Contract's death benefit may be higher than the face amount, depending upon the
length of time the Contract is in force and the Contract's investment results.
1. SOME TYPICAL FACE AMOUNTS. The following table shows for insureds of various
ages what the face amount of insurance will be for an initial premium payment of
$10,000 or $50,000. The table assumes that at issuance the fixed-rate option is
not being credited more than 6% (if a higher rate is being credited under the
fixed-rate option, the face amount will be slightly higher) and, for the $10,000
premium payment, assumes a total state and local premium tax rate of 2%.
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FACE AMOUNT FACE AMOUNT
AGE OF FOR $10,000 FOR $50,000
INSURED PREMIUM PREMIUM
ON THE ------------------------------------------------------
CONTRACT
DATE MALE FEMALE MALE FEMALE
--------------------------------------------------------------------
5 $231,211 $298,154 $1,179,644 $1,521,193
15 $151,173 $198,359 $ 771,290 $1,012,032
25 $104,157 $129,799 $ 531,412 $ 662,236
35 $ 66,654 $ 82,561 $ 340,069 $ 421,229
45 $ 42,601 $ 52,980 $ 217,353 $ 270,304
55 $ 28,260 $ 35,032 $ 144,183 $ 178,734
65 $ 19,832 $ 23,624 $ 101,180 $ 120,529
75 $ 14,982 $ 16,631 $ 76,439 $ 84,850
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In some states the figures in the above table for males will apply to both males
and females. The table does not apply to certain Contracts issued to employers
and employee organizations based on unisex rates. See LEGAL CONSIDERATIONS
RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS, page 18.
2. INCREASE IN DEATH BENEFIT DUE TO FAVORABLE INVESTMENT EXPERIENCE. It is
likely that the amount of insurance will not change for several years after the
Contract date. Then, if investment experience is sufficiently favorable (by
which is generally meant an average annual net return of greater than 6%), the
death benefit may increase. The Contract provides that the death benefit will
never be less than the face amount or a stated multiple (which changes every
year with the attained age of the insured) of the Contract fund. Representative
multiples for insureds are shown in the table below.
11
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Death Benefit is No Less Than the Contract Fund
AGE OF INSURED Times the Following Multiple (Assumes No Loan)
---------------------------------------------------
MALE FEMALE
---------------------------------------------------------------------
5 4.80 7.50
15 4.80 7.50
25 4.56 6.11
35 3.76 4.52
45 2.27 2.64
55 1.55 1.82
65 1.23 1.40
75 1.09 1.15
85 1.05 1.05
95 1.02 1.02
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Thus, for a male of 55 who purchased a Contract with a face amount of $133,307
when he was 35 for a premium payment of $20,000, if the Contract fund has
increased to $122,160 due to a gross return in the selected Series Fund
portfolios of 12%, the death benefit payable will be $195,456 at the end of 20
years, based on the assumptions reflected in the table on page T1. If the
Contract fund were to drop subsequently because of unfavorable investment
results, the death benefit would also drop, but not below the face amount. In
some states the figures in the above table for males will apply to both males
and females. The table does not apply to certain Contracts issued to employers
and employee organizations based on unisex rates. See LEGAL CONSIDERATIONS
RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS, page 18.
LAPSE AND REINSTATEMENT
If the investment results of a Contract's variable investment option[s] have
been so unfavorable that the net cash surrender value on any Monthly date has
decreased to zero or less, the Contract will go into default.
Should this happen, Pruco Life will send the Contract owner a notice of default
setting forth the payment necessary to keep the Contract in force. This payment
must be received at the Pruco Life Home Office within the 61 day grace period
after the notice of default is mailed or the Contract will lapse. A Contract
that lapses with an outstanding Contract loan may have tax consequences. See TAX
TREATMENT OF CONTRACT BENEFITS on page 15.
A Contract that has lapsed may be reinstated within 3 years after the date of
default unless the Contract has been surrendered for its cash surrender value.
To reinstate a lapsed Contract, Pruco Life requires renewed evidence of
insurability, and submission of certain payments due under the Contract.
A Contract that has lapsed has no value and provides no benefits.
ADDITIONAL PREMIUM PAYMENTS
After the Contract has been in force for several years, the Contract owner may
be allowed the option of paying additional premium payments in order to increase
his or her Contract fund. Such premium payments are allowed when they will not
cause the Contract to fail to qualify as life insurance for tax purposes and
will not then increase the amount of insurance. Upon request, Pruco Life will
tell the Contract owner whether an additional premium payment can be made and
what its maximum amount is. If the owner does make an additional premium
payment, the amount of that payment, less any applicable premium taxes which may
be payable, will increase the Contract fund but not the death benefit. These
premium payments will not increase the maximum possible deferred sales charge.
An additional premium payment will not be accepted by Pruco Life if it would,
through the application of the multiples shown on page 11, immediately result in
an increase in the death benefit.
Several factors affect when additional premium payments may be made. For
example, the Contract years in which a female issue age 55 may make additional
payments depend upon investment performance. Based upon a hypothetical gross
annual rate of return of 8% in the selected Series Fund portfolio[s], and upon
the assumptions reflected in the table on page T1, an additional payment may
first be made in year 12, and additional payments may be made as late as year
20.
LIVING NEEDS BENEFIT
Contract applicants may elect to add the LIVING NEEDS BENEFIT(sm) to their
Contracts at issue, subject to Pruco Life's receipt of satisfactory evidence of
insurability. The benefit may vary state-by-state. It can generally be added
only to Contracts with face amounts of $50,000 or more or when the aggregate
face amounts of the insured's eligible contracts equal $50,000 or more.
12
<PAGE>
The LIVING NEEDS BENEFIT allows the Contract owner to elect to receive an
accelerated payment of all or part of the Contract's death benefit, adjusted to
reflect current value, at a time when certain special needs exist. The adjusted
death benefit will always be less than the death benefit, but will generally be
greater than the Contract's cash surrender value. Depending upon state
regulatory approval, one or both of the following options may be available. A
Pruco Life representative should be consulted as to whether additional options
may be available.
TERMINAL ILLNESS OPTION. This option is available if the insured is diagnosed as
terminally ill with a life expectancy of 6 months or less. When satisfactory
evidence is provided, Pruco Life will provide an accelerated payment of the
portion of the death benefit selected by the Contract owner as a LIVING NEEDS
BENEFIT. The Contract owner may (1) elect to receive the benefit in a single sum
or (2) receive equal monthly payments for 6 months. If the insured dies before
all of the payments have been made, the present value of the remaining payments
will be paid to the beneficiary designated in the Living Needs Benefit claim
form in a single sum.
NURSING HOME OPTION. This option is available after the insured has been
confined to an eligible nursing home for 6 months or more. When satisfactory
evidence is provided, including certification by a licensed physician, that the
insured is expected to remain in the nursing home until death, Pruco Life will
provide an accelerated payment of the portion of the death benefit selected by
the Contract owner as a Living Needs Benefit. The Contract owner may (1) elect
to receive the benefit in a single sum or (2) receive equal monthly payments for
a specified number of years (not more than 10 nor less than 2), depending upon
the age of the insured. If the insured dies before all of the payments have been
made, the present value of the remaining payments will be paid to the
beneficiary designated in the Living Needs Benefit claim form in a single sum.
All or part of the Contract's death benefit may be accelerated under the LIVING
NEEDS BENEFIT. If the benefit is only partially accelerated, a death benefit of
at least $25,000 must remain under the Contract. Pruco Life reserves the right
to determine the minimum amount that may be accelerated.
The LIVING NEEDS BENEFIT is available only to the extent regulatory approval has
been obtained. If desired by a Contract owner, the benefit must be requested on
the Contract's application. There is no charge for adding the benefit to the
Contract. However, an administrative charge (not to exceed $150) will be made at
the time the LIVING NEEDS BENEFIT is paid.
No benefit will be payable if the Contract owner is required to elect it in
order to meet the claims of creditors or to obtain a government benefit. Pruco
Life can furnish details about the amount of LIVING NEEDS BENEFIT that is
available to an eligible Contract owner under a particular Contract, and the
adjusted premium payments that would be in effect if less than the entire death
benefit is accelerated.
The Contract owner should consider whether adding this settlement option is
appropriate in his or her given situation. Adding the LIVING NEEDS BENEFIT to
the Contract has no adverse consequences; however, electing to use it could.
Contract owners should consult a qualified tax advisor before electing to
receive this benefit. Unlike a death benefit received by a beneficiary after the
death of an insured, receipt of a LIVING NEEDS BENEFIT payment may give rise to
a federal or state income tax. Receipt of a LIVING NEEDS BENEFIT payment may
also affect a Contract owner's eligibility for certain government benefits or
entitlements.
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED
PREMIUMS
The tables in this prospectus have been prepared to help show how values under
this Contract change with investment performance of the Account. The tables
assume that no portion of the Contract fund is allocated to the fixed-rate
option or the Real Property Account. The tables illustrate how cash surrender
values (reflecting the deduction of deferred sales charges, if any) and death
benefits under Contracts issued on an insured of a given age would vary over
time if the return on the assets held in the Series Fund portfolios were a
uniform, gross, after tax, annual rate of 0%, 4%, 8%, and 12%. The death
benefits and cash surrender values would be different from those shown if the
returns averaged 0%, 4%, 8%, and 12% but fluctuated over and under those
averages throughout the years. For the hypothetical returns of 0% and 4%, the
tables also show when the Contract would go into default, at which time
additional payments would be needed to keep it in force.
The amounts shown for the death benefit and cash surrender value as of each
Contract anniversary reflect the fact that the net investment return on the
assets held in the subaccounts is lower than the gross after tax return of the
portfolios. This is because these tables assume a total Series Fund expense
ratio of 0.51% (taking into account the offsets described under THE PRUDENTIAL
SERIES FUND, Inc. on page 5), and also reflect the daily charge to the Account
for the cost of administration, which is equivalent to an effective annual
charge of 0.35%, and the daily charge to the Account for assuming mortality and
expense risks, which is equivalent to an effective annual charge of 0.9%. The
actual fees and expenses of the portfolios associated with a particular Contract
may be more or less than 0.51% and will depend on which subaccounts are
selected. Based on the above assumptions, gross annual rates of return of 0%,
4%, 8%, and 12% thus correspond in the tables to approximate net annual rates of
return of -1.76%, 2.24%, 6.24%, and 10.24%.
13
<PAGE>
The tables on pages T1 and T3 also reflect the fact that Pruco Life generally
makes its monthly charge for providing insurance protection at an amount equal
to 0.05% per month (approximately 0.6% to 0.65% per year) of the assets in the
subaccounts attributable to the Contract, even though it has the contractual
right to charge a higher amount. Where the amount credited under a Contract
falls to such a level as to make this monthly charge inadequate in Pruco Life's
judgment (i.e., where the Contract fund value is at least 40% below that which
would exist were a net rate of 6% earned in the applicable subaccounts and
maximum mortality charges deducted), Pruco Life will deduct the maximum monthly
mortality charge. See CHARGE FOR INSURANCE PROTECTION, page 10. The 0% and 4%
columns in the tables on pages T1 and T3 reflect the deduction of these larger
mortality charges in later years in accordance with this standard. The tables on
pages T2 and T4 reflect the deduction of the maximum cost of insurance charge at
all times, even though Pruco Life does not currently intend to charge the
maximum contractual cost of insurance rates other than under the circumstances
where the Contract fund value falls to a specified level, as explained above.
All of the tables reflect the deduction of a sales charge in the calculation of
the cash surrender value during the first 6 Contract years.
The tables also reflect the fact that no charges for federal or state income
taxes are currently made against the Account. If such a charge is made in the
future, it will take a higher gross rate of return than it does now to produce
the net after-tax returns shown in the tables.
14
<PAGE>
<TABLE>
ILLUSTRATIONS
-------------
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
<CAPTION>
Death Benefit Cash Surrender Value
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premium Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net) (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307 $17,417 $18,126 $ 18,898 $ 19,678
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307 $17,195 $18,624 $ 20,110 $ 21,735
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307 $16,974 $19,133 $ 21,468 $ 23,990
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307 $16,754 $19,654 $ 22,914 $ 26,565
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307 $16,534 $20,186 $ 24,456 $ 29,420
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307 $16,316 $20,731 $ 26,099 $ 32,578
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307 $16,597 $21,946 $ 28,710 $ 37,187
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307 $16,012 $22,303 $ 30,319 $ 40,749
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307 $15,261 $22,667 $ 32,018 $ 44,653
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307 $14,480 $23,036 $ 33,812 $ 48,931
15 $ 36,019 $133,307 $133,307 $133,307 $ 149,214 $10,020 $24,973 $ 44,410 $ 77,313
20 $ 43,822 $133,307 $133,307 $133,307 $ 195,456 $ 4,065 $26,154 $ 58,330 $ 122,160
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 268,296 $ 0(2) $21,665 $ 76,612 $ 193,019
30 $ 64,868 $ 0 $133,307 $133,307 $ 381,220 $ 0 $11,737 $100,625 $ 304,975
35 $ 78,922 $ 0 $ 0(2) $153,318 $ 558,995 $ 0 $ 0(2) $132,170 $ 481,892
40 $ 96,020 $ 0 $ 0 $190,980 $ 837,643 $ 0 $ 0 $173,618 $ 761,493
45 $116,824 $ 0 $ 0 $244,032 $1,287,582 $ 0 $ 0 $228,067 $1,203,347
</TABLE>
(1) Illustrated values assume 2% state and/or local premium taxes, no
Contract loan, and the deduction of the monthly cost of insurance charge
in accordance with the standard explained in the prospectus. The cash
surrender values reflect the contingent deferred sales charges applicable
to surrenders within the first 6 Contract years. The face amount is based
upon the assumption that at issuance the fixed-rate option is not being
credited more than 6%.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 23 unless an additional premium payment was made. Based on a
gross return of 4%, the Contract would go into default in policy year 34
unless an additional premium payment was made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING
INTEREST RATES, AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH SURRENDER
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES
OF RETURN AVERAGED 0%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR THE SERIES FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
T1
<PAGE>
<TABLE>
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
<CAPTION>
Death Benefit Cash Surrender Value
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premium Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net) (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307 $17,299 $18,009 $ 18,769 $ 19,549
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307 $16,939 $18,369 $ 19,857 $ 21,463
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307 $16,558 $18,719 $ 21,059 $ 23,584
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307 $16,153 $19,056 $ 22,327 $ 25,994
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307 $15,720 $19,375 $ 23,662 $ 28,657
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307 $15,255 $19,673 $ 25,066 $ 31,599
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307 $15,212 $20,561 $ 27,363 $ 35,929
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307 $14,509 $20,598 $ 28,667 $ 39,233
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307 $13,778 $20,600 $ 30,022 $ 42,858
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307 $13,017 $20,563 $ 31,432 $ 46,838
15 $ 36,019 $133,307 $133,307 $133,307 $ 142,050 $ 8,643 $19,654 $ 39,381 $ 73,601
20 $ 43,822 $133,307 $133,307 $133,307 $ 186,068 $ 2,751 $16,854 $ 48,949 $ 116,292
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 255,343 $ 0(2) $10,570 $ 60,262 $ 183,699
30 $ 64,868 $ 0 $ 0(2) $133,307 $ 362,742 $ 0 $ 0(2) $ 73,745 $ 290,193
35 $ 78,922 $ 0 $ 0 $133,307 $ 531,740 $ 0 $ 0 $ 90,252 $ 458,396
40 $ 96,020 $ 0 $ 0 $133,307 $ 796,486 $ 0 $ 0 $112,677 $ 724,078
45 $116,824 $ 0 $ 0 $157,328 $1,222,830 $ 0 $ 0 $147,035 $1,142,831
</TABLE>
(1) Illustrated values assume 2% state and/or local premium taxes, no
Contract loan, and the deduction of maximum monthly cost of insurance
charges. The cash surrender values reflect the contingent deferred sales
charges applicable to surrenders within the first 6 Contract years. The
face amount is based upon the assumption that at issuance the fixed-rate
option is not being credited more than 6%.
(2) Based on a gross return of 0% and the deduction of maximum cost of
insurance charges, the Contract would go into default in policy year 22
unless an additional premium payment was made. Based on a gross return of
4% and the deduction of maximum cost of insurance charges, the Contract
would go into default in policy year 30 unless an additional premium
payment was made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING
INTEREST RATES, AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH SURRENDER
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES
OF RETURN AVERAGED 0%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR THE SERIES FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
T2
<PAGE>
<TABLE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
<CAPTION>
Death Benefit Cash Surrender Value
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premium Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net) (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468 $88,863 $ 92,628 $ 96,604 $100,580
2 $108,160 $357,468 $357,468 $357,468 $ 357,468 $87,731 $ 95,020 $102,601 $111,079
3 $112,486 $357,468 $357,468 $357,468 $ 357,468 $86,602 $ 97,617 $109,529 $122,583
4 $116,986 $357,468 $357,468 $357,468 $ 357,468 $85,478 $100,273 $116,911 $135,537
5 $121,665 $357,468 $357,468 $357,468 $ 357,468 $84,359 $102,990 $124,776 $150,102
6 $126,532 $357,468 $357,468 $357,468 $ 357,468 $83,246 $105,769 $133,156 $166,214
7 $131,593 $357,468 $357,468 $357,468 $ 357,468 $84,679 $111,970 $146,478 $189,727
8 $136,857 $357,468 $357,468 $357,468 $ 357,468 $82,690 $113,793 $154,687 $207,904
9 $142,331 $357,468 $357,468 $357,468 $ 357,468 $78,015 $115,646 $163,356 $227,822
10 $148,024 $357,468 $357,468 $357,468 $ 359,494 $72,754 $117,529 $172,511 $249,648
15 $180,094 $357,468 $357,468 $357,468 $ 508,850 $40,286 $127,414 $226,581 $394,457
20 $219,112 $ 0(2) $357,468 $357,468 $ 729,223 $ 0(2) $138,130 $297,600 $623,267
25 $266,584 $ 0 $357,468(2) $429,973 $1,083,275 $ 0 $149,748(2) $390,885 $984,795
</TABLE>
(1) Illustrated values assume no deduction for state and/or local premium
taxes, no Contract loan, and the deduction of the monthly cost of
insurance charge in accordance with the standard explained in the
prospectus. The cash surrender values reflect the contingent deferred
sales charges applicable to surrenders within the first 6 Contract years.
The face amount is based upon the assumption that at issuance the
fixed-rate option is not being credited more than 6%.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 20 unless an additional premium payment was made. Based on a
gross return of 4%, the Contract would go into default in policy year 33
unless an additional premium payment was made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING
INTEREST RATES, AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH SURRENDER
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES
OF RETURN AVERAGED 0%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR THE SERIES FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
T3
<PAGE>
<TABLE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
<CAPTION>
Death Benefit Cash Surrender Value
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premium Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net) (-1.76% Net) (2.24% Net) (6.24% Net) (10.24% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468 $87,687 $91,332 $ 95,305 $ 99,279
2 $108,160 $357,468 $357,468 $357,468 $ 357,468 $85,223 $92,507 $100,087 $108,350
3 $112,486 $357,468 $357,468 $357,468 $ 357,468 $82,607 $93,613 $105,533 $118,405
4 $116,986 $357,468 $357,468 $357,468 $ 357,468 $79,836 $94,614 $111,281 $129,992
5 $121,665 $357,468 $357,468 $357,468 $ 357,468 $76,890 $95,490 $117,345 $142,858
6 $126,532 $357,468 $357,468 $357,468 $ 357,468 $73,737 $96,209 $123,730 $157,150
7 $131,593 $357,468 $357,468 $357,468 $ 357,468 $72,506 $99,717 $134,466 $178,382
8 $136,857 $357,468 $357,468 $357,468 $ 357,468 $67,962 $98,949 $140,241 $194,568
9 $142,331 $357,468 $357,468 $357,468 $ 357,468 $63,115 $97,854 $146,193 $212,431
10 $148,024 $357,468 $357,468 $357,468 $ 357,468 $57,910 $96,378 $152,318 $232,189
15 $180,094 $357,468 $357,468 $357,468 $ 472,442 $25,406 $81,994 $186,264 $366,233
20 $219,112 $ 0(2) $357,468 $357,468 $ 676,804 $ 0(2) $46,964 $226,790 $578,464
25 $266,584 $ 0 $ 0(2) $357,468 $1,004,905 $ 0 $ 0(2) $275,398 $913,549
</TABLE>
(1) Illustrated values assume no deduction for state and/or local premium
taxes, no Contract loan, and the deduction of maximum monthly cost of
insurance charges. The cash surrender values reflect the contingent
deferred sales charges applicable to surrenders within the first 6
Contract years. The face amount is based upon the assumption that at
issuance the fixed-rate option is not being credited more than 6%.
(2) Based on a gross return of 0% and the deduction of maximum cost of
insurance charges, the Contract would go into default in policy year 18
unless an additional premium payment was made. Based on a gross return of
4% and the deduction of maximum cost of insurance charges, the Contract
would go into default in policy year 24 unless an additional premium
payment was made.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING
INTEREST RATES, AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH SURRENDER
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES
OF RETURN AVERAGED 0%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR THE SERIES FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
T4
<PAGE>
WHEN PROCEEDS ARE PAID
Pruco Life will generally pay any death benefit, cash surrender value or loan
proceeds within 7 days after receipt at a Pruco Life Home Office of all the
documents required for such a payment. Other than the death benefit, which is
determined as of the date of death, the amount will be determined as of the end
of the valuation period in which the necessary documents are received. However,
Pruco Life may delay payment of proceeds from the subaccount[s] and the portion
of the death benefit due under the Contract in excess of the face amount if the
disposal or valuation of the Account's assets is not reasonably practicable
because the New York Stock Exchange is closed for other than a regular holiday
or weekend, trading is restricted by the SEC or the SEC declares that an
emergency exists.
With respect to the amount of any cash surrender value allocated to the
fixed-rate option, Pruco Life expects to pay the cash surrender value promptly
upon request. However, Pruco Life has the right to delay payment of such cash
surrender value for up to 6 months (or a shorter period if required by
applicable law). Pruco Life will pay interest of at least 3% a year if it delays
such a payment for 30 days or more (or a shorter period if required by
applicable law).
REPORTS TO CONTRACT OWNERS
Once each Contract year, Contract owners will be sent statements that provide
certain information pertinent to their own Contract. These statements detail
values and transactions made and specific Contract data that apply only to each
particular Contract. On request, a Contract owner will be sent a current
statement in a form similar to that of the annual statement described above, but
Pruco Life may limit the number of such requests or impose a reasonable charge
if such requests are made too frequently.
Each Contract owner will be sent an annual report for the Account. Contract
owners will also be sent annual and semi-annual reports of the Series Fund
showing the financial condition of the portfolios and the investments held in
each.
TAX TREATMENT OF CONTRACT BENEFITS
Each prospective purchaser is urged to consult a qualified tax advisor. The
following discussion is not intended as tax advice, and it is not a complete
statement of what the effect of federal income taxes will be under all
circumstances. Rather, it provides information about how Pruco Life believes the
current laws apply in the most commonly occurring circumstances. There is no
guarantee, however, that the current federal income tax laws, regulations or
interpretations will not change.
TREATMENT AS LIFE INSURANCE. The Contract will be treated as "life insurance,"
as long as it satisfies certain definitional tests set forth in Sections 7702 of
the Code and as long as the underlying investments for the Contract satisfies
diversification requirements under Section 817(h) of the Code. (For further
detail on diversification requirements, see DIVIDENDS, DISTRIBUTIONS, AND TAXES
in the attached prospectus for the Series Fund.)
Pruco Life believes that the Contract meets these definitional and
diversification requirements and accordingly will be treated as life insurance
for tax purposes. This means that: (1) except as noted below, the Contract owner
should not be taxed on any part of the Contract fund, including additions
attributable to interest, dividends or appreciation, until amounts are
distributed under the Contract; and (2) the death benefit should be excludible
from the gross income of the beneficiary under Section 101(a) of the Code.
However, Section 7702 of the Code which defines life insurance for tax purposes
gives the Secretary of the Treasury authority to prescribe regulations to carry
out the purposes of the Section. In this regard, proposed regulations governing
mortality charges were issued in 1991 and proposed regulations under Sections
101, 7702 and 7702A governing the treatment of life insurance policies that
provide accelerated death benefits were issued in 1992. None of these proposed
regulations has yet been finalized. Additional regulations under Section 7702
may also be promulgated in the future. Moreover, in connection with the issuance
of temporary regulations relating to diversification requirements under Section
817(h), the Treasury Department announced that such regulations do not provide
guidance concerning the extent to which Contract owners may direct their
investments to particular divisions of a separate account. Such guidance will be
included in regulations or rulings under Section 817(d) relating to the
definition of a variable contract.
Pruco Life intends to comply with final regulations issued under sections 7702
and 817. Therefore, it reserves the right to make such changes as it deems
necessary to assure that the Contract continues to qualify as life insurance for
tax purposes. Any such changes will apply uniformly to affected Contract owners
and will be made only after advance written notice to affected Contract owners.
PRE-DEATH DISTRIBUTIONS. Section 7702A of the Code provides rules regarding the
federal income tax treatment of loans and other pre-death distributions from the
Contract if issued after June 20, 1988. It provides that, with
15
<PAGE>
respect to life insurance policies issued after June 20, 1988, which, like the
Contract, provide for the payment of premiums faster than would be allowed under
a policy providing for paid-up insurance after the payment of seven level annual
premiums: (1) policy loans are treated as distributions; (2) all distributions
from the policy before the death of the insured are generally includible in
gross income on an income first basis (i.e., distributions are includible in
income to the extent the Contract fund exceeds the gross premiums paid for the
Contract increased by the amount of any loans previously includible in income
and reduced by any untaxed amounts previously received other than the amount of
any loans excludible from income).
In addition, pre-death distributions from such Contracts (including full
surrenders) will be subject to a penalty of 10 percent of the amount includible
in income unless the amount is distributed on or after age 59 1/2, on account of
the taxpayer's disability, or as a life annuity. It is presently unclear how the
penalty tax provisions apply to Contracts owned by nonnatural persons such as
corporations.
Under certain circumstances, Modified Endowment Contracts issued during any
calendar year will be treated as a single contract for purposes of applying the
above rules.
Section 7702A does not change the treatment of death benefit proceeds under the
Contract. Accordingly, as stated previously, such amounts are excludible from
the gross income of the beneficiary. Also, Section 7702A does not change the
general rule that a Contract owner is not taxed on any part of the Contract
fund, including additions attributable to interest, dividends or appreciation,
unless amounts are distributed.
WITHHOLDING. The taxable portion of any amounts received under the Contract will
be subject to withholding to meet federal income tax obligations if the Contract
owner fails to elect that no taxes be withheld or in certain other
circumstances. Contract owners who do not provide a social security number or
other taxpayer identification number will not be permitted to elect out of
withholding. All recipients of such amounts may be subject to penalties under
the estimated tax payment rules if withholding and estimated tax payments are
not sufficient.
OTHER TAX CONSIDERATIONS. Transfer of the Contract to a new owner or assignment
of the Contract may have tax consequences depending on the circumstances. In the
case of a transfer of the Contract for a valuable consideration, the death
benefit may be subject to federal income taxes under section 101(a)(2) of the
Code. In addition, the transfer of the Contract to or the designation of a
beneficiary who is either 37 1/2 years younger than the Contract owner or a
grandchild of the Contract owner may have Generation Skipping Transfer tax
consequences under Section 2601 of the Code.
Deductions for interest paid or accrued on Contract debt or on other loans
incurred or continued to purchase or carry the Contract will be disallowed under
section 264 of the Code. The Congress is also considering legislation to deny
interest deductions generally for loans on business-owned policies. For
business-owned life insurance, section 264 (a)(1) of the Code also precludes
business Contract owners from deducting premium payments. The Code also imposes
an indirect tax upon additions to the Contract fund or the receipt of death
benefits under business-owned life insurance policies under certain
circumstances by way of the corporate alternative minimum tax.
The individual situation of each Contract owner or beneficiary will determine
the federal estate taxes and the state and local estate, inheritance, and other
taxes due if the owner or insured dies.
TAXES ON PRUCO LIFE. Although the Account is registered as an investment
company, it is not a separate taxpayer for purposes of the Code. The earnings of
the Account are taxed as part of the operations of Pruco Life. No charge is
currently being made to the Account for company federal income taxes. Pruco Life
will review the question of a charge to the Account for company federal income
taxes periodically. Such a charge may be made in future years for any federal
income taxes that would be attributable to the Account.
Under current laws Pruco Life may incur state and local taxes (in addition to
premium taxes) in several states. At present, these other taxes are not
significant and they are not charged against the Contracts or the Account. If
there is a material change in applicable state or local tax laws, the imposition
of any such taxes upon Pruco Life that are attributable to the Account may
result in a corresponding charge against the Account.
THE FIXED-RATE OPTION
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED-RATE
OPTION UNDER THE CONTRACT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940. ACCORDINGLY, INTERESTS IN THE
FIXED-RATE OPTION ARE NOT SUBJECT TO THE PROVISIONS OF THESE ACTS, AND PRUCO
LIFE HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO THE FIXED-RATE
OPTION. DISCLOSURE REGARDING THE FIXED-RATE OPTION MAY, HOWEVER, BE SUBJECT TO
CERTAIN GENERALLY APPLICABLE PROVISIONS OF FEDERAL SECURITIES LAWS RELATING TO
THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
16
<PAGE>
As explained earlier, a Contract owner may elect to allocate, either initially
or by transfer, all or part of the amount credited under the Contract to a
fixed-rate option, and the amount so allocated or transferred becomes part of
Pruco Life's general assets. Sometimes this is referred to as Pruco Life's
general account, which consists of all assets owned by Pruco Life other than
those in the Account and in other separate accounts that have been or may be
established by Pruco Life. Subject to applicable law, Pruco Life has sole
discretion over the investment of the assets of the general account, and
Contract owners do not share in the investment experience of those assets.
Instead, Pruco Life guarantees that the part of the Contract fund allocated to
the fixed-rate option will accrue interest daily at an effective annual rate
that Pruco Life declares periodically, but not less than an effective annual
rate of 3%. Currently, declared interest rates remain in effect from the date
money is allocated to the fixed-rate option until the third Contract anniversary
following the date of the allocation. Thereafter, a new crediting rate will be
declared each year, and will remain in effect for the calendar year. Pruco Life
reserves the right to change this practice. Pruco Life is not obligated to
credit interest at a higher rate than 3%, although in its sole discretion it may
do so. Different crediting rates may be declared for different portions of the
Contract fund allocated to the fixed-rate option. On request, a Contract owner
will be advised of the interest rates that currently apply to his or her
Contract.
Transfers from the fixed-rate option are subject to strict limits. (See
TRANSFERS, page 8. The payment of any cash surrender value attributable to the
fixed-rate option may be delayed up to 6 months (see WHEN PROCEEDS ARE PAID,
page 15 ). For Contracts issued in Texas, the fixed-rate option is not
available.
Voting Rights
As stated above, all of the assets held in the subaccounts of the Account will
be invested in shares of the corresponding portfolios of the Series Fund. Pruco
Life is the legal owner of those shares and as such has the right to vote on any
matter voted on at Series Fund shareholders meetings. However, Pruco Life will,
as required by law, vote the shares of the Series Fund at any regular and
special shareholders meetings it is required to hold in accordance with voting
instructions received from Contract owners. The Series Fund will not hold annual
shareholders meetings when not required to do so under Maryland law or the
Investment Company Act of 1940. Series Fund shares for which no timely
instructions from Contract owners are received, and any shares attributable to
general account investments of Pruco Life will be voted in the same proportion
as shares in the respective portfolios for which instructions are received.
Should the applicable federal securities laws or regulations, or their current
interpretation, change so as to permit Pruco Life to vote shares of the Series
Fund in its own right, it may elect to do so.
Matters on which Contract owners may give voting instructions include the
following: (1) election of the Board of Directors of the Series Fund; (2)
ratification of the independent accountant of the Series Fund; (3) approval of
the investment advisory agreement for a portfolio of the Series Fund
corresponding to the Contract owner's selected subaccount[s]; (4) any change in
the fundamental investment policy of a portfolio corresponding to the Contract
owner's selected subaccount[s]; and (5) any other matter requiring a vote of the
shareholders of the Series Fund. With respect to approval of the investment
advisory agreement or any change in a portfolio's fundamental investment policy,
Contract owners participating in such portfolios will vote separately on the
matter, pursuant to the requirements of Rule 18f-2 under the 1940 Act.
The number of Series Fund shares for which instructions may be given by a
Contract owner is determined by dividing the portion of the value of the
Contract derived from participation in a subaccount, by the value of one share
in the corresponding portfolio of the Series Fund. The number of votes for which
each Contract owner may give Pruco Life instructions will be determined as of
the record date chosen by the Board of Directors of the Series Fund. Pruco Life
will furnish Contract owners with proper forms and proxies to enable them to
give these instructions. Pruco Life reserves the right to modify the manner in
which the weight to be given voting instructions is calculated where such a
change is necessary to comply with current federal regulations or
interpretations of those regulations.
Pruco Life may, if required by state insurance regulations, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment objectives of one or more
of the Series Fund's portfolios, or to approve or disapprove an investment
advisory contract for the Series Fund. In addition, Pruco Life itself may
disregard voting instructions that would require changes in the investment
policy or investment advisor of one or more of the Series Fund's portfolios,
provided that Pruco Life reasonably disapproves such changes in accordance with
applicable federal regulations. If Pruco Life does disregard voting
instructions, it will advise Contract owners of that action and its reasons for
such action in the next annual or semi-annual report to Contract owners.
SALE OF THE CONTRACT AND SALES COMMISSIONS
Pruco Securities Corporation ("Prusec"), an indirect wholly-owned subsidiary of
The Prudential, acts as the principal underwriter of the Contract. Prusec,
organized in 1971 under New Jersey law, is registered as a broker and dealer
17
<PAGE>
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. Prusec's principal business address is
1111 Durham Avenue, South Plainfield, New Jersey 07080. The Contract is sold by
registered representatives of Prusec who are also authorized by state insurance
departments to do so. The Contract may also be sold through other broker-dealers
authorized by Prusec and applicable law to do so. Registered representatives of
such other broker-dealers may be paid on a different basis than described below.
The maximum commission that will be paid to the representative is 3% of the
premium received, and the amount paid to the broker-dealer to cover both the
individual representative's commission and other distribution expenses will not
exceed 5.5% of the premium. The representative may be required to return all of
the first year commission if the Contract is not continued through the first
year. Representatives who meet certain productivity, profitability, and
persistency standards with regard to the sale of the Contract will be eligible
for additional compensation.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life expects to recover its total sales expenses over the periods
the Contracts are in effect. To the extent that the sales charges are
insufficient to cover total sales expenses, the sales expenses will be recovered
from Pruco Life's surplus, which may include the amounts derived from the
mortality and expense risk charge, described in item 5 under CHARGES, page 9.
SUBSTITUTION OF SERIES FUND SHARES
Although Pruco Life believes it to be unlikely, it is possible that in the
judgment of its management, one or more of the portfolios of the Series Fund may
become unsuitable for investment by Contract owners because of investment policy
changes, tax law changes or the unavailability of shares for investment. In that
event, Pruco Life may seek to substitute the shares of another portfolio or of
an entirely different mutual fund. Before this can be done, the approval of the
SEC, and possibly one or more state insurance departments, will be required.
Contract owners will be notified of such substitution.
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS
The Contract generally employs mortality tables that distinguish between males
and females. Thus, initial amounts of insurance that a given premium will buy,
cost of insurance charges, and benefits under Contracts issued on males and
females of the same age will generally differ. However, in those states that
have adopted regulations prohibiting sex-distinct insurance rates, initial
amounts of insurance, cost of insurance charges and benefits will be based on
male mortality tables whether the insured is male or female. In addition,
employers and employee organizations considering purchase of a Contract should
consult their legal advisors to determine whether purchase of a Contract based
on sex-distinct actuarial tables is consistent with Title VII of the Civil
Rights Act of 1964 or other applicable law. Pruco Life may offer the Contract
with unisex mortality rates to such prospective purchasers.
OTHER GENERAL CONTRACT PROVISIONS
BENEFICIARY. The beneficiary is designated and named in the application by the
Contract owner. Thereafter, the owner may change the beneficiary, provided it is
in accordance with the terms of the Contract. Should the insured die with no
surviving beneficiary, the insured's estate will become the beneficiary.
INCONTESTABILITY. After the Contract has been in force during the insured's
lifetime for 2 years from the Contract date, Pruco Life will not contest its
liability under the Contract in accordance with its terms.
MISSTATEMENT OF AGE OR SEX. If the insured's stated age or sex (except where
unisex rates apply) or both are incorrect in the Contract, Pruco Life will
adjust the benefits payable, as required by law, to reflect what the premium
would have purchased for the correct age and sex.
SUICIDE EXCLUSION. Generally, if the insured, whether sane or insane, dies by
suicide within 2 years from the Contract date, Pruco Life will pay no more under
the Contract than the sum of the premiums paid.
ASSIGNMENT. This Contract may not be assigned if such assignment would violate
any federal, state or local law or regulation. Generally, the Contract may not
be assigned to another insurance company without Pruco Life's consent. Pruco
Life assumes no responsibility for the validity or sufficiency of any
assignment, and it will not be obligated to comply with any assignment unless it
has received a copy at one of its Home Offices.
SETTLEMENT OPTIONS. The Contract grants to most owners, or to the beneficiary, a
wide variety of optional ways of receiving Contract proceeds, other than in a
lump sum. Any Pruco Life representative authorized to sell this Contract can
explain these options upon request.
18
<PAGE>
STATE REGULATION
Pruco Life is subject to regulation and supervision by the Department of
Insurance of the State of Arizona, which periodically examines its operations
and financial condition. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business.
Pruco Life is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business to determine solvency and compliance with local
insurance laws and regulations.
In addition to the annual statements referred to above, Pruco Life is required
to file with Arizona and other jurisdictions a separate statement with respect
to the operations of all its variable contract accounts, in a form promulgated
by the National Association of Insurance Commissioners.
ADDITIONAL INFORMATION
A registration statement has been filed with the SEC under the Securities Act of
1933, relating to the offering described in this prospectus. This prospectus
does not include all of the information set forth in the registration statement.
Certain portions have been omitted pursuant to the rules and regulations of the
SEC. The omitted information may, however, be obtained from the SEC's principal
office in Washington, D.C., upon payment of a prescribed fee.
Further information may also be obtained from Pruco Life's office. The address
and telephone number are set forth on the cover of this prospectus.
EXPERTS
The financial statements included in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing. Deloitte &
Touche LLP's principal business address is Two Hilton Court, Parsippany, New
Jersey 07054-0319. Actuarial matters included in this prospectus have been
examined by Paul Haley, FSA, CLU, and ChFC, whose opinion is filed as an exhibit
to the registration statement.
On March 12, 1996, Deloitte & Touche LLP was dismissed as the independent
accountants of Pruco Life. There have been no disagreements with Deloitte &
Touche LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which, if not resolved to
the satisfaction of the accountant, would have caused them to make reference to
the matter in their reports.
LITIGATION
Several actions have been brought against Pruco Life on behalf of those persons
who purchased life insurance policies based on complaints about sales practices
engaged in by The Prudential, Pruco Life and agents appointed by The Prudential
and Pruco Life. The Prudential has agreed to indemnify Pruco Life for any and
all losses resulting from such litigation.
Financial Statements
The consolidated financial statements of Pruco Life and subsidiaries included
herein should be distinguished from the financial statements of the Account, and
should be considered only as bearing upon the ability of Pruco Life to meet its
obligations under the Contracts.
19
<PAGE>
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life, listed with their principal
occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE
E. MICHAEL CAULFIELD, Director. -- Chief Executive Officer, Prudential Money
Management Group since 1995; 1993 to 1995: President, Prudential Preferred
Financial Services; 1992 to 1993: President, Prudential Property and Casualty
Insurance Company*; Prior to 1992: President of Investment Services of The
Prudential.
GARNETT L. KEITH, JR., Director. -- Vice Chairman of The Prudential.
IRA J. KLEINMAN, Director. -- Chief Marketing and Product Development Officer,
Prudential Individual Insurance Group since 1995; 1993 to 1995: President,
Prudential Select; Prior to 1993: Senior Vice President of The Prudential.
ESTHER H. MILNES, President and Director. -- Vice President and Actuary,
Prudential Individual Insurance Group since 1996; 1993 to 1996: Senior Vice
President and Chief Actuary, Prudential Insurance and Financial Services; Prior
to 1993: Vice President and Associate Actuary of The Prudential.
I. EDWARD PRICE, Vice Chairman and Director. -- Senior Vice President and
Actuary, Prudential Individual Insurance Group since 1995; 1994 to 1995: Chief
Executive Officer, Prudential International Insurance; 1993 to 1994: President,
Prudential International Insurance; Prior to 1993: Senior Vice President and
Company Actuary of The Prudential.
WILLIAM F. YELVERTON, Director. -- Chief Executive Officer, Prudential
Individual Insurance Group since 1995; Prior to 1995: Chief Executive Officer,
New York Life Worldwide.
OFFICERS WHO ARE NOT DIRECTORS
BEVERLY R. BARNEY, Senior Vice President. -- Vice President and Re-Engineering
Officer, Prudential Individual Insurance Group since 1995; 1993 to 1995: Senior
Vice President and Associate Actuary, Prudential Direct; Prior to 1993: Senior
Vice President and Actuary of Pruco Life.
SUSAN L. BLOUNT, Secretary. -- Vice President and Secretary of The Prudential
since 1995; Prior to 1995: Assistant General Counsel for Prudential Residential
Services Company.
C. EDWARD CHAPLIN, Treasurer. -- Vice President and Treasurer of The Prudential
since 1995; 1993 to 1995: Managing Director and Assistant Treasurer of The
Prudential; 1992 to 1993: Vice President and Assistant Treasurer, Banking and
Cash Management for The Prudential; Prior to 1992: Regional Vice President of
Prudential Mortgage Capital Company.
CLIFFORD E. KIRSCH, Chief Legal Officer. -- Chief Counsel, Variable Products,
Law Department of The Prudential since 1995; 1994 to 1995: Associate General
Counsel with Paine Webber; Prior to 1994: Assistant Director in the Division
of Investment Management with the Securities and Exchange Commission.
RICHARD F. LAMBERT, Senior Vice President and Chief Actuary. -- Vice President
and Actuary, Prudential Individual Insurance Group since 1996; 1994 to 1996:
Vice President and Chief Actuary, Prudential Preferred Financial Services; 1993
to 1994: Vice President and Actuary, Prudential Preferred Financial Services;
Prior to 1993: Vice President and Associate Actuary of The Prudential.
FRANK MARINO, Senior Vice President. -- Vice President, Policyholder Relations
Department, Prudential Individual Insurance Group since 1996; Prior to 1996:
Senior Vice President, Prudential Mutual Fund Services.
MICHAEL R. SHAPIRO, Senior Vice President. -- Vice President, Marketing and
Product Development, Prudential Individual Insurance Group since 1996; Prior to
1996: Senior Vice President, Prudential Select Brokerage.
STEPHEN P. TOOLEY, Vice President, Comptroller and Chief Accounting Officer. --
Vice President, Product Performance, Prudential Individual Insurance Group since
1996; 1993 to 1996: Vice President and Comptroller, Prudential Insurance and
Financial Services; Prior to 1993: Director, Financial Analysis for The
Prudential.
The business address of all directors and officers of Pruco Life is 213
Washington Street, Newark, New Jersey 07102-2992.
* SUBSIDIARY OF THE PRUDENTIAL
20
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE
TOTAL MARKET BOND EQUITY MANAGED
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value
[Note 2]...................................... $ 281,642,706 $ 21,319,060 $ 12,748,094 $ 47,929,500 $ 70,896,981
Receivable from Related Separate Account........ 40,933 0 0 0 0
-------------- -------------- -------------- -------------- --------------
Total Assets.................................. $ 281,683,639 $ 21,319,060 $ 12,748,094 $ 47,929,500 $ 70,896,981
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 279,580,410 $ 20,405,171 $ 12,741,470 $ 47,908,053 $ 70,813,250
Equity of Pruco Life Insurance Company.......... 2,103,229 913,889 6,624 21,447 83,731
-------------- -------------- -------------- -------------- --------------
$ 281,683,639 $ 21,319,060 $ 12,748,094 $ 47,929,500 $ 70,896,981
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE
TOTAL MARKET BOND EQUITY MANAGED
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 10,430,800 $ 1,195,253 $ 822,138 $ 921,951 $ 2,136,121
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 3A and 3C].............. 3,319,138 258,673 150,497 541,835 842,721
Reimbursement for excess expenses [Note 3D]..... (398,166) (8,505) (5,509) (42,850) (169,110)
-------------- -------------- -------------- -------------- --------------
NET EXPENSES...................................... 2,920,972 250,168 144,988 498,985 673,611
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 7,509,828 945,085 677,150 422,966 1,462,510
-------------- -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 8,670,220 0 28,095 1,688,154 2,961,811
Realized gain (loss) on shares redeemed
[average cost basis].......................... 4,120,976 0 33,240 1,098,551 1,224,987
Net unrealized gain on investments.............. 28,185,068 0 1,427,282 8,034,144 8,437,634
-------------- -------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 40,976,264 0 1,488,617 10,820,849 12,624,432
-------------- -------------- -------------- -------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 48,486,092 $ 945,085 $ 2,165,767 $ 11,243,815 $ 14,086,942
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A1
<PAGE>
STATEMENTS OF NET ASSETS (CONTINUED)
December 31, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------
ZERO ZERO
COUPON COUPON HIGH
CONSERVATIVE BOND BOND YIELD STOCK
BALANCED 1995 2000 BOND INDEX
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value
[Note 2]...................................... $ 87,866,392 $ 0 $ 3,909,175 $ 6,297,822 $ 6,468,987
Receivable from Related Separate Account........ 0 0 0 0 0
-------------- -------------- -------------- -------------- --------------
Total Assets.................................. $ 87,866,392 $ 0 $ 3,909,175 $ 6,297,822 $ 6,468,987
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 87,637,255 $ 0 $ 3,904,531 $ 6,284,934 $ 6,440,927
Equity of Pruco Life Insurance Company.......... 229,137 0 4,644 12,888 28,060
-------------- -------------- -------------- -------------- --------------
$ 87,866,392 $ 0 $ 3,909,175 $ 6,297,822 $ 6,468,987
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
EQUITY NATURAL
INCOME RESOURCES GLOBAL
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value
[Note 2]...................................... $ 12,487,007 $ 3,409,764 $ 2,283,455
Receivable from Related Separate Account........ 0 0 0
-------------- -------------- --------------
Total Assets.................................. $ 12,487,007 $ 3,409,764 $ 2,283,455
-------------- -------------- --------------
-------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 12,442,591 $ 3,030,079 $ 2,234,025
Equity of Pruco Life Insurance Company.......... 44,416 379,685 49,430
-------------- -------------- --------------
$ 12,487,007 $ 3,409,764 $ 2,283,455
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS (CONTINUED)
For the year ended December 31, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------
ZERO ZERO
COUPON COUPON HIGH
CONSERVATIVE BOND BOND YIELD STOCK
BALANCED 1995 2000 BOND INDEX
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 3,524,631 $ 159,535 $ 157,285 $ 625,468 $ 123,036
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 3A and 3C].............. 1,067,241 25,760 43,967 68,611 66,283
Reimbursement for excess expenses [Note 3D]..... (164,648) (3,417) (2,901) 0 0
-------------- -------------- -------------- -------------- --------------
NET EXPENSES...................................... 902,593 22,343 41,066 68,611 66,283
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 2,622,038 137,192 116,219 556,857 56,753
-------------- -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 2,993,129 39,521 141,727 0 48,697
Realized gain (loss) on shares redeemed
[average cost basis].......................... 1,093,958 (113,315) 44,810 (36,010) 188,339
Net unrealized gain on investments.............. 6,125,443 66,549 374,726 299,046 1,283,063
-------------- -------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 10,212,530 (7,245) 561,263 263,036 1,520,099
-------------- -------------- -------------- -------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 12,834,568 $ 129,947 $ 677,482 $ 819,893 $ 1,576,852
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
EQUITY NATURAL
INCOME RESOURCES GLOBAL
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 435,022 $ 45,923 $ 32,073
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 3A and 3C].............. 139,767 39,237 21,163
Reimbursement for excess expenses [Note 3D]..... 0 0 0
-------------- -------------- --------------
NET EXPENSES...................................... 139,767 39,237 21,163
-------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 295,255 6,686 10,910
-------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 520,438 179,705 41,171
Realized gain (loss) on shares redeemed
[average cost basis].......................... 131,128 156,751 83,503
Net unrealized gain on investments.............. 1,045,497 428,732 110,391
-------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 1,697,063 765,188 235,065
-------------- -------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 1,992,318 $ 771,874 $ 245,975
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A2
<PAGE>
STATEMENTS OF NET ASSETS (CONTINUED)
December 31, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
INCOME 2005 JENNISON STOCK
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value
[Note 2]...................................... $ 3,608,901 $ 1,479,570 $ 483,792 $ 454,206
Receivable from Related Separate Account........ 0 0 0 40,933
-------------- -------------- -------------- --------------
Total Assets.................................. $ 3,608,901 $ 1,479,570 $ 483,792 $ 495,139
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 3,307,694 $ 1,465,766 $ 469,525 $ 495,139
Equity of Pruco Life Insurance Company.......... 301,207 13,804 14,267 0
-------------- -------------- -------------- --------------
$ 3,608,901 $ 1,479,570 $ 483,792 $ 495,139
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS (CONTINUED)
For the year ended December 31, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
INCOME 2005 JENNISON* STOCK*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 194,777 $ 56,747 $ 21 $ 819
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 3A and 3C].............. 35,774 15,115 1,577 917
Reimbursement for excess expenses [Note 3D]..... 0 (1,226) 0 0
-------------- -------------- -------------- --------------
NET EXPENSES...................................... 35,774 13,889 1,577 917
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 159,003 42,858 (1,556) (98)
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 0 25,337 0 2,435
Realized gain (loss) on shares redeemed
[average cost basis].......................... 14,056 199,655 926 397
Net unrealized gain on investments.............. 311,921 218,240 14,845 7,555
-------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 325,977 443,232 15,771 10,387
-------------- -------------- -------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 484,980 $ 486,090 $ 14,215 $ 10,289
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
*Commenced
Business
on 5/1/95
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A3
<PAGE>
(This page intentionally left blank.)
A4
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
MONEY DIVERSIFIED
TOTAL MARKET BOND
------------------------------ ------------------------------ ------------------------------
1995 1994 1995 1994 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 7,509,828 $ 6,161,517 $ 945,085 $ 551,739 $ 677,150 $ 666,450
Capital gains distributions
received....................... 8,670,220 5,038,968 0 0 28,095 32,253
Realized gain (loss) on shares
redeemed [average cost basis].. 4,120,976 2,449,473 0 0 33,240 (73,444)
Net unrealized gain (loss) on
investments.................... 28,185,068 (19,056,694) 0 0 1,427,282 (1,296,202)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... 48,486,092 (5,406,736) 945,085 551,739 2,165,767 (670,943)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS........................ (21,572,630) (12,892,049) (2,005,207) 2,903,904 (1,097,631) (3,574,742)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM SURPLUS
TRANSFERS........................ (9,066) 276,221 381,338 315,505 (33,382) (146)
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 26,904,396 (18,022,564) (678,784) 3,771,148 1,034,754 (4,245,831)
NET ASSETS:
Beginning of year................ 254,779,243 272,801,807 21,997,844 18,226,696 11,713,340 15,959,171
-------------- -------------- -------------- -------------- -------------- --------------
End of year...................... $ 281,683,639 $ 254,779,243 $ 21,319,060 $ 21,997,844 $ 12,748,094 $ 11,713,340
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
FLEXIBLE
EQUITY MANAGED
------------------------------ ------------------------------
1995 1994 1995 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 422,966 $ 446,665 $ 1,462,510 $ 1,178,365
Capital gains distributions
received....................... 1,688,154 1,642,927 2,961,811 1,892,222
Realized gain (loss) on shares
redeemed
[average cost basis]........... 1,098,551 782,996 1,224,987 510,497
Net unrealized gain (loss) on
investments.................... 8,034,144 (2,261,571) 8,437,634 (6,516,314)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... 11,243,815 611,017 14,086,942 (2,935,230)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS........................ (2,240,812) (1,583,816) (7,589,195) (4,316,198)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM SURPLUS
TRANSFERS........................ (226,203) 249,028 (272,194) 114,045
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 8,776,800 (723,771) 6,225,553 (7,137,383)
NET ASSETS:
Beginning of year................ 39,152,700 39,876,471 64,671,428 71,808,811
-------------- -------------- -------------- --------------
End of year...................... $ 47,929,500 $ 39,152,700 $ 70,896,981 $ 64,671,428
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
ZERO
COUPON
CONSERVATIVE BOND
BALANCED 1995
------------------------------ ------------------------------
1995 1994 1995 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 2,622,038 $ 2,064,530 $ 137,192 $ 124,438
Capital gains distributions
received....................... 2,993,129 903,223 39,521 529
Realized gain (loss) on shares
redeemed [average cost basis].. 1,093,958 791,178 (113,315) 10,890
Net unrealized gain (loss) on
investments.................... 6,125,443 (5,556,131) 66,549 (164,577)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... 12,834,568 (1,797,200) 129,947 (28,720)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS........................ (8,311,674) (7,148,287) (2,574,269) (275,660)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM SURPLUS
TRANSFERS........................ (149,732) (517,702) (17,023) (68,477)
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 4,373,162 (9,463,189) (2,461,345) (372,857)
NET ASSETS:
Beginning of year................ 83,493,230 92,956,419 2,461,345 2,834,202
-------------- -------------- -------------- --------------
End of year...................... $ 87,866,392 $ 83,493,230 $ 0 $ 2,461,345
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A6
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK
2000 BOND INDEX
------------------------------ ------------------------------ ------------------------------
1995 1994 1995 1994 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 116,219 $ 191,936 $ 556,857 $ 459,751 $ 56,753 $ 48,648
Capital gains distributions
received....................... 141,727 6,383 0 0 48,697 6,746
Realized gain (loss) on shares
redeemed [average cost basis].. 44,810 55,901 (36,010) (19,400) 188,339 134,755
Net unrealized gain (loss) on
investments.................... 374,726 (582,196) 299,046 (662,734) 1,283,063 (196,516)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... 677,482 (327,976) 819,893 (222,383) 1,576,852 (6,367)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS.... ................... (24,144) (656,487) 421,112 (336,732) 666,899 (922,424)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM SURPLUS
TRANSFERS........................ (116,790) 85,167 (28,631) 6,904 14,385 10,499
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 536,548 (899,296) 1,212,374 (552,211) 2,258,136 (918,292)
NET ASSETS:
Beginning of year................ 3,372,627 4,271,923 5,085,448 5,637,659 4,210,851 5,129,143
-------------- -------------- -------------- -------------- -------------- --------------
End of year...................... $ 3,909,175 $ 3,372,627 $ 6,297,822 $ 5,085,448 $ 6,468,987 $ 4,210,851
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------------------------------------------
EQUITY NATURAL
INCOME RESOURCES GLOBAL**
------------------------------ ------------------------------ ------------------------------
1995 1994 1995 1994 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 295,255 $ 222,179 $ 6,686 $ (7,276) $ 10,910 $ (7,946)
Capital gains distributions
received....................... 520,438 497,939 179,705 54,352 41,171 2,069
Realized gain (loss) on shares
redeemed [average cost basis].. 131,128 128,602 156,751 112,510 83,503 14,375
Net unrealized gain (loss) on
investments.................... 1,045,497 (851,292) 428,732 (361,552) 110,391 (58,035)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... 1,992,318 (2,572) 771,874 (201,966) 245,975 (49,537)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS........................ 933,260 476,162 (371,555) 190,024 634,220 1,492,404
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM SURPLUS
TRANSFERS........................ 26,506 17,231 391,993 (64,028) (71,057) 31,450
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 2,952,084 490,821 792,312 (75,970) 809,138 1,474,317
NET ASSETS:
Beginning of year................ 9,534,923 9,044,102 2,617,452 2,693,422 1,474,317 0
-------------- -------------- -------------- -------------- -------------- --------------
End of year...................... $ 12,487,007 $ 9,534,923 $ 3,409,764 $ 2,617,452 $ 2,283,455 $ 1,474,317
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
**Commenced
Business
on 5/1/94
<CAPTION>
GOVERNMENT
INCOME
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 159,003 $ 150,861
Capital gains distributions
received....................... 0 0
Realized gain (loss) on shares
redeemed [average cost basis].. 14,056 (8,524)
Net unrealized gain (loss) on
investments.................... 311,921 (382,787)
-------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... 484,980 (240,450)
-------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS........................ 116,346 (589,359)
-------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM SURPLUS
TRANSFERS........................ 288,428 13,964
-------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 889,754 (815,845)
NET ASSETS:
Beginning of year................ 2,719,147 3,534,992
-------------- --------------
End of year...................... $ 3,608,901 $ 2,719,147
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A8
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
ZERO
COUPON SMALL
BOND PRUDENTIAL CAPITALIZATION
2005 JENNISON* STOCK*
------------------------------ -------------- --------------
1995 1994 1995 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 42,858 $ 71,177 $ (1,556) $ (98)
Capital gains distributions
received....................... 25,337 325 0 2,435
Realized gain (loss) on shares
redeemed [average cost basis].. 199,655 9,137 926 397
Net unrealized gain (loss) on
investments.................... 218,240 (166,787) 14,845 7,555
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... 486,090 (86,148) 14,215 10,289
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS........................ (1,066,375) 1,449,162 454,167 482,228
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM SURPLUS
TRANSFERS........................ (214,736) 82,781 15,410 2,622
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... (795,021) 1,445,795 483,792 495,139
NET ASSETS:
Beginning of year................ 2,274,591 828,796 0 0
-------------- -------------- -------------- --------------
End of year...................... $ 1,479,570 $ 2,274,591 $ 483,792 $ 495,139
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
*Commenced
Business
on 5/1/95
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A10 AND A11.
A9
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
FOR THE YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994
NOTE 1: GENERAL
Pruco Life Single Premium Variable Life Account (the "Account") was
established on April 15, 1985 under Arizona law as a separate
investment account of Pruco Life Insurance Company ("Pruco Life")
which is a wholly-owned subsidiary of The Prudential Insurance Company
of America ("The Prudential"). The assets of the Account are
segregated from Pruco Life's other assets.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. There are sixteen subaccounts
within the Account, each of which invests only in a corresponding
portfolio of The Prudential Series Fund, Inc. (the "Series Fund"). The
Series Fund is a diversified open-end management investment company,
and is managed by The Prudential.
The Zero Coupon Bond 1995 subaccount was liquidated on November 15,
1995. On that date, all shares held in the corresponding portfolio of
the Series Fund were redeemed and the redemption proceeds were
transferred to the Money Market subaccount, unless otherwise directed,
in accordance with the prospectus.
NOTE 2: INVESTMENT INFORMATION FOR THE PRUDENTIAL SERIES FUND, INC. PORTFOLIOS
The net asset value per share for each portfolio of the Series Fund,
the number of shares of each portfolio held by the subaccounts of the
Account and the aggregate cost of investments in such shares at
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
---------------------------------------------------------------------------
PORTFOLIO MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
INFORMATION MARKET BOND EQUITY MANAGED BALANCED
- -------------------------- ------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Number of shares: 2,131,906 1,126,842 1,869,336 3,969,747 5,739,615
Net asset value per share: $ 10.0000 $ 11.3131 $ 25.6399 $ 17.8593 $ 15.3088
Cost: $ 21,319,060 $ 12,115,236 $ 35,702,512 $ 59,755,998 $ 78,035,105
<CAPTION>
PORTFOLIOS (CONTINUED)
---------------------------------------------------------------------------
ZERO ZERO
COUPON COUPON HIGH
PORTFOLIO BOND BOND YIELD STOCK EQUITY
INFORMATION 1995 2000 BOND INDEX INCOME
- -------------------------- ------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Number of shares: 0 294,521 807,372 324,161 767,444
Net asset value per share: $ 0.0000 $ 13.2730 $ 7.8004 $ 19.9561 $ 16.2709
Cost: $ 0 $ 3,553,051 $ 6,555,944 $ 4,911,883 $ 11,307,301
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
------------------------------------------------------------------------------------------
ZERO
COUPON SMALL
PORTFOLIO NATURAL GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
INFORMATION RESOURCES GLOBAL INCOME 2005 JENNISON STOCK
- -------------------------- ------------- ------------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Number of shares: 197,418 147,005 307,955 112,174 38,559 38,383
Net asset value per share: $ 17.2718 $ 15.5332 $ 11.7189 $ 13.1899 $ 12.5468 $ 11.8334
Cost: $ 3,132,900 $ 2,231,098 $ 3,457,649 $ 1,329,366 $ 468,947 $ 446,651
</TABLE>
NOTE 3: CHARGES AND EXPENSES
A. Mortality Risk and Expense Risk Charges
The mortality risk and expense risk charges at an effective
annual rate of 0.90% are applied daily against the net assets
representing equity of Contract owners held in each subaccount.
A10
<PAGE>
B. Deferred Sales Charge
A deferred sales charge is imposed upon the surrender of certain
variable life insurance contracts to compensate Pruco Life for
sales and other marketing expenses. The amount of any sales
charge will depend on the number of years that have elapsed since
the Contract was issued. No sales charge will be imposed after
the sixth Contract year. No sales charge will be imposed on death
benefits.
C. Administrative Charge
The administrative charge at an effective annual rate of 0.35% is
applied daily against the net assets representing equity of
Contract owners held in each subaccount.
D. Expense Reimbursement
Pursuant to a prior merger agreement, the Account is reimbursed
by Pruco Life for expenses in excess of 0.40% of the average
daily net assets incurred by the Money Market, Diversified Bond,
Equity, Flexible Managed, Conservative Balanced, Zero Coupon Bond
1995 and the Zero Coupon Bond 2000 Portfolios of the Series Fund.
In addition, the Account is reimbursed by Pruco Life, on a
non-guaranteed basis, for expenses incurred by the Series Fund in
excess of the effective rate of 0.40% of the average daily net
assets of the Zero Coupon Bond 2005 Portfolio.
NOTE 4: TAXES
The operations of the subaccounts form a part of, and are taxed with,
the operations of Pruco Life. Under the Internal Revenue Code, all
ordinary income and capital gains allocated to the Contract owners are
not taxed to Pruco Life. As a result, the net asset values of the
subaccounts are not affected by federal income taxes on distributions
received by the subaccounts.
NOTE 5: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS
The increase (decrease) in net assets resulting from surplus transfers
represents the net contributions (withdrawals) of Pruco Life to the
Account.
A11
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners of
Pruco Life Single Premium Variable Life
Account and the Board of Directors
of Pruco Life Insurance Company
Newark, New Jersey
We have audited the accompanying statements of net assets of Pruco Life Single
Premium Variable Life Account of Pruco Life Insurance Company (comprising,
respectively, the Money Market, Diversified Bond, Equity, Flexible Managed,
Conservative Balanced, Zero Coupon Bond 1995, Zero Coupon Bond 2000, High Yield
Bond, Stock Index, Equity Income, Natural Resources, Global, Government Income,
Zero Coupon Bond 2005, Prudential Jennison, and Small Capitalization Stock
subaccounts) as of December 31, 1995, the related statements of operations for
the periods presented in the year then ended, and the statements of changes in
net assets for each of the periods presented in the two years then ended. 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 in accordance with generally accepted auditing
standards. 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. Our procedures included
confirmation of securities owned as of December 31, 1995. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of each of the respective subaccounts
constituting the Pruco Life Single Premium Variable Life Account as of December
31, 1995, the results of their operations, and the changes in their net assets
for the respective stated periods in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Parsippany, New Jersey
February 15, 1996
A12
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DECEMBER 31,
-----------------------------
1995 1994
-------- -------
($000'S)
ASSETS
Fixed maturities (market value $2,598,439
and $2,596,172)....................... $2,510,783 $2,647,315
Equity securities (cost $5,317 and $5,434) 4,009 3,326
Mortgage loans........................... 64,464 71,919
Investment in real estate................ 4,059 7,189
Policy loans............................. 569,273 493,862
Other long-term investments.............. 4,159 4,044
Short-term investments................... 228,016 191,455
---------- ----------
Total Investments..................... 3,384,763 3,419,110
Cash..................................... 41,435 27,780
Accrued investment income................ 59,862 59,382
Premiums due and deferred................ 19,521 16,821
Receivable from affiliates............... 8,275 7,517
Federal income taxes--from affiliate..... 8,875 23,306
Other assets............................. 9,436 25,102
Assets held in Separate Accounts......... 4,285,269 3,511,784
---------- ----------
TOTAL ASSETS............................. $7,817,436 $7,090,802
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy liabilities and insurance reserves:
Future policy benefits and claims...... $2,606,856 $2,767,552
Other policy claims and benefits payable 13,822 15,184
Interest Maintenance Reserve (IMR)..... 27,282 21,802
Payable to affiliates.................... 41,584 30,257
Other liabilities........................ 52,865 131,695
Asset Valuation Reserve (AVR)............ 37,268 23,690
Liabilities related to Separate Accounts 4,208,737 3,424,535
---------- ----------
TOTAL LIABILITIES ........................ 6,988,414 6,414,715
---------- ----------
STOCKHOLDER'S EQUITY:
Common Stock, $10 par value; authorized,
1,000,000 shares; issued and outstanding,
250,000 shares......................... 2,500 2,500
Paid-in capital.......................... 439,582 439,582
Unassigned surplus....................... 386,940 234,005
---------- ----------
TOTAL STOCKHOLDER'S EQUITY................ 829,022 676,087
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY. $7,817,436 $7,090,802
========== ==========
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
($000'S)
REVENUE
Premiums and annuity considerations....... $570,440 $611,820 $563,900
Net investment income..................... 250,386 245,977 260,939
Net realized investment gains/(losses).... 3,952 (21,215) 8,878
Other income.............................. 40,987 13,259 18,882
-------- -------- --------
TOTAL REVENUE.............................. 865,765 849,841 852,599
-------- -------- --------
BENEFITS AND EXPENSES
Current and future benefits and claims.... 512,988 559,658 534,354
Commission expenses....................... 25,755 30,169 28,386
General, administrative and other expenses 118,808 119,309 129,171
-------- -------- --------
TOTAL BENEFITS AND EXPENSES................ 657,551 709,136 691,911
-------- -------- --------
Income before provision in lieu of federal
income tax............................... 208,214 140,705 160,688
Provision in lieu of federal
income tax............................... (50,013) (87,750) (83,640)
-------- -------- --------
NET INCOME................................. $158,201 $ 52,955 $ 77,048
======== ======== ========
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B-1
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
-------- -------- -------
($000'S)
COMMON STOCK
Balance, beginning of year................. $ 2,500 $ 2,500 $ 2,500
Issued during year......................... - - -
-------- -------- --------
Balance, end of year....................... 2,500 2,500 2,500
-------- -------- --------
PAID-IN CAPITAL
Balance, beginning of year................. 439,582 439,582 439,582
Paid-in during year........................ - - -
-------- -------- --------
Balance, end of year ...................... 439,582 439,582 439,582
-------- -------- --------
UNASSIGNED SURPLUS
Balance, beginning of year................. 234,005 176,711 162,530
Net income................................. 158,201 52,955 77,048
Net unrealized investment gains/(losses)... 8,761 5,814 (9,351)
(Increase) decrease in non-admitted assets. (449) (477) 575
(Increase) decrease in AVR................. (13,578) (998) 5,909
Dividends to stockholder................... - - (60,000)
-------- -------- --------
Balance, end of year....................... 386,940 234,005 176,711
-------- -------- --------
TOTAL STOCKHOLDER'S EQUITY.................. $829,022 $676,087 $618,793
======== ======== ========
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
-------- -------- ------
($000'S)
CASH FLOW FROM OPERATING ACTIVITIES
Net income............................... $ 158,201 $ 52,955 $ 77,048
Adjustments to reconcile net income
to net cash from operations:
Increase/(decrease) in policy
liabilities and insurance reserves..... (162,058) (143,153) (124,602)
Net decrease in Separate Accounts....... 10,717 5,674 12,173
Net realized investment (gains)/losses.. (3,952) 21,215 (8,878)
Depreciation, amortization and
other non-cash items................... (2,854) 314 1,907
(Increase)/decrease in operating assets:
Policy loans........................... (75,411) (73,591) (71,472)
Notes receivable from affiliates....... - 50,000 9,000
Interest receivable from affiliates.... - 23 420
Accrued investment income.............. (480) (2,597) 880
Premiums due and deferred.............. (2,700) (252) (880)
Receivable from affiliates............. (758) (637) 1,970
Federal income taxes--from affiliate... 14,467 (19,155) 6,879
Other assets........................... 15,666 (9,273) (9,481)
Increase/(decrease) in operating
liabilities:
Payable to affiliates.................. 11,327 (24,029) 13,260
Federal income taxes--to affiliate..... (36) - -
Other liabilities...................... (78,830) 27,710 34,632
--------- --------- ---------
CASH FLOW FROM (USED FOR) OPERATING
ACTIVITIES ............................ (116,701) (114,796) (57,144)
--------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from the sale/maturity of:
Fixed maturities....................... 2,031,587 2,710,424 1,687,992
Equity securities...................... 5,557 1,909 4,032
Mortgage loans......................... 7,395 10,821 21,691
Other long-term investments............ 1,559 607 520
Investment in real estate.............. 2,925 8,676 -
Payments for the purchase of:
Fixed maturities....................... (1,876,232) (2,561,081) (1,483,234)
Equity securities...................... (4,279) (2,436) (3,068)
Mortgage loans......................... - (35,276) (918)
Other long-term investments............ (1,674) (1,584) (84)
Investment in real estate.............. - - (20)
Net proceeds/(payments) of short-term
investments............................ (36,482) 9,845 (116,735)
--------- ---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES...... 130,356 141,905 110,176
--------- ---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid......................... - - (60,000)
--------- ---------- -----------
Net increase/(decrease) in Cash........ 13,655 27,109 (6,968)
Cash, beginning of year................ 27,780 671 7,639
--------- ---------- ----------
CASH, END OF YEAR....................... $ 41,435 $ 27,780 $ 671
========= ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Non-cash financing:
Investment in real estate from
foreclosed mortgage loans.......... $ - $ 4,139 $ 7,300
========= ========== ==========
Cash paid in lieu of income taxes.... $ 53,107 $ 73,903 $ 76,760
========= ========== ==========
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B-2
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES
A. PRINCIPLES OF CONSOLIDATION
The accompanying 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 is a
wholly-owned subsidiary of The Prudential Insurance Company of America
(The Prudential), a mutual life insurance company. The Company markets
individual life insurance and single pay deferred annuities primarily
through The Prudential's sales force. All significant intercompany
balances and transactions have been eliminated in consolidation.
B. BASIS OF PRESENTATION
The consolidated financial statements are presented in conformity with
generally accepted accounting principles ("GAAP"), which for mutual life
insurance companies and their insurance subsidiaries are statutory
accounting practices prescribed or permitted by the National Association
of Insurance Commissioners ("NAIC") and their respective domiciliary home
state insurance departments. 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, with permission from the Arizona Department of Insurance
("the Department"), prepares an Annual Report that differs from the Annual
Statement filed with the Department in that subsidiaries are consolidated
and certain financial statement captions are presented differently.
Certain reclassifications have been made to the 1994 and 1993 financial
statements and footnotes to conform to the 1995 presentation. Included in
the Statement of Operations are certain items which, under statutory
accounting practices, are charged or credited directly to surplus.
Management has used estimates and assumptions in the preparation of the
financial statements that affect the reported amounts of assets,
liabilities, revenue and expenses. Actual results could differ from those
estimates.
The following is a reconciliation of Pruco Life's Statutory Net Income
with net income per the consolidated financial statements.
YEARS ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
-------- -------- -------
($000'S)
Pruco Life Statutory Net Income including net
gains and losses on sales of investments....... $113,565 $ 49,374 $ 79,405
Adjustments to reconcile to net income
as follows:
Dividends from subsidiary...................... - - (26,000)
Change in General Account Reserve due to
changes in valuation basis................... 8,990 10,853 (2,331)
Provision for future assessments............... 367 377 588
Net gain from operations in Separate Accounts.. (9,775) 8,880 5,114
Gain/(Loss) due to income tax applicable to
other than current year...................... 19,752 (33,001) -
Other.......................................... (510) (13) 67
Subsidiaries' Statutory Net Income............. 25,812 16,485 20,205
-------- -------- --------
Consolidated Net Income.......................... $158,201 $ 52,955 $ 77,048
======== ======== ========
C. FUTURE APPLICATION OF ACCOUNT STANDARDS
The Financial Accounting Standards Board (the "FASB") issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises," which, as
amended, is effective for fiscal years beginning after December 15, 1995.
Interpretation No. 40 changes the current practice of
B-3
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
mutual life insurance companies, with respect to utilizing statutory basis
financial statements for general purposes, in not allowing such financial
statements to be referred to as having been prepared in accordance with
GAAP. Interpretation No. 40 requires GAAP financial statements of mutual
life insurance companies to apply all GAAP pronouncements, unless
specifically exempted. Implementation of Interpretation No. 40 will
require significant effort and judgement. The company is assessing the
impact of Interpretation No. 40 on its consolidated financial statements,
such effort has not been completed and management currently believes
surplus will increase significantly.
D. SELECTED FINANCIAL DATA OF PRUCO LIFE
Pruco Life markets the Future Value Annuity Contract, and individual
deferred annuity contract. Only assets of Pruco Life, shown below, are
available to meet the guarantees under this annuity contract. The
following is the selected financial data of Pruco Life:
DECEMBER 31,
------------------------------
1995 1994
---------- ----------
($000'S)
Assets:
Investments other than subsidiaries........ $2,736,259 $2,758,088
Investment in subsidiaries................. 198,601 169,816
Other assets............................... 132,185 135,778
Assets held in Separate Accounts........... 3,495,841 2,869,734
---------- ----------
Total Assets............................... $6,562,886 $5,933,416
========== ==========
Liabilities:
Policy liabilities and insurance reserves.. $2,187,632 $2,296,987
Other liabilities.......................... 115,115 163,322
Liabilities related to Separate Accounts... 3,431,117 2,797,020
---------- ----------
Total Liabilities.......................... $5,733,864 $5,257,329
========== ==========
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
--------- --------- ---------
($000'S)
Revenues........................... $717,990 $698,685 $716,402
Benefits, expenses and taxes....... 588,812 659,237 633,277
-------- -------- --------
Net Income......................... $129,178 $ 39,448 $ 83,125
======== ======== ========
E. INVESTMENTS
Fixed maturities, which include long-term bonds and redeemable preferred
stock, are stated primarily at amortized cost. Certain investments in this
category were non-income producing at December 31, 1995 and 1994. These
investments amounted to $29 million and $13 million, respectively.
Equity securities, which consist primarily of common stock, are carried at
market value which is based on quoted market prices, where available, or
prices provided by the National Association of Insurance Commissioners'
(NAIC) Securities Valuation Office (SVO).
Mortgage loans are carried at the lower of the fair value of the
underlying property or unpaid principal balance. At December 31, 1995, two
loans were in foreclosure in the amount of $8 million. At December 31,
1994, one loan was in foreclosure in the amount of $6 million.
Policy loans are stated primarily at unpaid principal balances.
B-4
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
All the Company's real estate investments were acquired through
foreclosure during 1995 and 1994. These properties are carried at the
lower of cost of fair value less disposition costs. Fair value is
considered to be the amount that could reasonably be expected in a current
transaction between willing parties, other than in forced or liquidation
sale. Depreciation on these properties for the years ended December 31,
1995 and 1994 was $106 thousand and $456 thousand, respectively.
Other long-term investments, which consist solely of limited partnerships,
are valued at the aggregate net equity in the partnerships. Certain
investments in this category were non-income producing at December 31,
1995. These investments amounted to $300 thousand. There were no
non-income producing investments at December 31, 1994.
Short-term investments are stated at amortized cost, which approximates
fair value.
Realized investment gains and losses are reported based on specific
identification of the investments sold.
F. FUTURE POLICY BENEFITS, LOSSES AND CLAIMS
Reserves for individual life insurance are calculated using various
methods, interest rates and mortality tables which produce reserves that
meet the aggregate requirements of state laws and regulations.
Approximately 7% of individual life insurance reserves are determined
using the net level premium method, or by using the greater of a net level
premium reserve or the policy cash value. About 93% of individual life
insurance reserves are calculated according to the Commissioner's Reserve
Valuation Method ("CRVM"), or methods which compare CRVM reserves to
policy cash values.
Reserves for deferred individual annuity contracts are determined using
the Commissioner's Annuity Reserve Valuation Method.
For life insurance and annuities, unpaid claims include estimates of both
the death benefits on reported claims and those which are incurred but not
reported.
Reserves for other deposit funds or other liabilities with life
contingencies reflect the contract deposit account or experience
accumulation for the contract and any purchased annuity reserves.
G. REVENUE RECOGNITION AND RELATED EXPENSES
Premium revenues are recognized as income over the premium paying period
of the related policies. Annuity considerations are recognized as revenue
when received. Expenses, including new business acquisition costs such as
commissions, are charged to operations as incurred.
H. ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve (AVR) and the Interest Maintenance Reserve
(IMR) are required for life insurance companies under NAIC regulations.
The AVR is calculated based on a statutory formula and designed to
mitigate the effect of valuation and credit-related losses on unassigned
surplus.
The components of AVR at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
($000'S)
FIXED EQUITY REAL ESTATE
MATURITIES MORTGAGES SECURITIES & OTHER INV. TOTAL
---------- --------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Beginning of Year 1994 -- AVR ................ $ 18,294 $ 3,699 $ 699 $ 0 $ 22,692
Additions .................................... 12,062 2,166 348 2,047 16,623
Deductions ................................... (10,454) (4,355) (314) (502) (15,625)
-------- ------- ------- ------ --------
End of Year 1994 -- AVR ...................... $ 19,902 $ 1,510 $ 733 $1,545 $ 23,690
======== ======= ======= ====== ========
Beginning of Year 1995 -- AVR ................ $ 19,902 $ 1,510 $ 733 $1,545 $ 23,690
Additions .................................... 14,540 1,007 2,764 272 18,583
Deductions ................................... (1,832) (39) (2,627) (507) (5,005)
-------- ------- ------- ------ --------
End of Year 1995-- AVR ....................... $ 32,610 $ 2,478 $ 870 $1,310 $ 37,268
========= ======= ======= ====== ========
</TABLE>
B-5
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The IMR captures net realized capital gains and losses resulting from
changes in the general level of interest rates. These gains and losses are
amortized into investment income over the expected remaining life of the
investment sold. The IMR balance was $27.3 million and $21.8 million at
December 31, 1995 and 1994, respectively. "Net realized investment
gains/(losses)" of $9.2 million and $(19.9) million were deferred in 1995
and 1994, respectively. Amortized into "Net investment income" were $3.8
million and $4.8 million of IMR for the year ended December 31, 1995 and
1994, respectively.
I. FEDERAL INCOME TAXES
The Company is a member of a group of affiliated companies which join in
filing a consolidated federal tax return. Pursuant to a tax allocation
agreement, current tax liabilities are determined for individual companies
based upon their separate return basis taxable income. Members with
taxable income incur an amount in lieu of the separate return basis
federal tax. Members with a loss for tax purposes recognize a current
benefit in proportion to the amount of their losses utilized in computing
consolidated taxable income. Differences between estimated liabilities and
actual payments are included in the current year's operations as an
adjustment to the provision in lieu of income taxes. For the year 1993,
the Company was allocated a portion of the consolidated income tax
liability attributable to Section 809 of the Internal Revenue Code
(commonly referred to as "Equity Tax"). Since 1994, the Company has no
longer been allocated this Equity Tax.
Taxes on the Company are calculated under the Internal Revenue Code of
1986 which provides that life insurance companies be taxed on their gain
from operations after dividends to policyholders. In calculating this tax,
the Code requires the capitalization and amortization of policy
acquisition expenses.
J. SEPARATE ACCOUNTS
Separate accounts represent funds for which investment income and
investment gains and losses accrue directly to, and investment risk is
borne by, the policyholders, with the exception of the Pruco Life Modified
Guaranteed Annuity Account. The Pruco Life Modified Guaranteed Annuity
Account is a non-unitized separate account, which funds the Modified
Guaranteed Annuity Contract and the Market Value Adjustment Annuity
Contract. Owners of the Pruco Life Modified Annuity and the Market Value
Adjustment Annuity Contracts do not participate in the investment gain or
loss from assets relating to such accounts. Such gain, or loss is borne,
in total, by Pruco Life. Assets are carried at market value. Deposits to
such accounts are included in revenues with a corresponding liability
increase included in benefits and expenses. The assets of each account are
legally segregated and are not subject to claims that arise out of any
other business of the Company. Consequently, management believes that it
is appropriate to combine Separate Account policyholder net investment
income and net realized and unrealized capital gains/(losses) along with
benefit payments and change in reserves in "Current and future benefits
and claims". Policyholder net investment income and net realized and
unrealized gains/(losses) for the years ended December 31, 1995, 1994 and
1993 were $805 million, ($28) million and $443 million, respectively.
B-6
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. FEDERAL INCOME TAXES
The following is a reconciliation of the Company's federal tax provision
as computed at the federal tax rate with that computed at the Company's
effective tax rate. The below amounts include federal income tax
applicable to prior years, where appropriate.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
-------- -------- -------
($000'S)
<S> <C> <C> <C>
Income before provision in lieu of
federal income taxes.................... $208,214 $140,705 $160,688
Statutory tax rate........................ 35% 35% 35%
--------- -------- --------
Expected federal income taxes............. $ 72,875 $ 49,247 $ 56,241
Tax effect of:
Statutory/tax policy reserve
difference............................ (14,524) 19,949 14,577
Timing differences in tax/book income
recognition on investments............ (6,980) 11,608 4,055
Timing differences in tax/book income
Recognition--other.................... (7,173) (6,816) (415)
Decrease/(Increase) in life insurance
premiums deferred and uncollected..... (953) (88) (308)
Capitalization of policy acquisition
expenses.............................. 6,768 13,850 7,374
Allocated equity tax.................... - - 2,116
-------- -------- --------
Federal income taxes...................... $ 50,013 $ 87,750 $ 83,640
======== ======== ========
Effective tax rate........................ 24% 62% 52%
======== ======== ========
</TABLE>
3. NET INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
---------- ---------- --------
($000'S)
<S> <C> <C> <C>
Gross investment income
Fixed maturities......................... $194,198 $196,909 $216,660
Equity securities......................... 104 14 22
Mortgage loans............................ 7,757 4,041 6,359
Investment in real estate................. 647 2,146 2,066
Policy loans.............................. 29,775 25,692 21,741
Short-term investments.................... 15,092 12,676 9,031
Other..................................... 3,949 5,075 3,945
-------- -------- --------
251,522 246,553 259,824
Investment expenses......................... (4,904) (5,421) (5,570)
-------- -------- --------
Net investment income before IMR............ 246,618 241,132 254,254
Amortization of Interest Maintenance Reserve 3,768 4,845 6,685
-------- -------- --------
Net investment income....................... $250,386 $245,977 $260,939
======== ======== ========
</TABLE>
B-7
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. INVESTMENT AND INVESTMENT GAINS (LOSSES)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
---------- ---------- --------
($000'S)
<S> <C> <C> <C>
Realized Gains (Losses)
Fixed maturities.......................... $ 11,359 $(38,180) $ 32,471
Equity securities......................... 2,020 503 607
Mortgage loans............................ (90) (4,581) (2,592)
Investment in real estate................. (99) 1,184 (2,004)
Other..................................... 10 (1) (411)
Tax effected amounts transferred to Interest
Maintenance Reserve....................... (9,248) 19,860 (19,193)
-------- -------- --------
Net realized investment gains............... $ 3,952 $(21,215) $ 8,878
======== ======== ========
Unrealized Gains (Losses)
Fixed maturities.......................... 9,192 5,430 (9,380)
Equity securities......................... 799 (490) 260
Other..................................... (1,229) 874 (231)
-------- -------- --------
Net unrealized investment gains (losses) 8,762 5,814 (9,351)
Balance beginning of year................... (12,352) (18,166) (8,815)
-------- -------- --------
Balance end of year......................... $ (3,590) $(12,352) $(18,166)
======== ======== ========
</TABLE>
EQUITY SECURITIES AT DECEMBER 31,
($000'S)
GROSS UNREALIZED
-----------------------------------------------------
FAIR
MARKET
COST GAINS LOSSES VALUE
------- ------- -------- -------
1995 ........... $5,317 $581 $1,889 $4,009
1994 ........... 5,434 386 2,493 3,327
1993 ........... 4,405 742 2,359 2,788
FIXED MATURIES
--------------------------------
($000'S)
INCREASE (DECREASE)
AT DECEMBER 31, IN DIFFERENCE BETWEEN
-------------------------------- MARKET VALUE AND
AMORTIZED MARKET AND AMORTIZED COST
COST VALUE DURING THE YEAR
---------- ---------- ------------------
1995 .... $2,510,782 $2,598,439 $ 138,800
1994 .... 2,647,315 2,596,172 (167,494)
1993 .... 2,835,251 2,951,602 10,453
B-8
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The amortized cost and estimated market value of fixed maturities at December
31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
($000's) ($000's) ($000's) ($000's)
----------- -------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of
U.S. government corporations
and agencies ........................ $ 324,854 $ 6,829 $ 61 $ 331,622
Obligations of U.S. and
political subdivisions .............. - - - -
Debt securities issued by foreign
governments and
their agencies ...................... 73,042 3,055 - 76,097
Corporate securities .................. 1,943,696 73,489 3,974 2,013,211
Mortgage backed securities ............ 169,190 8,717 398 177,509
---------- -------- ------- ----------
Total ................................. $2,510,782 $ 92,090 $ 4,433 $2,598,439
========== ======== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
1994
--------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
($000'S) ($000'S) ($000'S) ($000'S)
---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of
U.S. government corporations
and agencies $ 409,678 $ 224 $ 20,259 $ 389,643
Obligations of U.S. and
political subdivisions ............. - - - -
Debt securities issued by
foreign governments and
their agencies ..................... 86,026 2,075 2,310 85,791
Corporate securities ................. 1,960,296 17,005 43,521 1,933,780
Mortgage-backed securities ........... 191,315 1,429 5,786 186,958
---------- -------- -------- ----------
Total ................................ $2,647,315 $ 20,733 $ 71,876 $2,596,172
========== ======== ======== ==========
</TABLE>
The amortized cost and estimated market value of fixed maturities at December
31, 1995 by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
ESTIMATED
AMORTIZED MARKET
COST VALUE
($000's) ($000's)
---------- ----------
Due in one year or less ................... $ 161,693 $ 163,629
Due after one year through five years ..... 1,500,204 1,549,264
Due after five years through ten years .... 529,845 556,294
Due after ten years ....................... 149,850 151,743
---------- ----------
2,341,592 2,420,930
Mortgage-backed securities ................ 169,190 177,509
---------- ----------
Total ..................................... $2,510,782 $2,598,439
========== ==========
Proceeds from the sale/maturity of fixed maturities during 1995, 1994, and
1993 were $2.0 billion, $2.7 billion and $1.7 billion, respectively. Gross
gains of $28.8 million, $16.8 million and $44.5 million and gross losses
of $17.5 million, $49.8 million and $12.0 million were realized on those
sales during 1995, 1994, and 1993, respectively.
The Company invests in both investment grade and non-investment grade
securities. The SVO of the NAIC rates fixed maturities held by insurers
(SVO rated securities accounted for approximately 87.2% and 93.6% of the
Company's total fixed maturities balances at both December 31, 1995 and
1994) for regulatory purposes and
B-9
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
groups investments into six categories ranging from highest quality bonds
to those in or near default. The lowest three NAIC categories represent,
for the most part, high-yield securities and are defined by the NAIC as
including any security with a public agency rating of B+ or B1 or less.
Included in "fixed maturities" are securities that are classified by the
NAIC as being in the lowest three rating categories. These approximated
1.0% and 1.5% of the Company's assets at December 31, 1995 and 1994,
respectively. The amount by which the market value of these securities
exceeded the carrying value was approximately $1.8 million and $(0.9)
million at December 31, 1995 and 1994, respectively.
5. RELATED PARTY TRANSACTIONS
A. SERVICE AGREEMENTS
The Company, The Prudential, Pruco Life of New Jersey and Pruco Securities
Corporation, an indirect wholly-owned subsidiary of The Prudential,
operate under service and lease agreements whereby services of officers
and employees, supplies, use of equipment and office space are provided.
The net cost of these services allocated to the Company were $98 million,
$78 million, and $98 million for the years ended December 31, 1995, 1994,
and 1993, respectively.
In a reorganization of the parent's Individual Insurance Department,
effective January 1, 1993, the corporate staff of the Company was absorbed
by the parent. The costs associated with these employees, which were
previously borne by the Company, are now charged to the Company under the
service and lease agreements with the parent.
B. EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company is a wholly-owned subsidiary of The Prudential which sponsors
several defined benefit pension plans that cover substanially all of its
employees. Benefits are generally based on career average earnings and
credited length of service. The Prudential's funding policy is to
contribute annually the amount necessary to satisfy the Internal Revenue
Service contribution guidelines.
No pension expense for contributions to the plan was allocated to the
Company in 1995, 1994 or 1993 because the plan was subject to the full
funding limitation under the Internal Revenue Code.
POSTRETIREMENT LIFE AND HEALTH BENEFITS
The Prudential also sponsors certain life insurance and health care
benefits for its retired employees. Substantially all employees may become
eligible to receive a benefit if they retire after age 55 with at least 10
years of service. Postretirement benefits, with respect to The Prudential,
are recognized in accordance with the prescribed NAIC policy. The
Prudential elected to amortize its obligation over twenty years. A
provision for contributions to the postretirement fund is included in the
net cost of services allocated to the Company discussed above for the
years ended December 31, 1995, 1994, and 1993.
C. REINSURANCE
The Company currently has three reinsurance agreements in place with The
Prudential (the reinsurer). Specifically: reinsurance of a Group Annuity
Contract, whereby the reinsurer, in consideration for a single premium
payment by the Company, provides Reinsurance equal to 100% of all payments
due under the contact; and, two Yearly Renewable Term agreement in which
the Company may offer and the reinsurer may accept reinsurance on any life
in excess of the Company's maximum limit of retention ($2.5 million).
These agreements had no material effect on net income for the years ended
December 1995, 1994, and 1993.
D. OTHER TRANSACTIONS
The Company has issued approximately 375 variable universal life contracts
to The Prudential for the purpose of funding non-qualified pension
benefits for certain employees. Included in insurance premiums and annuity
considerations for the years ended December 31, 1995, 1994 and 1993 are
respectively, $12 million, $12 million and $12 million, which are
attributable to these contracts.
B-10
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. DIVIDENDS
The Company is subject to Arizona law which limits the amount of dividends
that insurance companies can pay to stockholders. The maximum dividend
which may be paid in any 12 month period without notification or approval
is limited to the lesser of 10% of 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 and the Company's surplus position
at December 31, 1995, the Company would be permitted a maximum of $83
million in dividend distributions in 1996, all of which could be paid in
cash, without approval from The State of Arizona Department of Insurance.
7. FAIR VALUE INFORMATION
The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies for only those accounts
for which fair value disclosures are required. Considerable judgement is
necessarily applied in interpreting data to develop the estimates of fair
value. Accordingly, the estimates presented may not be realized in a
current market exchange. The use of different market assumptions and/or
estimation methodologies could have a material effect on the estimated
fair values.
The following methods and assumptions were used in calculating the fair
values. For all other financial instruments presented in the table, the
carrying value is a reasonable estimate of fair value.
FIXED MATURITIES. Fair values for fixed maturities, other than private
placement securities, are based on quoted market prices or estimates from
independent pricing services. Fair values for private placement securities
are estimated using a discounted cash flow model which considers the
current market spreads between the U.S. Treasury yield curve and corporate
bond yield curve adjusted for the type of issue, its current quality and
its remaining average life. The fair value of certain non-performing
private placement securities is based on amounts provided by state
regulatory authorities.
EQUITY SECURITIES. Fair value is based on quoted market prices, where
available, or prices provided by state regulatory authorities.
MORTGAGE LOANS. The fair value of the commercial mortgage and agricultural
loan portfolio is primarily based upon the present value of the scheduled
cash flows discounted at the appropriate U.S. Treasury rate, adjusted for
the current market spread for a similar quality mortgage. For certain
non-performing and other loans, fair value is based upon the value of the
underlying collateral.
POLICY LOANS. The estimated fair value is calculated using a discounted
cash flow model based upon current U.S. Treasury rates and historical loan
repayments.
INVESTMENT-TYPE INSURANCE CONTRACT LIABILITIES. Fair values for the
Company's investment-type insurance contract liabilities are estimated
using a discounted cash flow model, based on interest rates currently
being offered for similar contracts.
B-11
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The following table discloses the carrying amounts and estimated fair
values of the Company's financial instruments at December 31, 1995 and
1994.
<TABLE>
<CAPTION>
(000's) (000's)
1995 1994
----------------------- --------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities ............. $2,510,782 $2,598,438 $ 2,647,315 $ 2,596,172
Equity securities ............ 4,009 4,036 3,326 3,326
Mortgage Loans ............... 64,464 63,635 71,919 71,805
Policy Loans ................. 569,273 577,975 493,862 448,617
Other Long term investments .. 4,159 4,159 4,044 4,044
Short term investments ....... 228,016 228,016 191,455 191,455
Financial Liabilities:
Investment type
insurance contracts ........ $ 536,963 $ 537,241 $ 794,691 $ 761,324
</TABLE>
8. 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 The Prudential, the Company and agents
appointed by The Prudential and the Company. The Prudential has agreed to
indemnify the Company for any and all losses resulting from such
litigation.
B-12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Pruco Life Insurance Company
Newark, New Jersey
We have audited the accompanying consolidated statements of financial position
of Pruco Life Insurance Company and Subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of operations, stockholder's
equity, and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Pruco Life Insurance Company and
subsidiaries as of December 31, 1995 and 1994 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Parsippany, New Jersey
March 15, 1996
B-13
<PAGE>
SINGLE PREMIUM VARIABLE LIFE ACCOUNT
VARIABLE LIFE INSURANCE CONTRACTS
PRUCO LIFE INSURANCE COMPANY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 445-4571
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Prudential Directors' and Officers' Liability and Corporation Reimbursement
Insurance Program, purchased by The Prudential from Aetna Casualty & Surety
Company, CNA Insurance Companies, Lloyds of London, Great American Insurance
Company, Reliance Insurance Company, Corporate Officers & Directors Assurance
Ltd., A.C.E. Insurance Company, Ltd., XL Insurance Company, Ltd., and
Zurich-American Insurance Company, provides reimbursement for "Loss" (as defined
in the policies) which the Company pays as indemnification to its directors or
officers resulting from any claim for any actual or alleged act, error,
misstatement, misleading statement, omission, or breach of duty by persons in
the discharge of their duties in their capacities as directors or officers of
The Prudential, any of its subsidiaries, or certain investment companies
affiliated with The Prudential. Coverage is also provided to the individual
directors or officers for such Loss, for which they shall not be indemnified.
Loss essentially is the legal liability on claims against a director or officer,
including adjudicated damages, settlements and reasonable and necessary legal
fees and expenses incurred in defense of adjudicatory proceedings and appeals
therefrom. Loss does not include punitive or exemplary damages or the multiplied
portion of any multiplied damage award, criminal or civil fines or penalties
imposed by law, taxes or wages, or matters which are uninsurable under the law
pursuant to which the policies are construed.
There are a number of exclusions from coverage. Among the matters excluded are
Losses arising as the result of (1) claims brought about or contributed to by
the criminal or fraudulent acts or omissions or the willful violation of any law
by a director or officer, (2) claims based on or attributable to directors or
officers gaining personal profit or advantage to which they were not legally
entitled, and (3) claims arising from actual or alleged performance of, or
failure to perform, services as, or in any capacity similar to, an investment
adviser, investment banker, underwriter, broker or dealer, as those terms are
defined in the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Advisers Act of 1940, the Investment Company Act of 1940, any rules
or regulations thereunder, or any similar federal, state or local statute, rule
or regulation.
The limit of coverage under the Program for both individual and corporate
reimbursement coverage is $150,000,000. The retention for corporate
reimbursement coverage is $10,000,000 per loss.
The relevant provisions of New Jersey law permitting or requiring
indemnification, New Jersey being the state of organization of The Prudential,
can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The
relevant provisions of Arizona law permitting or requiring indemnification,
Arizona being the state of organization of Pruco Life, can be found in Section
10-005 of the Arizona Statutes Annotated. The text of The Prudential's by-law
26, which relates to indemnification of officers and directors, is incorporated
by reference to Exhibit 1.A.(6)(b) of Post-Effective Amendment No. 1 to Form
S-6, Registration No. 33-61079, filed April 25, 1996, on behalf of The
Prudential Variable Appreciable Account. The text of Pruco Life's by-laws,
Article VIII, which relates to indemnification of officers and directors, is
incorporated by reference to Exhibit 1.A.(6)(b) to this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 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 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 Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 51 pages.
The undertaking to file reports.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
1. Deloitte and Touche LLP, independent auditors.
2. Clifford E. Kirsch, Esq.
3. Paul Haley, FSA, CLU, and ChFC, actuarial expert.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of Board of Directors of Pruco Life Insurance
Company establishing the Pruco Life Single Premium Variable
Life Account. (Note 3)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities Corporation
and Pruco Life Insurance Company. (Note 3)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the
Sale of the Contracts. (Note 3)
(c) Revised Schedule of Sales Commissions. (Note 8)
(4) Not Applicable.
(5)(a) Flexible Premium Variable Life Insurance Contract. (Note 3)
(b) Contract jacket for use in Georgia and Maryland. (Note 6)
(c) Contract data page for use in South Dakota. (Note 4)
(d) Contract data page for use in Minnesota. (Note 4)
(e) Contract page 5 for use in Colorado and North Dakota.
(Note 4)
(f) Contract page 6 for use in Colorado and North Dakota.
(Note 4)
(g) Contract page 7 for use in Missouri. (Note 6)
(h) Contract page 8 for use in Missouri. (Note 6)
(i) Contract page 7 for use in South Carolina. (Note 4)
(j) Contract page 7 for use in Oklahoma. (Note 4)
(k) Unisex Endorsement for use in Montana. (Note 5)
(l) Contract jacket for use in Pennsylvania. (Note 6)
(m) Contract jacket for use in Minnesota. (Note 6)
(n) Contract jacket for use in Texas. (Note 6)
(o) Contract jacket for use in Virginia. (Note 6)
(p) Contract page 5 for use in Massachusetts. (Note 6)
(q) Contract page 5 for use in Texas. (Note 6)
(r) Contract page 5 for use in Pennsylvania. (Note 6)
(s) Contract page 6 for use in Pennsylvania. (Note 6)
(t) Contract page 7 for use in Kentucky. (Note 6)
(u) Contract page 7 for use in Texas. (Note 6)
(v) Contract page 7 for use in Connecticut. (Note 6)
(w) Contract page 7 for use in Pennsylvania. (Note 6)
(x) Contract page 9 for use in Connecticut and Kentucky.
(Note 6)
(y) Contract page 9 for use in Texas. (Note 6)
II-2
<PAGE>
(z) Contract page 11 for use in Massachusetts. (Note 6)
(aa) Contract page 11 for use in Kentucky. (Note 6)
(bb) Contract page 11 for use in Pennsylvania. (Note 6)
(cc) Contract page 13 for use in Kentucky. (Note 6)
(dd) Contract page 19 for use in Pennsylvania. (Note 6)
(ee) Contract jacket for use in Massachusetts. (Note 7)
(ff) Contract Endorsement for use in California. (Note 7)
(gg) Contract page 8 for use in Texas. (Note 8)
(hh) Contract page 9 for use in Connecticut. (Note 8)
(ii) Contract page 10 for use in Texas. (Note 8)
(jj) Contract page 11 for use in Texas. (Note 8)
(kk) Contract page 13 for use in Texas. (Note 8)
(ll) Contract page 19 for use in Texas. (Note 8)
(mm) Contract page 12 for use in Texas. (Note 9)
(nn) Contract page 17 for use in Texas. (Note 9)
(6)
(a) Articles of Incorporation of Pruco Life Insurance
Company, as amended July 25, 1972. (Note 2)
(b) By-laws of Pruco Life Insurance Company, as amended
June 14, 1983. (Note 10)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10)
(a) Application Form for Flexible Premium Variable Life
Insurance Contract. (Note 3)
(b) Supplement to the Application for Flexible Premium
Variable Life Insurance Contract. (Note 3)
(c) Supplement to the Application for Flexible Premium
Variable Life Insurance Contract. (Note 9)
(11) Revised Form of Notice of Withdrawal Right. (Note 5)
(12) Memorandum describing Pruco Life Insurance Company's
issuance, transfer, and redemption procedures for the
Contracts pursuant to Rule 6e-3(T)(b)(12)(ii) and method
of computing cash adjustment upon exercise of right to
exchange for fixed-benefit insurance pursuant to Rule
6e-3(T)(b)(13)(v)(B). (Note 4)
(13)
(a) Living Needs Benefit Rider for use in Florida. (Note 11)
(b) Living Needs Benefit Rider for use in all other approved
jurisdictions. (Note 11)
2. See Exhibit 1.A.(5).
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the legality of
the securities being registered. (Note 1)
4. None.
5. Not Applicable.
6. Opinion and Consent of Paul Haley, FSA, CLU, ChFC, as to actuarial
matters pertaining to the securities being registered. (Note 1)
7. Powers of Attorney:
(a) E. Michael Caulfield, Garnett L. Keith, Jr.,
Ira J. Kleinman, Esther H. Milnes, I. Edward Price,
Stephen P. Tooley (Note 12)
(b) William F. Yelverton (Note 13)
8. Pruco Life Insurance Company's representations regarding mortality and
expense risks and sales load. (Note 4)
27. Financial Data Schedule (Note 1)
II-3
<PAGE>
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Form N-8B-2, Registration No. 2-80513,
filed November 22, 1982, on behalf of the Pruco Life Variable
Insurance Account.
(Note 3) Incorporated by reference to Registrant's Form S-6, filed
July 29, 1985.
(Note 4) Incorporated by reference to Pre-Effective Amendment No. 1 to this
Registration Statement, filed December 13, 1985.
(Note 5) Incorporated by reference to Pre-Effective Amendment No. 2 to this
Registration Statement, filed February 7, 1986.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 1 to this
Registration Statement, filed March 17, 1986.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 2 to this
Registration Statement, filed April 29, 1986.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 3 to this
Registration Statement, filed October 23, 1986.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 4 to this
Registration Statement, filed April 27, 1987.
(Note 10) Incorporated 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 Appreciable Account.
(Note 11) Incorporated by reference to Post-Effective Amendment No. 12 to this
Registration Statement, filed April 26, 1990.
(Note 12) Incorporated by reference to Form N-4, Registration No. 33-61125,
filed July 19, 1995 on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 13) Incorporated by reference to Pre-Effective Amendment No. 1 to Form
N-4, Registration No. 33-61125, filed November 17, 1995 on behalf of
the Pruco Life Flexible Premium Variable Annuity Account.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that this Amendment is filed solely for one or more of the purposes
specified in Rule 485(b)(1) under the Securities Act of 1933 and that no
material event requiring disclosure in the prospectus, other than one listed in
Rule 485(b)(1), has occurred since the effective date of the most recent
Post-Effective Amendment to the Registration Statement which included a
prospectus, and has caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal hereunto
affixed and attested, all in the city of Newark and the State of New Jersey, on
this 25th day of April, 1996.
(Seal) PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
(Registrant)
By: PRUCO LIFE INSURANCE COMPANY
(Depositor)
Attest: /s/ THOMAS C. CASTANO By: /s/ ESTHER H. MILNES
-------------------------- ------------------------------
Thomas C. Castano Esther H. Milnes
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 20 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this 25th day of April, 1996.
SIGNATURE AND TITLE
/s/ *
- ------------------------------------
Esther Milnes
President and Director
/s/ *
- ------------------------------------
Stephen Tooley
Chief Accounting Officer and Comptroller
/s/ *
- ------------------------------------
E. Michael Caulfield
Director
/s/ * *By: /s/ THOMAS C. CASTANO
- ------------------------------------ --------------------------------
Garnett L. Keith, Jr. Thomas C. Castano
Director (Attorney-in-Fact)
/s/ *
- ------------------------------------
Ira J. Kleinman
Director
/s/ *
- ------------------------------------
I. Edward Price
Director
/s/ *
- ------------------------------------
William F. Yelverton
Director
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Consent of Deloitte & Touche LLP, independent auditors. Page II-6
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the Page II-8
legality of the securities being registered.
6. Opinion and Consent of Paul Haley, FSA, CLU, ChFC, as to Page II-9
actuarial matters pertaining to the securities being registered.
27. Financial Data Schedule. Page II-10
</TABLE>
II-7
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 20 to Registration
Statement No. 2-99260 on Form S-6 of Pruco Life Single Premium Variable Life
Account of Pruco Life Insurance Company of our report dated February 15, 1996,
relating to the financial statements of Pruco Life Single Premium Variable Life
Account, and of our report dated March 15, 1996, relating to the consolidated
financial statements of Pruco Life Insurance Company and subsidiaries appearing
in the Prospectus, which is part of such Registration Statement, and to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
April 25, 1996
II-6
Exhibit 3
April 25, 1996
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
Gentlemen:
In my capacity as Chief Legal Officer of Pruco Life Insurance Company ("Pruco
Life"), I have reviewed the establishment of Pruco Life Single Premium Variable
Life Account (the "Account") on April 15, 1985 by the Executive Committee of the
Board of Directors of Pruco Life as a separate account for assets applicable to
certain single premium variable life insurance contracts, pursuant to the
provisions of Section 20-651 of the Arizona Insurance Code. I was responsible
for oversight of the preparation and review of the Registration Statement on
Form S-6, as amended, filed by Pruco Life with the Securities and Exchange
Commission (Registration No. 2-99260) under the Securities Act of 1933 for the
registration of certain single premium variable life insurance contracts issued
with respect to the Account.
I am of the following opinion:
(1) Pruco Life was duly organized under the laws of Arizona and is a validly
existing corporation.
(2) The Account has been duly created and is validly existing as a
separate account pursuant to the aforesaid provisions of
Arizona law.
(3) The portion of the assets held in the Account equal to the
reserve and other liabilities for variable benefits under the
single premium variable life insurance contracts is not
chargeable with liabilities arising out of any other business
Pruco Life may conduct.
(4) The single premium variable life insurance contracts are legal
and binding obligations of Pruco Life in accordance with their
terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as I judged to be necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Clifford E. Kirsch
II-8
Exhibit 6
April 25, 1996
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
To Pruco Life Insurance Company:
This opinion is furnished in connection with the registration by Pruco Life
Insurance Company of flexible premium variable life insurance contracts
("Contracts") under the Securities Act of 1933. The prospectus included in
Post-Effective Amendment No. 20 to Registration Statement No. 2-99260 on
Form S-6 describes the Contract. I have reviewed the Contract form and I have
participated in the preparation and review of the Registration Statement and
Exhibits thereto. In my opinion:
(1) The illustrations of face amounts of insurance included in the
section entitled "Some typical face amounts" ("Amount of Life
Insurance"), based on the assumptions stated in the
illustrations, are consistent with the provisions of the
Contract.
(2) The illustrations of death benefits included in the section
entitled "Increase in death benefit due to favorable
investment experience" ("Amount of Life Insurance"), based on
the assumptions stated in the illustrations, are consistent
with the provisions of the Contract.
(3) The illustrations of cash surrender values and death benefits
included in the section entitled "Illustrations", based on the
assumptions stated in the illustrations, are consistent with the
provisions of the Contract. The rate structure of the Contract has
not been designed so as to make the relationship between the
premium and benefits, as shown in the illustrations, appear more
favorable to a prospective purchaser of a Contract for male age 35
or female age 55, than to prospective purchasers of Contracts on
insureds of other ages.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
Paul Haley, FSA, CLU, ChFC
Vice President
The Prudential Insurance Company of America
II-9
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