As filed with the Securities Exchange Commission on April 28, 1997.
Registration No. 2-99260
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-6
Post-Effective Amendment No. 21
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 1996 was
filed on February 28, 1997.
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, 1997 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))
----------
<TABLE>
<CAPTION>
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
<S> <C>
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 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
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-8B-2 ITEM NUMBER LOCATION
- ------------------ --------
<S> <C>
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
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
</TABLE>
2
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PROSPECTUS
MAY 1, 1997 [INSERT LOGO]
PRUCO LIFE INSURANCE COMPANY
SINGLE PREMIUM VARIABLE LIFE ACCOUNT
VARIABLE LIFE INSURANCE CONTRACTS
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 ("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.
----------
THE REPLACEMENT OF LIFE INSURANCE IS GENERALLY NOT IN THE INTEREST OF THE
CUSTOMER. IN MOST CASES, WHEN A CUSTOMER REQUIRES ADDITIONAL COVERAGE,
SUPPLEMENTING THE EXISTING POLICY BY PURCHASING ADDITIONAL INSURANCE OR A NEW
POLICY SHOULD BE REQUESTED, THEREBY PROTECTING THE BENEFITS OF THE ORIGINAL
POLICY. IF YOU ARE CONSIDERING REPLACING A POLICY, YOU SHOULD COMPARE THE
BENEFITS AND COSTS OF SUPPLEMENTING YOUR EXISTING POLICY WITH THE BENEFITS AND
COSTS OF PURCHASING THE CONTRACT DESCRIBED IN THIS PROSPECTUS AND YOU SHOULD
CONSULT WITH A QUALIFIED TAX ADVISOR.
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 Prudential.
SPVL-1 Ed 5-97
Catalog No. 6401654
<PAGE>
PROSPECTUS CONTENTS
<TABLE>
<S> <C>
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 ........................................................................ 12
LAPSE AND REINVESTMENT .......................................................................... 13
ADDITIONAL PREMIUM PAYMENTS ..................................................................... 13
LIVING NEEDS BENEFIT ............................................................................ 14
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS ................ 15
WHEN PROCEEDS ARE PAID .......................................................................... 15
REPORTS TO CONTRACT OWNERS ...................................................................... 16
TAX TREATMENT OF CONTRACT BENEFITS .............................................................. 16
THE FIXED-RATE OPTION ........................................................................... 17
VOTING RIGHTS ................................................................................... 18
SALE OF THE CONTRACT AND SALES COMMISSIONS ...................................................... 18
SUBSTITUTION OF SERIES FUND SHARES .............................................................. 19
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS ............................. 19
OTHER GENERAL CONTRACT PROVISIONS ............................................................... 19
STATE REGULATION ................................................................................ 19
ADDITIONAL INFORMATION .......................................................................... 19
EXPERTS ......................................................................................... 20
LITIGATION ...................................................................................... 20
FINANCIAL STATEMENTS ............................................................................ 20
DIRECTORS AND OFFICERS ............................................................................ 21
FINANCIAL STATEMENTS OF PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT ........................... A1
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY AND
SUBSIDIARIES .................................................................................... B1
</TABLE>
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 initial premium payment and
certain required documentation.
ONTRACT FUND--The total value attributable to a specific Contract,
representing amounts in all the subaccounts, amounts allocated to the fixed-rate
option, amounts invested in the Real Property Account, and the principal amount
and any accrued interest credited with respect to 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 allocated 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.
<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 16.
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 ("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 is invested primarily in high quality medium-term corporate and
government debt securities; the GOVERNMENT INCOME 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 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 and who prefers a relatively lower
risk of loss and a correspondingly reduced chance of high appreciation; the
FLEXIBLE MANAGED 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 and 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
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 is
invested primarily in common stocks; the PRUDENTIAL JENNISON 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 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.
<PAGE>
2
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 12.
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 of New Jersey 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 Prudential, a mutual insurance
company founded in 1875 under the laws of the State of New Jersey. As of
December 31, 1996, Prudential has invested over $442 million in Pruco Life in
connection with Pruco Life's organization and operation. 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. 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 B-1 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 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 A-1.
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 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.
5
<PAGE>
Prudential is the investment advisor for the assets of each of the portfolios of
the Series Fund. Prudential's principal business address is Prudential Plaza,
Newark, New Jersey 07102-3777. Prudential has a Service Agreement with its
wholly-owned subsidiary Prudential Investment Corporation ("PIC"), which
provides that, subject to Prudential's supervision, PIC will furnish investment
advisory services in connection with the management of the Series Fund. In
addition, 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.
Prudential, PIC, and Jennison are registered as investment advisors under the
Investment Advisers Act of 1940.
As an investment advisor, Prudential charges the Series Fund a daily investment
management fee as compensation for its services. In addition to the investment
management fee, each portfolio incurs certain expenses such as accounting and
custodian fees. See EXPENSES incurred by the SERIES FUND, page 11.
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 Prudential and two of its subsidiaries, invests primarily
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
valueof assets.
The partnership has entered into an investment management agreement with
Prudential, under which Prudential selects the properties and other investments
held by the partnership. 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 PROPERTY ACCOUNT
AS AN INVESTMENT OPTION. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES
WILL BE MET.
6
<PAGE>
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 Home Office specified in the Contract, 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 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. 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 account.
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 account. Currently, there is no charge for
using the Dollar Cost Averaging account.
7
<PAGE>
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 the 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 is jointly owned or the Contract owner
elects not to have this privilege. Telephone transfers are not available if
Pruco Life has received proper notice that the Contract is assigned. See
ASSIGNMENT, page 19. 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 the 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. 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 the 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 16.
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
9
<PAGE>
invested as the owner directs. During 1996, 1995 and 1994, Pruco Life received a
total of approximately $1,442, $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 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 1996, 1995 and 1994, Pruco Life received a total of
approximately $177,363, $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 1996, 1995 and
1994, Pruco Life received a total of approximately $974,407, $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.
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.
10
<PAGE>
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 annual rate of up to 0.9% (.00245475%, daily). During
1996, 1995 and 1994, Pruco Life received a total of approximately $2,498,810,
$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 and expenses for the available Series Fund
portfolios are briefly described under THE PRUDENTIAL SERIES FUND, INC. on page
5. The Account purchases shares of the Series Fund at net asset value. The net
asset value of those shares reflects investment management fees and expenses
already deducted from the assets of the Series Fund. More detailed information
is contained in the attached prospectus for the Series Fund 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.
The total expenses of each portfolio for the year 1996 expressed as a
percentage of the average assets during the year are shown below:
<TABLE>
<CAPTION>
OTHER EXPENSES TOTAL EXPENSES
INVESTMENT (AFTER EXPENSE (AFTER EXPENSE
PORTFOLIO ADVISORY FEE REIMBURSEMENT)* REIMBURSEMENT)*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO* 0.40% 0% 0.40%
DIVERSIFIED BOND PORTFOLIO* 0.40% 0% 0.40%
GOVERNMENT INCOME PORTFOLIO 0.40% 0.06% 0.46%
ZERO COUPON BOND PORTFOLIOS* 0.40% 0% 0.40%
CONSERVATIVE BALANCED PORTFOLIO* 0.55% 0% 0.40%
FLEXIBLE MANAGED PORTFOLIO 0.60% 0% 0.40%
HIGH YIELD BOND PORTFOLIO 0.55% 0.08% 0.63%
STOCK INDEX PORTFOLIO 0.35% 0.05% 0.40%
EQUITY INCOME PORTFOLIO 0.40% 0.05% 0.45%
EQUITY PORTFOLIO* 0.45% 0% 0.40%
PRUDENTIAL JENNISON PORTFOLIO 0.60% 0.06% 0.66%
SMALL CAPITALIZATION STOCK PORTFOLIO 0.40% 0.16% 0.56%
GLOBAL PORTFOLIO 0.75% 0.17% 0.92%
NATURAL RESOURCES PORTFOLIO 0.45% 0.07% 0.52%
</TABLE>
* 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, 0.45% for the Diversified
Bond Portfolio, 0.52% for the Zero Coupon Bond Portfolio 2000, 0.53% for the
Zero Coupon Bond Portfolio 2005, 0.59% for the Conservative Balanced Portfolio,
0.64% for the Flexible Managed Portfolio, and 0.50% for the Equity Portfolio in
1996. 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.
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
11
<PAGE>
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.
8. TAXES ON PRUCO LIFE. The Account 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 against the Account for company
federal income taxes (excluding any charge for taxes attributable to premiums).
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 company federal income taxes that would be attributable to the Account.
Under current law, Pruco Life may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant
and they are not charged against the Account. If there is a material change in
the 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.
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%.
<TABLE>
<CAPTION>
AGE OF FACE AMOUNT FACE AMOUNT
INSURED FOR $10,000 FOR $50,000
ON THE PREMIUN PREMIUM
CONTRACT ---------------------------------------------------------
DATE MALE FEMALE MALE FEMALE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
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 19.
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
12
<PAGE>
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. The latter
ensures that the Contract will always have a death benefit large enough to be
treated as life insurance for tax purposes under current law. Representative
multiples for insureds are shown in the table below.
<TABLE>
<CAPTION>
DEATH BENEFIT IS NO LESS THAN
AGE OF THE CONTRACT FUND TIMES THE
INSURED FOLLOWING MULTIPLE (ASSUMES NO
LOAN)
--------------------------------------
MALE FEMALE
---------------------------------------------------------------------
<S> <C> <C>
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
</TABLE>
Thus, for a male age 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 $122,604 due to a gross return in the selected Series Fund
portfolios of 12%, the death benefit payable will be $196,166 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 19.
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 16.
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
its maximum amount. 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.
13
<PAGE>
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 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.
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.
With the exception of certain business-related policies, the recently enacted
Health Insurance Portability and Accountability Act of 1996 excludes from income
the Living Needs Benefit if the insured is terminally ill or chronically ill as
defined in the tax law (although the exclusion in the latter case may be
limited). Contract owners should consult with a qualified tax advisor before
electing to receive this benefit. Receipt of a Living Needs Benefit payment may
also affect a Contract owner's eligibility for certain government benefits or
entitlements.
14
<PAGE>
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 EXPENSES
INCURRED BY THE PRUDENTIAL SERIES FUND, INC. page 11), 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 -1.74%, 2.26%, 6.26%, and 10.26%.
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.
WHEN PROCEEDS ARE PAID
Pruco Life will generally pay any death benefit, cash surrender value or loan
proceeds within 7 days after receipt at the 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).
15
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
-------------
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
DEATH BENEFIT CASH SURRENDER VALUE
---------------------------------------------------- -------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------- -------------------------------------------------
PREMIUM
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 (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307 $17,421 $18,130 $ 18,902 $ 19,682
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307 $17,202 $18,631 $ 20,117 $ 21,744
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307 $16,984 $19,144 $ 21,480 $ 24,004
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307 $16,767 $19,669 $ 22,932 $ 26,585
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307 $16,551 $20,206 $ 24,479 $ 29,447
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307 $16,336 $20,755 $ 26,128 $ 32,613
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307 $16,621 $21,976 $ 28,748 $ 37,234
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307 $16,067 $22,338 $ 30,364 $ 40,808
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307 $15,318 $22,707 $ 32,072 $ 44,726
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307 $14,539 $23,081 $ 33,876 $ 49,020
15 $ 36,019 $133,307 $133,307 $133,307 $ 149,620 $10,087 $25,047 $ 44,536 $ 77,523
20 $ 43,822 $133,307 $133,307 $133,307 $ 196,166 $ 4,137 $26,417 $ 58,550 $ 122,604
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 269,516 $ 0(2) $22,005 $ 76,973 $ 193,896
30 $ 64,868 $ 0 $133,307 $133,307 $ 383,300 $ 0 $12,178 $101,195 $ 306,640
35 $ 78,922 $ 0 $ 0(2) $154,332 $ 562,555 $ 0 $ 0(2) $133,044 $ 484,961
40 $ 96,020 $ 0 $ 0 $192,424 $ 843,743 $ 0 $ 0 $174,930 $ 767,039
45 $116,824 $ 0 $ 0 $246,109 $1,298,135 $ 0 $ 0 $230,008 $1,213,210
- ----------
(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.
</TABLE>
T-1
<PAGE>
<TABLE>
<CAPTION>
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
DEATH BENEFIT CASH SURRENDER VALUE
---------------------------------------------------- -------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
---------------------------------------------------- -------------------------------------------------
PREMIUM
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 (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307 $17,303 $18,012 $ 18,773 $ 19,553
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307 $16,946 $18,377 $ 19,864 $ 21,471
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307 $16,568 $18,731 $ 21,071 $ 23,597
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307 $16,166 $19,072 $ 22,344 $ 26,013
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307 $15,736 $19,395 $ 23,685 $ 28,684
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307 $15,275 $19,697 $ 25,096 $ 31,635
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307 $15,236 $20,591 $ 27,401 $ 35,977
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307 $14,535 $20,633 $ 28,713 $ 39,293
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307 $13,807 $20,640 $ 30,077 $ 42,932
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307 $13,048 $20,608 $ 31,497 $ 46,929
15 $ 36,019 $133,307 $133,307 $133,307 $ 142,473 $ 8,683 $19,727 $ 39,510 $ 73,820
20 $ 43,822 $133,307 $133,307 $133,307 $ 186,791 $ 2,795 $16,959 $ 49,181 $ 116,744
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 256,568 $ 0(2) $10,711 $ 60,658 $ 184,581
30 $ 64,868 $ 0 $ 0(2) $133,307 $ 364,813 $ 0 $ 0(2) $ 74,418 $ 291,850
35 $ 78,922 $ 0 $ 0 $133,307 $ 535,261 $ 0 $ 0 $ 91,419 $ 461,432
40 $ 96,020 $ 0 $ 0 $133,307 $ 802,488 $ 0 $ 0 $114,843 $ 729,534
45 $116,824 $ 0 $ 0 $160,874 $1,233,162 $ 0 $ 0 $150,349 $1,152,488
(1) ILLUSTRATED VALUES ASSUME 2% STATE AND/OR LOCAL PREMIUM TAXES, NO CONTRACT LOAN, AND THE DEDUCTION OF THE 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 MAXIMUN
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.
</TABLE>
T-2
<PAGE>
<TABLE>
<CAPTION>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
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 (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468 $88,882 $ 92,648 $ 96,624 $100,600
2 $108,160 $357,468 $357,468 $357,468 $ 357,468 $87,766 $ 95,058 $102,640 $111,122
3 $112,486 $357,468 $357,468 $357,468 $ 357,468 $86,655 $ 97,674 $109,591 $122,654
4 $116,986 $357,468 $357,468 $357,468 $ 357,468 $85,548 $100,352 $116,999 $135,636
5 $121,665 $357,468 $357,468 $357,468 $ 357,468 $84,445 $103,091 $124,894 $150,239
6 $126,532 $357,468 $357,468 $357,468 $ 357,468 $83,348 $105,893 $133,307 $166,395
7 $131,593 $357,468 $357,468 $357,468 $ 357,468 $84,799 $112,123 $146,671 $189,968
8 $136,857 $357,468 $357,468 $357,468 $ 357,468 $82,825 $113,971 $154,920 $208,206
9 $142,331 $357,468 $357,468 $357,468 $ 357,468 $78,165 $115,850 $163,633 $228,194
10 $148,024 $357,468 $357,468 $357,468 $ 360,146 $72,919 $117,759 $172,836 $250,101
15 $180,094 $357,468 $357,468 $357,468 $ 510,236 $40,510 $127,788 $227,222 $395,532
20 $219,112 $ 0(2) $357,468 $357,468 $ 731,873 $ 0(2) $138,672 $298,723 $625,532
25 $266,584 $ 0 $357,468(2) $432,003 $1,088,199 $ 0 $150,482(2) $392,729 $989,271
- ----------------
(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.
</TABLE>
T-3
<PAGE>
<TABLE>
<CAPTION>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
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 (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468 $87,705 $91,352 $ 95,325 $ 99,299
2 $108,160 $357,468 $357,468 $357,468 $ 357,468 $85,258 $92,544 $100,125 $108,394
3 $112,486 $357,468 $357,468 $357,468 $ 357,468 $82,660 $93,670 $105,595 $118,472
4 $116,986 $357,468 $357,468 $357,468 $ 357,468 $79,905 $94,692 $111,370 $130,091
5 $121,665 $357,468 $357,468 $357,468 $ 357,468 $76,975 $95,591 $117,464 $142,995
6 $126,532 $357,468 $357,468 $357,468 $ 357,468 $73,838 $96,334 $123,882 $157,334
7 $131,593 $357,468 $357,468 $357,468 $ 357,468 $72,626 $99,870 $134,662 $178,627
8 $136,857 $357,468 $357,468 $357,468 $ 357,468 $68,095 $99,128 $140,478 $194,878
9 $142,331 $357,468 $357,468 $357,468 $ 357,468 $63,261 $98,059 $146,476 $212,816
10 $148,024 $357,468 $357,468 $357,468 $ 357,468 $58,068 $96,610 $152,651 $232,661
15 $180,094 $357,468 $357,468 $357,468 $ 473,866 $25,607 $82,375 $186,953 $367,338
20 $219,112 $ 0(2) $357,468 $357,468 $ 679,461 $ 0(2) $47,533 $228,114 $580,735
25 $266,584 $ 0 $357,460(2) $357,468 $1,009,765 $ 0 $ 0(2) $278,031 $917,968
- ----------------
(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.
</TABLE>
T-4
<PAGE>
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.
Contract owners will be sent annual and semi-annual reports of the Series Fund
showing the financial condition of the portfolios and the investments held in
each.
If a single individual or company invests in the Series Fund through more than
one variable insurance contract, then the individual or company will receive
only one copy of each annual and semi-annual report issued by the Series Fund.
However, if such individual or company wishes to receive multiple copies of any
such report, a request may be made by calling the toll-free telephone number
listed on the cover page of this prospectus.
TAX TREATMENT OF CONTRACT BENEFITS
Each prospective purchaser is urged to consult with 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 relating to the
definition of life insurance 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 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
16
<PAGE>
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. 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. Contract owners should consult a tax
advisor regarding the application of the Code to their circumstances.
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.
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.
17
<PAGE>
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
Prudential, acts as the principal underwriter of the Contract. Prusec, organized
in 1971 under New Jersey law, is registered as a broker and dealer 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 213 Washington
Street, Newark, N.J. 07102-2992. 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 or part 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.
18
<PAGE>
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.
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
19
<PAGE>
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 for the year ended December
31, 1996 have been audited by Price Waterhouse LLP, independent accountants, 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. Price Waterhouse LLP's principal business address is 1177 Avenue of
the Americas, New York, New York 10036.
The financial statements included in this prospectus for years ended December
31, 1995 and December 31, 1994 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.
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 a reference
to the matter in their reports.
Actuarial matters included in this prospectus have been examined by Paul A.
Haley, FSA, MAA, CLU, ChFC, Vice President and Assistant Actuary of Prudential
whose opinion is filed as an exhibit to the registration statement.
LITIGATION
Several actions have been brought against Pruco Life Insurance Company (the
"Company") alleging that the Company and its agents engaged in improper life
insurance sales practices. The Prudential Insurance Company of America has
agreed to indemnify the Company for losses, if any, resulting from such
litigation. No other significant litigation is being brought against the Company
that would have a material effect on its financial position.
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.
20
<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
WILLIAM M. BETHKE, Director.--President, Prudential Capital Markets Group since
1992.
IRA J. KLEINMAN, Director.--Executive Vice President, International Insurance
Group since 1997; 1995 to 1997: Chief Marketing and Product Development Officer,
Prudential Individual Insurance Group; 1993 to 1995: President, Prudential
Select; Prior to 1993: Senior Vice President of Prudential.
MENDEL A. MELZER, Director.--Chief Investment Officer, Mutual Funds and
Annuities, Prudential Investments since 1996; 1995 to 1996: Chief Financial
Officer of the Money Management Group of Prudential; 1993 to 1995: Senior Vice
President and Chief Financial Officer of Prudential Preferred Financial
Services; Prior to 1993: Managing Director, Prudential Investment Corporation.
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 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 Prudential.
KIYOFUMI SAKAGUCHI, Director.--President, Prudential International Insurance
Group since 1995; 1994 to 1995: Chairman and Chief Executive Officer, The
Prudential Life Insurance Company., Ltd.; Prior to 1994: President and Chief
Executive Officer, Asia Pacific Region--Prudential International Insurance and
President, The Prudential Life Insurance Co., Ltd.
WILLIAM F. YELVERTON, Chairman and 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
SUSAN L. BLOUNT, Secretary.--Vice President and Secretary of Prudential since
1995; Prior to 1995: Assistant General Counsel for Prudential Residential
Services Company.
C. EDWARD CHAPLIN, Treasurer.--Vice President and Treasurer of Prudential since
1995; 1993 to 1995: Managing Director and Assistant Treasurer of Prudential;
1992 to 1993: Vice President and Assistant Treasurer, Banking and Cash
Management for Prudential.
LINDA S. DOUGHERTY, Vice President, Comptroller and Chief Accounting
Officer.--Vice President and Comptroller, Prudential Individual Insurance Group
since 1997; Prior to 1997: Vice President, Accounting, Prudential.
JAMES C. DROZANOWSKI, Senior Vice President.--Vice President and Operations
Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996:
President, Credit Card Division, Chase Manhattan Bank; Prior to 1995: Chase
Manhattan Bank.
CLIFFORD E. KIRSCH, Chief Legal Officer.--Chief Counsel, Variable Products, Law
Department of 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.
FRANK P. MARINO, Senior Vice President.--Vice President, Policyowner Relations
Department, Prudential Individual Insurance Group since 1996; Prior to 1996:
Senior Vice President, Prudential Mutual Fund Services.
MARIO A. MOSSE, Senior Vice President.--Vice President, Annuity Services,
Prudential Investments since 1996; Prior to 1996: Vice President, Chase
Manhattan Bank.,
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary.--Vice President and
Associate Actuary, Prudential.
KAREN L. SHAPIRO, Senior Vice President.--Vice President, Prudential Individual
Insurance Group since 1996; Vice President and Associate General Counsel,
Prudential Securities Incorporated 1993 to 1996; Prior to 1993: Senior Associate
with Shaw, Pittman, Potts and Trowbridge.
The business address of all directors and officers of Pruco Life is 213
Washington Street, Newark, New Jersey 07102-2992.
* SUBSIDIARY OF PRUDENTIAL.
21
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3]............................................ $ 15,336,982 $ 10,851,298 $ 51,756,369 $ 71,479,939 $ 87,355,732
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 15,313,819 $ 10,798,885 $ 51,635,890 $ 71,141,582 $ 87,188,309
Equity of Pruco Life Insurance Company.......... 23,163 52,413 120,479 338,357 167,423
-------------- -------------- -------------- -------------- --------------
$ 15,336,982 $ 10,851,298 $ 51,756,369 $ 71,479,939 $ 87,355,732
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Number of Contract owner units outstanding...... 9,162,270.610 4,751,252.832 12,313,462.746 23,319,756.765 33,083,771.221
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Unit Value...................................... $ 1.67140 $ 2.27285 $ 4.19345 $ 3.05070 $ 2.63538
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 849,922 $ 734,790 $ 1,193,506 $ 2,143,818 $ 3,496,167
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4C].............. 202,024 142,663 614,748 882,801 1,080,118
Reimbursement for excess expenses [Note 4D]..... (6,908) (5,597) (54,196) (178,092) (173,327)
-------------- -------------- -------------- -------------- --------------
NET EXPENSES...................................... 195,116 137,066 560,552 704,709 906,791
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 654,806 597,724 632,954 1,439,109 2,589,376
-------------- -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 0 0 4,590,879 6,748,281 5,364,643
Realized gain (loss) on shares redeemed
[average cost basis].......................... 0 46,177 1,516,095 1,582,636 1,560,460
Net unrealized gain (loss) on investments....... 0 (366,764) 1,084,389 (1,468,777) (59,931)
-------------- -------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 0 (320,587) 7,191,363 6,862,140 6,865,172
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 654,806 $ 277,137 $ 7,824,317 $ 8,301,249 $ 9,454,548
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A1
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3] $ 3,119,476 $ 6,228,867 $ 8,604,673 $ 13,728,951 $ 4,383,395
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners $ 3,021,339 $ 6,237,338 $ 8,569,900 $ 13,715,876 $ 4,370,555
Equity of Pruco Life Insurance Company 98,137 (8,471) 34,773 13,075 12,840
-------------- -------------- -------------- -------------- --------------
$ 3,119,476 $ 6,228,867 $ 8,604,673 $ 13,728,951 $ 4,383,395
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Number of Contract owner units outstanding 1,190,628.694 3,054,554.282 2,961,960.776 4,546,633.757 1,546,212.608
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Unit Value $ 2.53760 $ 2.04198 $ 2.89332 $ 3.01671 $ 2.82662
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
ZERO
COUPON
GOVERNMENT BOND
GLOBAL INCOME 2005
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3] $ 4,543,416 $ 3,326,611 $ 1,891,793
-------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners $ 4,502,794 $ 3,321,026 $ 1,522,769
Equity of Pruco Life Insurance Company 40,622 5,585 369,024
-------------- -------------- --------------
$ 4,543,416 $ 3,326,611 $ 1,891,793
-------------- -------------- --------------
-------------- -------------- --------------
Number of Contract owner units outstanding 3,448,487.819 1,920,645.345 749,265.214
-------------- -------------- --------------
-------------- -------------- --------------
Unit Value $ 1.30573 $ 1.72912 $ 2.03235
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY
2000 BOND INDEX INCOME
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 143,328 $ 608,481 $ 140,579 $ 437,689
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4C] 43,571 79,734 94,079 159,086
Reimbursement for excess expenses [Note 4D] (3,977) 0 0 0
-------------- -------------- -------------- --------------
NET EXPENSES 39,594 79,734 94,079 159,086
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) 103,734 528,747 46,500 278,603
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received 0 0 97,668 428,472
Realized gain (loss) on shares redeemed
[average cost basis] 61,546 (8,889) 322,008 258,878
Net unrealized gain (loss) on investments (156,572) 89,453 980,432 1,389,905
-------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS (95,026) 80,564 1,400,108 2,077,255
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 8,708 $ 609,311 $ 1,446,608 $ 2,355,858
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
ZERO
COUPON
NATURAL GOVERNMENT BOND
RESOURCES GLOBAL INCOME 2005
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 27,824 $ 86,459 $ 212,588 $ 95,552
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4C] 49,128 41,077 41,693 21,882
Reimbursement for excess expenses [Note 4D] 0 0 0 (2,205)
-------------- -------------- -------------- --------------
NET EXPENSES 49,128 41,077 41,693 19,677
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (21,304) 45,382 170,895 75,875
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received 531,704 67,416 0 20,412
Realized gain (loss) on shares redeemed
[average cost basis] 207,066 44,616 19,693 4,000
Net unrealized gain (loss) on investments 223,037 399,470 (151,572) (134,741)
-------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS 961,807 511,502 (131,879) (110,329)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 940,503 $ 556,884 $ 39,016 $ (34,454)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A2
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------
SMALL
PRUDENTIAL CAPITALIZATION
JENNISON STOCK
-------------- --------------
<S> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3]............................................ $ 1,491,664 $ 1,316,363
-------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 1,498,227 $ 1,307,734
Equity of Pruco Life Insurance Company.......... (6,563) 8,629
-------------- --------------
$ 1,491,664 $ 1,316,363
-------------- --------------
-------------- --------------
Number of Contract owner units outstanding...... 1,065,375.329 929,607.285
-------------- --------------
-------------- --------------
Unit Value...................................... $ 1.40629 $ 1.40676
-------------- --------------
-------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------
SMALL
PRUDENTIAL CAPITALIZATION
JENNISON STOCK
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 2,691 $ 5,233
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4C].............. 13,404 7,208
Reimbursement for excess expenses [Note 4D]..... 0 0
-------------- --------------
NET EXPENSES...................................... 13,404 7,208
-------------- --------------
NET INVESTMENT INCOME (LOSS)...................... (10,713) (1,975)
-------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 0 16,901
Realized gain (loss) on shares redeemed
[average cost basis].......................... 9,875 8,724
Net unrealized gain (loss) on investments....... 151,305 67,298
-------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 161,180 92,923
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 150,467 $ 90,948
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
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, 1996, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND
---------------------------------------------- ----------------------------------------------
1996 1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)....$ 654,806 $ 945,085 $ 551,739 $ 597,724 $ 677,150 $ 666,450
Capital gains distributions
received...................... 0 0 0 0 28,095 32,253
Realized gain (loss) on shares
redeemed
[average cost basis].......... 0 0 0 46,177 33,240 (73,444)
Net unrealized gain (loss) on
investments................... 0 0 0 (366,764) 1,427,282 (1,296,202)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS....... 654,806 945,085 551,739 277,137 2,165,767 (670,943)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6]........................ (5,721,859) (2,005,207) 2,903,904 (2,217,069) (1,097,631) (3,574,742)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7]........................ (915,025) 381,338 315,505 43,136 (33,382) (146)
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... (5,982,078) (678,784) 3,771,148 (1,896,796) 1,034,754 (4,245,831)
NET ASSETS:
Beginning of year............... 21,319,060 21,997,844 18,226,696 12,748,094 11,713,340 15,959,171
-------------- -------------- -------------- -------------- -------------- --------------
End of year.....................$ 15,336,982 $ 21,319,060 $ 21,997,844 $ 10,851,298 $ 12,748,094 $ 11,713,340
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A5
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
FLEXIBLE
EQUITY MANAGED
---------------------------------------------- --------------
1996 1995 1994 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 632,954 $ 422,966 $ 446,665 $ 1,439,109
Capital gains distributions
received 4,590,879 1,688,154 1,642,927 6,748,281
Realized gain (loss) on shares
redeemed
[average cost basis] 1,516,095 1,098,551 782,996 1,582,636
Net unrealized gain (loss) on
investments 1,084,389 8,034,144 (2,261,571) (1,468,777)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 7,824,317 11,243,815 611,017 8,301,249
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6] (4,080,845) (2,240,812) (1,583,816) (7,933,681)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7] 83,397 (226,203) 249,028 215,390
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 3,826,869 8,776,800 (723,771) 582,958
NET ASSETS:
Beginning of year 47,929,500 39,152,700 39,876,471 70,896,981
-------------- -------------- -------------- --------------
End of year $ 51,756,369 $ 47,929,500 $ 39,152,700 $ 71,479,939
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
CONSERVATIVE
BALANCED
----------------------------------------------
1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,462,510 $ 1,178,365 $ 2,589,376 $ 2,622,038 $ 2,064,530
Capital gains distributions
received 2,961,811 1,892,222 5,364,643 2,993,129 903,223
Realized gain (loss) on shares
redeemed
[average cost basis] 1,224,987 510,497 1,560,460 1,093,958 791,178
Net unrealized gain (loss) on
investments 8,437,634 (6,516,314) (59,931) 6,125,443 (5,556,131)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 14,086,942 (2,935,230) 9,454,548 12,834,568 (1,797,200)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6] (7,589,195) (4,316,198) (9,872,985) (8,311,674) (7,148,287)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7] (272,194) 114,045 (92,223) (149,732) (517,702)
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 6,225,553 (7,137,383) (510,660) 4,373,162 (9,463,189)
NET ASSETS:
Beginning of year 64,671,428 71,808,811 87,866,392 83,493,230 92,956,419
-------------- -------------- -------------- -------------- --------------
End of year $ 70,896,981 $ 64,671,428 $ 87,355,732 $ 87,866,392 $ 83,493,230
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A6
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
ZERO COUPON HIGH
BOND YIELD
2000 BOND
---------------------------------------------- ----------------------------------------------
1996 1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)....$ 103,734 $ 116,219 $ 191,936 $ 528,747 $ 556,857 $ 459,751
Capital gains distributions
received...................... 0 141,727 6,383 0 0 0
Realized gain (loss) on shares
redeemed
[average cost basis].......... 61,546 44,810 55,901 (8,889) (36,010) (19,400)
Net unrealized gain (loss) on
investments................... (156,572) 374,726 (582,196) 89,453 299,046 (662,734)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS....... 8,708 677,482 (327,976) 609,311 819,893 (222,383)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6]........................ (883,895) (24,144) (656,487) (652,164) 421,112 (336,732)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7]........................ 85,488 (116,790) 85,167 (26,102) (28,631) 6,904
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... (789,699) 536,548 (899,296) (68,955) 1,212,374 (552,211)
NET ASSETS:
Beginning of year............... 3,909,175 3,372,627 4,271,923 6,297,822 5,085,448 5,637,659
-------------- -------------- -------------- -------------- -------------- --------------
End of year.....................$ 3,119,476 $ 3,909,175 $ 3,372,627 $ 6,228,867 $ 6,297,822 $ 5,085,448
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A7
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
STOCK EQUITY
INDEX INCOME
---------------------------------------------- --------------
1996 1995 1994 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 46,500 $ 56,753 $ 48,648 $ 278,603
Capital gains distributions
received 97,668 48,697 6,746 428,472
Realized gain (loss) on shares
redeemed
[average cost basis] 322,008 188,339 134,755 258,878
Net unrealized gain (loss) on
investments 980,432 1,283,063 (196,516) 1,389,905
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 1,446,608 1,576,852 (6,367) 2,355,858
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6] 694,843 666,899 (922,424) (1,077,303)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7] (5,765) 14,385 10,499 (36,611)
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 2,135,686 2,258,136 (918,292) 1,241,944
NET ASSETS:
Beginning of year 6,468,987 4,210,851 5,129,143 12,487,007
-------------- -------------- -------------- --------------
End of year $ 8,604,673 $ 6,468,987 $ 4,210,851 $ 13,728,951
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
NATURAL
RESOURCES
----------------------------------------------
1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 295,255 $ 222,179 $ (21,304) $ 6,686 $ (7,276)
Capital gains distributions
received 520,438 497,939 531,704 179,705 54,352
Realized gain (loss) on shares
redeemed
[average cost basis] 131,128 128,602 207,066 156,751 112,510
Net unrealized gain (loss) on
investments 1,045,497 (851,292) 223,037 428,732 (361,552)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 1,992,318 (2,572) 940,503 771,874 (201,966)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6] 933,260 476,162 405,943 (371,555) 190,024
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7] 26,506 17,231 (372,815) 391,993 (64,028)
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 2,952,084 490,821 973,631 792,312 (75,970)
NET ASSETS:
Beginning of year 9,534,923 9,044,102 3,409,764 2,617,452 2,693,422
-------------- -------------- -------------- -------------- --------------
End of year $ 12,487,007 $ 9,534,923 $ 4,383,395 $ 3,409,764 $ 2,617,452
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A8
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
GOVERNMENT
GLOBAL* INCOME
---------------------------------------------- ----------------------------------------------
1996 1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)....$ 45,382 $ 10,910 $ (7,946) $ 170,895 $ 159,003 $ 150,861
Capital gains distributions
received...................... 67,416 41,171 2,069 0 0 0
Realized gain (loss) on shares
redeemed
[average cost basis].......... 44,616 83,503 14,375 19,693 14,056 (8,524)
Net unrealized gain (loss) on
investments................... 399,470 110,391 (58,035) (151,572) 311,921 (382,787)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS....... 556,884 245,975 (49,537) 39,016 484,980 (240,450)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6]........................ 1,711,765 634,220 1,492,404 (20,151) 116,346 (589,359)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7]........................ (8,688) (71,057) 31,450 (301,155) 288,428 13,964
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... 2,259,961 809,138 1,474,317 (282,290) 889,754 (815,845)
NET ASSETS:
Beginning of year............... 2,283,455 1,474,317 0 3,608,901 2,719,147 3,534,992
-------------- -------------- -------------- -------------- -------------- --------------
End of year.....................$ 4,543,416 $ 2,283,455 $ 1,474,317 $ 3,326,611 $ 3,608,901 $ 2,719,147
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
*Commenced
Business
on 5/1/94
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A9
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
ZERO COUPON
BOND PRUDENTIAL
2005 JENNISON**
---------------------------------------------- --------------
1996 1995 1994 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 75,875 $ 42,858 $ 71,177 $ (10,713)
Capital gains distributions
received 20,412 25,337 325 0
Realized gain (loss) on shares
redeemed
[average cost basis] 4,000 199,655 9,137 9,875
Net unrealized gain (loss) on
investments (134,741) 218,240 (166,787) 151,305
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS (34,454) 486,090 (86,148) 150,467
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6] 95,080 (1,066,375) 1,449,162 893,360
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7] 351,597 (214,736) 82,781 (35,955)
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 412,223 (795,021) 1,445,795 1,007,872
NET ASSETS:
Beginning of year 1,479,570 2,274,591 828,796 483,792
-------------- -------------- -------------- --------------
End of year $ 1,891,793 $ 1,479,570 $ 2,274,591 $ 1,491,664
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
**Commenced
Business
on 5/1/95
<CAPTION>
SMALL
CAPITALIZATION
STOCK**
------------------------------
1995 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,556) $ (1,975) $ (98)
Capital gains distributions
received 0 16,901 2,435
Realized gain (loss) on shares
redeemed
[average cost basis] 926 8,724 397
Net unrealized gain (loss) on
investments 14,845 67,298 7,555
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 14,215 90,948 10,289
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[NOTE 6] 454,167 708,061 482,228
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[NOTE 7] 15,410 22,215 2,622
-------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 483,792 821,224 495,139
NET ASSETS:
Beginning of year 0 495,139 0
-------------- -------------- --------------
End of year $ 483,792 $ 1,316,363 $ 495,139
-------------- -------------- --------------
-------------- -------------- --------------
**Commenced
Business
on 5/1/95
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A10
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 1996
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 ("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 fifteen 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 Prudential.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared in conformity with generally
accepted accounting principles (GAAP). The preparation of the financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
Investments--The investments in shares of the Series Fund are stated at the net
asset value of the respective portfolio.
Security Transactions--Realized gains and losses on security transactions are
reported on an average cost basis. Purchase and sale transactions are recorded
as of the trade date of the security being purchased or sold.
Distributions Received--Dividend and capital gain distributions received are
reinvested in additional shares of the Series Fund and are recorded on the
ex-dividend date.
Equity of Pruco Life Insurance Company--Pruco Life maintains a position in the
Account for the purpose of administering activity in the Account. The activity
includes unit transactions, fund share transactions, and expense processing.
Pruco Life monitors the balance daily and transfers funds based upon anticipated
activity. At times, Pruco Life may owe an amount to the Account, which is
reflected in Pruco Life's equity as a negative balance. The position does not
have an effect on the Contract owner's account or the related unit value.
A11
<PAGE>
NOTE 3: 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, 1996 were as
follows:
<TABLE>
<CAPTION>
PORTFOLIOS
----------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Number of shares: 1,533,698 980,649 1,919,398 4,018,520 5,629,657
Net asset value
per share: $ 10.00000 $ 11.06543 $ 26.96489 $ 17.78763 $ 15.51706
Cost: $ 15,336,982 $ 10,585,203 $ 38,444,992 $ 61,807,733 $ 77,584,376
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Number of shares: 241,503 791,722 362,383 741,712 221,771
Net asset value
per share: $ 12.91693 $ 7.86749 $ 23.74471 $ 18.50982 $ 19.76541
Cost: $ 2,919,924 $ 6,397,536 $ 6,067,138 $ 11,159,340 $ 3,883,493
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Number of shares: 254,465 296,461 154,378 104,143 95,445
Net asset value
per share: $ 17.85474 $ 11.22109 $ 12.25430 $ 14.32319 $ 13.79187
Cost: $ 4,091,589 $ 3,326,930 $ 1,876,329 $ 1,325,513 $ 1,241,509
</TABLE>
NOTE 4: 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. Mortality risk is that annuitants
may live longer than estimated and expense risk is that the cost of issuing
and administering the policies may exceed the estimated expenses. For 1996,
the amount of these charges paid to Pruco Life was $2,498,810.
B. Deferred Sales Charge
Subsequent to a contract owner redemption, a deferred sales charge is
imposed upon surrenders 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
year of the Contract. No sales charge will be imposed on death benefits. For
1996, the amount of these charges paid to Pruco Life was $177,363.
C. Administration Charges
The administration charges at an effective annual rate of 0.35% are applied
daily against the net assets representing equity of Contract owners held in
each subaccount. Administration charges include costs associated with
issuing the Contract, establishing and maintaining records, and providing
reports to Contract owners. For 1996, the amount of these charges paid to
Pruco Life was $974,407.
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 and Zero Coupon 2000 Portfolios of the Series Fund. In
addition, the
A12
<PAGE>
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. For 1996,
the amount of these reimbursements totaled $424,303.
E. Cost of Insurance Charges
Contract holder contributions are applied to the account net of State
premium taxes. During 1996, Pruco Life received a total of $1,442.
NOTE 5: TAXES
Pruco Life is taxed as a "life insurance company" under the Internal Revenue
Code and the operations of the Account form a part of and are taxed with those
of Pruco Life. Under current federal law, no federal income taxes are payable by
the Account. As such, no provision for tax liability has been recorded.
NOTE 6: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
Contract owner activity in the subaccounts of the Account, for the year ended
December 31, 1996, was as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions,
net: $ 11,105,394 $ 2,260,753 $ 6,477,728 $ 3,841,686 $ 4,848,937
Contract Owner
Redemptions: $ (17,552,501) $ (5,018,460) $(10,444,553) $ (10,499,568) $ (13,024,429)
Net Transfers
from(to) other
subaccounts or
fixed rate
option: $ 725,248 $ 540,638 $ (114,020) $ (1,275,799) $ (1,697,493)
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
-------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions,
net: $ 373,985 $ 1,553,297 $ 1,586,972 $ 1,609,102 $ 1,743,433
Contract Owner
Redemptions: $ (959,382) $ (1,952,950) $ (2,041,157) $ (2,263,884) $ (1,945,979)
Net Transfers
from(to) other
subaccounts or
fixed rate
option: $ (298,498) $ (252,511) $ 1,149,028 $ (422,521) $ 608,489
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
-------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions,
net: $ 1,107,100 $ 471,250 $ 406,676 $ 705,471 $ 496,867
Contract Owner
Redemptions: $ (1,419,331) $ (511,457) $ (635,466) $ (779,466) $ (641,256)
Net Transfers
from(to) other
subaccounts or
fixed rate
option: $ 2,023,996 $ 20,056 $ 323,870 $ 967,355 $ 852,450
</TABLE>
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM EQUITY TRANSFERS
The increase (decrease) in net assets resulting from equity transfers represents
the net contributions (withdrawals) of Pruco Life to (from) the Account.
A13
<PAGE>
NOTE 8: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts), for the year
ended December 31, 1996, were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 7,216,650.455 1,291,974.736 1,690,948.389 1,350,356.208 1,965,621.835
Contract Owner
Redemptions: (10,746,897.814) (2,326,211.044) (2,764,409.903) (4,146,398.162) (5,968,854.234)
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 150,307.163 797,423.665 1,062,803.613 595,202.784 916,222.712
Contract Owner
Redemptions: (504,229.043) (1,128,838.367) (795,554.570) (1,007,416.435) (755,613.643)
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 2,603,487.570 294,632.366 363,945.684 1,293,924.433 1,030,250.081
Contract Owner
Redemptions: (1,186,505.179) (305,047.606) (320,641.624) (605,796.030) (516,974.354)
</TABLE>
NOTE 9: PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments in the
Series Fund, Inc. were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
--------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases......... $ 4,424,000 $ 1,037,000 $ 675,000 $ 110,000 $ 194,000
Sales............. $ (11,256,000) $ (3,348,000) $ (5,233,000) $ (8,533,000) $ (11,066,000)
<CAPTION>
PORTFOLIOS (CONTINUED)
--------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases......... $ 0 $ 371,000 $ 1,833,000 $ 588,000 $ 1,302,000
Sales............. $ (838,000) $ (1,129,000) $ (1,238,000) $ (1,861,000) $ (1,318,000)
<CAPTION>
PORTFOLIOS (CONTINUED)
--------------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases......... $ 2,321,000 $ 283,000 $ 615,000 $ 1,181,000 $ 1,208,000
Sales............. $ (659,000) $ (646,000) $ (188,000) $ (337,000) $ (444,000)
</TABLE>
A14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of
Pruco Life Single Premium Variable Life Account
and the Board of Directors of
Pruco Life Insurance Company
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of Money Market Subaccount,
Diversified Bond Subaccount, Equity Subaccount, Flexible Managed Subaccount,
Conservative Balanced Subaccount, Zero Coupon Bond 2000 Subaccount, High Yield
Bond Subaccount, Stock Index Subaccount, Equity Income Subaccount, Natural
Resources Subaccount, Global Subaccount, Government Income Subaccount, Zero
Coupon Bond 2005 Subaccount, Prudential Jennison Subaccount and Small
Capitalization Stock Subaccount of Pruco Life Single Premium Variable Life
Account at December 31, 1996, and the results of each of their operations and
the changes in each of their net assets for the year then ended, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of Pruco Life Insurance Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of shares owned in The
Prudential Series Fund, Inc. at December 31, 1996, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
New York, New York
March 31, 1997
A15
<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 changes in 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 2000, High Yield Bond, Stock
Index, Equity Income, Natural Resources, Global, Government Income, Zero Coupon
Bond 2005, Prudential Jennison, and Small Capitalization Stock subaccounts) for
the periods presented for each of the two 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 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. 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 changes in net assets of each of the respective subaccounts
constituting the Pruco Life Single Premium Variable Life Account for the
respective stated periods in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Parsippany, New Jersey
February 15, 1996
A16
<PAGE>
(This page intentionally left blank.)
<PAGE>
<TABLE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<CAPTION>
DECEMBER 31,
1996 1995
----------- ------------
(000'S)
ASSETS
<S> <C> <C>
Fixed maturities
Held to maturity $ 405,731 $ 437,727
Available for sale 2,236,817 2,144,854
Equity securities 3,748 4,036
Mortgage loans 46,915 64,464
Investment real estate - 4,059
Policy loans 639,782 569,273
Other long term investments 4,528 4,159
Short term investments 169,830 228,016
----------- ------------
Total invested assets 3,507,351 3,456,588
----------- ------------
Cash 73,766 41,435
Deferred policy acquisition costs 633,159 566,976
Premiums due 9,084 6,367
Accrued investment income 62,110 59,862
Receivable from affiliates 1,901 8,275
Federal income tax receivable 7,191 6,375
Reinsurance recoverable on unpaid losses 27,014 27,914
Other assets 20,000 12,578
Separate Account assets 5,336,851 4,285,268
----------- ------------
TOTAL ASSETS $9,678,427 $8,471,638
=========== ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Future policy benefits and other policyholders'
liabilities $ 557,351 $ 501,200
Policyholders' account balances 2,188,862 2,218,330
Deferred federal income tax payable 148,960 141,048
Payable to affiliate 51,729 41,584
Other liabilities 55,090 37,387
Separate Account liabilities 5,277,454 4,263,896
----------- ------------
Total Liabilities 8,279,446 7,203,445
----------- ------------
Contingencies - Note 9
Stockholder's Equity
Common Stock, $10 par value;
1,000,000 shares, authorized;
250,000 shares, issued and outstanding at
December 31, 1996 and 1995 2,500 2,500
Paid-in-capital 439,582 439,582
Net unrealized investment gains (less deferred
income tax) 12,402 30,836
Retained earnings 944,497 795,275
----------- ------------
Total Stockholder's Equity 1,398,981 1,268,193
----------- ------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $9,678,427 $8,471,638
=========== ============
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B-1
<PAGE>
<TABLE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
-----------------------------------
(000'S)
REVENUES
<S> <C> <C> <C>
Premiums $ 51,525 $ 42,089 $ 22,689
Policy charges and fee income 324,976 319,012 308,753
Net investment income 247,328 246,618 241,132
Realized investment gains (losses) 10,835 13,200 (41,074)
Other income 20,818 26,986 13,259
-----------------------------------
Total Revenues 655,482 647,905 544,759
-----------------------------------
BENEFITS AND EXPENSES
Policyholders' benefits 186,873 153,987 121,949
Interest credited to policyholders' account
balances 118,246 126,926 113,711
Other operating costs and expenses 122,006 134,790 179,173
-----------------------------------
Total Benefits and Expenses 427,125 415,703 414,833
-----------------------------------
Income before income tax provision 228,357 232,202 129,926
-----------------------------------
Income tax provision 79,135 79,558 48,031
-----------------------------------
NET INCOME $ 149,222 $ 152,644 $ 81,895
===================================
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B-2
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
-----------------------------------
(000'S)
Common Stock
<S> <C> <C> <C>
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
-----------------------------------
Net Unrealized Investment Gains (Losses)
(Less Deferred Income Tax)
Balance, beginning of year 30,836 (1,349) -
Adoption of SFAS 115 - (39,762) -
Net change in unrealized investment
gains (losses) (18,434) 71,947 (1,349)
-----------------------------------
Balance, end of year 12,402 30,836 (1,349)
-----------------------------------
RETAINED EARNINGS
Balance, beginning of year 795,275 642,631 560,736
Net income 149,222 152,644 81,895
-----------------------------------
Balance, end of year 944,497 795,275 642,631
-----------------------------------
TOTAL STOCKHOLDER'S EQUITY $1,398,981 $1,268,193 $1,083,364
===================================
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B-3
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
------------------------------------------
(000'S)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 149,222 $ 152,644 $ 81,895
Adjustments to reconcile net income to net cash from
operating activities:
Increase in future policy benefits and other policyholders'
liabilities 56,151 22,877 31,932
General account policy fee income (50,286) (56,637) (48,401)
Interest credited to policyholders' account balances 118,246 126,926 113,711
Net decrease (increase) in Separate Accounts (38,025) (3,520) (4,121)
Net realized investment (gains) losses (10,835) (13,200) 41,074
Amortization and other non-cash items 26,709 (8,106) 6,228
Change in:
Accrued investment income (2,248) (480) (2,597)
Premiums due (2,717) (1,957) (1,374)
Receivable from affiliates 6,374 (758) (637)
Note receivable from affiliate -- -- 50,000
Deferred policy acquisition costs (66,183) 31,318 34,124
Federal income tax receivable (816) 12,031 (28,908)
Other assets (6,522) (12,689) (11,121)
Payable to affiliate 10,145 11,327 (24,029)
Deferred federal income tax payable 7,912 30,779 --
Other liabilities 17,703 (61,306) (5,293)
-----------------------------------------
Cash Flows From Operating Activities 214,830 229,249 232,483
-----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Held to maturity 138,127 144,898 2,710,423
Available for sale 3,886,254 1,886,687 --
Equity securities 7,527 5,557 1,910
Mortgage loans 19,226 7,395 10,821
Other long term investments 288 1,559 607
Investment real estate 4,488 2,926 8,677
Payments for the purchase of:
Fixed maturities:
Held to maturity (114,494) (135,092) (2,561,082)
Available for sale (4,008,810) (1,741,139) --
Equity securities (4,697) (4,279) (2,436)
Mortgage loans -- -- (35,276)
Other long term investments (657) (1,674) (1,584)
Policy loans (70,509) (75,411) (73,591)
Net proceeds (payments) of short term investments 58,186 (36,482) 9,845
-----------------------------------------
Cash Flows From Investing Activities (85,071) 54,945 68,314
-----------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 536,370 95,039 114,105
Withdrawals (net of transfers to/from separate accounts) (633,798) (365,578) (387,793)
-----------------------------------------
Cash Flows From Financing Activities (97,428) (270,539) (273,688)
-----------------------------------------
Net increase in Cash 32,331 13,655 27,109
Cash, beginning of year 41,435 27,780 671
-----------------------------------------
CASH, END OF YEAR $ 73,766 $ 41,435 $ 27,780
=========================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid $ 61,760 $ 53,107 $ 56,089
=========================================
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
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
(Prudential), a mutual life insurance company. The Company markets
individual life insurance and deferred annuities primarily through
Prudential's sales force in the United States, and in Taiwan. All
significant intercompany balances and transactions have been eliminated in
consolidation.
B. Basis of Presentation
The Financial Accounting Standards Board (FASB) issued Interpretation No. 40
"Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises", as amended by Statement of Financial
Accounting Standards (SFAS) No. 120 "Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts", effective for fiscal years beginning after
December 15, 1995. Financial statements of mutual life insurance companies,
and their wholly owned stock life insurance subsidiaries, for periods
beginning after December 15, 1995 which are prepared on the basis of
statutory accounting practices will no longer be characterized as in
conformity with generally accepted accounting principles (GAAP). As a
result, the Company has prepared its 1996 consolidated financial statements
in accordance with all applicable GAAP pronouncements. The 1995 and 1994
consolidated financial statements, which were previously prepared on the
statutory basis of accounting, have been restated in accordance with GAAP.
The cumulative effect of adopting GAAP as of January 1, 1994 was an increase
in retained earnings of $378.3 million. See Note 7 for a reconciliation of
the Company's surplus and net income determined in accordance with statutory
accounting practices with equity and net income determined on a GAAP basis.
On January 1, 1995, the Company adopted SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities," which expanded the use of fair
value accounting for those securities that a company does not have positive
intent and ability to hold to maturity. Implementation of this statement
decreased stockholder's equity by $39.8 million net of deferred income tax
benefit of $21.4 million. In 1994 prior to the adoption of SFAS 115, all
fixed maturities were carried at amortized cost.
C. Investments
Fixed Maturities - Securities held to maturity are those that the Company
has the positive intent and ability to hold to maturity and are principally
reported at amortized cost. Amortized cost is adjusted to estimated fair
value for impairments which are deemed to be other than temporary.
Where the Company may not have the positive intent to hold fixed maturities
until maturity, the securities are classified as "Available for Sale." These
securities are reported at market value based principally on their quoted
market prices. The associated unrealized gains and losses, net of income
taxes and deferred policy acquisition costs, are included as a component of
equity or if deemed to be other than temporary, are included as a realized
loss.
Equity Securities consist primarily of common and preferred stocks.
Marketable equity securities are reported at market value based principally
on their quoted market prices. Cost basis of the equity securities is $3.9
million and $5.3 million as of December 31, 1996 and 1995, respectively. The
associated unrealized gains and losses are included as a component of
equity.
Mortgage Loans and Policy Loans are stated primarily at unpaid principal
balances, net of unamortized discounts. Interest income is recognized as net
investment income earned.
B-5
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
Investment Real Estate acquired through foreclosure during 1994 was sold in
1996 for $4.5 million.
Other Long Term Investments, which consist 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 were $.3 million at December 31, 1995. There were no non-income
producing investments at December 31, 1996 and 1994.
Partnership and joint venture interests in which the Company does not have
control and a majority economic interest are reported on the equity basis of
accounting. Non real estate related interests of $4.5 million and $4.1
million are included in other long term investments, at December 31, 1996
and 1995, respectively. The Company's share of net income from such entities
was $1.4 million, $.3 million, and $1.9 million for the years ended December
31, 1996, 1995, and 1994, respectively, and is reported in net investment
income.
Realized investment gains and losses are reported based on specific
identification of the investments sold.
Short-term investments are fixed maturities that mature within one year, and
are reported at estimated fair value.
D. Revenue Recognition and Related Expenses
Universal life contracts are long duration life insurance contracts that
involve significant mortality and morbidity risk with both fixed and
guaranteed terms. Investment contracts are long duration contracts that do
not subject the insurance enterprise to risks arising from policyholder
mortality or morbidity. Amounts received as payments for these contracts are
reported as deposits to policyholders' account balances. Revenues from these
contracts consist primarily of amounts assessed during the period against
policyholders' account balances for mortality charges, policy administration
fees and surrender charges. Policy benefits and claims that are charged to
expenses include benefit claims incurred in the period in excess of related
policyholders' account balances.
Premiums, policy benefits and claims from traditional life and annuity
policies, generally are recognized in operations when due.
E. Deferred Policy Acquisition Costs
Acquisition costs consist of commissions and other costs which vary with and
are primarily related to the production or acquisition of new business.
Acquisition costs related to universal life products and investment-type
contracts are deferred and amortized in proportion to total estimated gross
profits arising principally from investment results, mortality, expense
margins and surrender charges based on historical and anticipated future
experience. Amortization of deferred policy acquisition costs was $9.3
million, $54.4 million, and $76.0 million for the years ended December 31,
1996, 1995, and 1994, respectively. Deferred policy acquisition costs are
analyzed to determine if they are recoverable from future income, including
investment income. If such costs are determined to be unrecoverable, they
are expensed at the time of determination. The effect on the deferred policy
acquisition asset that would result from realization of unrealized
investment gains (losses) is recognized with an offset to unrealized
investment gains (losses) in consolidated stockholder's equity.
B-6
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
F. Future Policy Benefits and Policyholders' Account Balances
Benefit reserve liabilities for payout annuities such as matured deferred
annuities and supplementary contracts represent the present values of
estimated future benefits payments and related expenses. Present values for
these contracts are computed using interest rates ranging from 6.5% to 11%.
The mortality assumption for these contracts is the 83 IAM tables. Reserves
for supplementary benefits are stated at interest rates that vary from 4% to
6.5% using mortality and morbidity assumptions either from company
experience or various actuarial tables.
When liabilities for future policy benefits plus the present value of
expected future gross deposits are insufficient to provide expected future
policy benefits and expenses, unrecoverable deferred policy acquisition
costs are written off and thereafter, if required, a premium deficiency
reserve is established as a charge to income.
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account values
represent an accumulation of gross deposits plus interest credited less
expense and mortality charges and withdrawals.
Interest crediting rates on life insurance products range from 3.35% to 7%.
G. 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 Guaranteed 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
the Company.
All Separate Account assets are carried at market value. Deposits to all
Separate Accounts are reported as increases in Separate Account liabilities,
which equal the Separate Account policy account fund values. Charges
assessed against Policyholders' account balances for mortality, policy
administration and surrender charges are included in policy charges and fee
income. Mortality and expense risk charges are applied against the
Policyholders' account balance. The Separate Account assets are legally
segregated and are not subject to claims that arise out of any other
business of the Company.
H. Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
B-7
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
2. FIXED MATURITIES
Gross unrealized gains and losses for securities classified as Held to Maturity
and Available for Sale, by major security type, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held to Maturity
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ - $ - $ - $ -
Foreign government bonds - - - -
Corporate securities 405,731 10,947 576 416,102
Mortgage-backed securities - - - -
Other fixed maturities - - - -
- ---------------------------------------------------------------------------------------------------
Total $ 405,731 $ 10,947 $ 576 $ 416,102
- ---------------------------------------------------------------------------------------------------
<CAPTION>
DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available For Sale
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 32,055 $ 30 $ 174 $ 31,911
Foreign government bonds 90,447 857 205 91,099
Corporate securities 2,087,250 30,365 4,206 2,113,409
Mortgage-backed securities 398 - - 398
Other fixed maturities - - - -
- ---------------------------------------------------------------------------------------------------
Total $ 2,210,150 $ 31,252 $ 4,585 $ 2,236,817
- ---------------------------------------------------------------------------------------------------
</TABLE>
B-8
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held to Maturity
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ - $ - $ - $ -
Foreign government bonds - - - -
Corporate securities 437,727 18,629 1,805 454,551
Mortgage-backed securities - - - -
Other fixed maturities - - - -
- ---------------------------------------------------------------------------------------------------
Total $ 437,727 $ 18,629 $ 1,805 $ 454,551
- ---------------------------------------------------------------------------------------------------
<CAPTION>
DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available For Sale
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 324,854 $ 6,830 $ 61 $ 331,623
Foreign government bonds 73,042 3,055 - 76,097
Corporate securities 1,507,248 54,545 2,168 1,559,625
Mortgage-backed securities 169,190 8,717 398 177,509
Other fixed maturities - - - -
- ---------------------------------------------------------------------------------------------------
Total $ 2,074,334 $ 73,147 $ 2,627 $ 2,144,854
- ---------------------------------------------------------------------------------------------------
</TABLE>
B-9
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
The amortized cost and estimated fair value of fixed maturities at December 31,
1996, categorized by contractual maturity, are shown below. Actual maturities
will differ from contractual maturities because borrowers may prepay obligations
with or without call or prepayment penalties.
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
Estimated
Amortized Fair
(000's) Cost Value
- ------------------------------------------------------------------------------
Held to Maturity
Due in one year or less $ 28,653 $ 28,762
Due after one year through five years 156,013 158,183
Due after five years through ten years 194,765 202,766
Due after ten years 26,300 26,391
Mortgage-backed securities -- --
- ------------------------------------------------------------------------------
Total $ 405,731 $ 416,102
- ------------------------------------------------------------------------------
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
Estimated
Amortized Fair
(000's) Cost Value
- ------------------------------------------------------------------------------
Available For Sale
Due in one year or less $ 130,400 $ 131,301
Due after one year through five years 1,561,854 1,578,979
Due after five years through ten years 398,090 404,920
Due after ten years 119,408 121,219
Mortgage-backed securities 398 398
- ------------------------------------------------------------------------------
Total $2,210,150 $2,236,817
- ------------------------------------------------------------------------------
Proceeds from the sale of fixed maturities during 1996, 1995, and 1994 were $3.8
billion, $1.8 billion, and $2.6 billion, respectively. Gross gains of $28.7
million, $28.8 million, and $16.8 million and gross losses of $19.7 million,
$17.5 million, and $49.8 million were realized on those sales during 1996, 1995,
and 1994, respectively.
B-10
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
3. Net Investment Income YEAR ENDED
DECEMBER 31,
1996 1995 1994
-------------------------------------------
(000'S)
<S> <C> <C> <C>
Net investment income consists of:
Gross investment income
Fixed maturities
Held to maturity $ 33,419 $ 33,458 $ 196,909
Available for sale 152,445 160,740 --
Equity securities 44 104 14
Mortgage loans 5,669 7,757 4,041
Investment real estate 613 647 2,146
Policy loans 33,449 29,775 25,692
Short term investments 16,780 15,092 12,676
Other 9,438 3,949 5,075
-------------------------------------------
251,857 251,522 246,553
Investment expenses (4,529) (4,904) (5,421)
===========================================
Net investment income $ 247,328 $ 246,618 $ 241,132
===========================================
4. Investment Gains (Losses)
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
-------------------------------------------
(000'S)
<S> <C> <C> <C>
Realized investment gains (losses)
Fixed maturities - Available for sale $ 9,036 $ 11,359 $ (38,180)
Equity securities 781 2,020 503
Mortgage loans 1,677 (90) (4,581)
Investment real estate 487 (99) 1,184
Other (1,146) 10 --
-------------------------------------------
Realized investment gains (losses) $ 10,835 $ 13,200 $ (41,074)
===========================================
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
-------------------------------------------
(000'S)
<S> <C> <C> <C>
Net unrealized investment gains
(losses), beginning of period $ 30,836 $ (1,349) $ --
Net unrealized investment gains (losses)
Fixed maturities - Available for sale (43,853) 131,712 --
Equity securities 1,403 827 (2,108)
-------------------------------------------
(42,450) 132,539 (2,108)
Deferred income tax benefit (provision) 15,398 (47,714) 759
Deferred policy acquisition costs
(net of deferred income taxes) 8,618 (12,878) --
-------------------------------------------
Net change in unrealized
investment gains (losses) (18,434) 71,947 (1,349)
Adoption of SFAS 115 -- (39,762) --
-------------------------------------------
Net unrealized investment gains
(losses), end of period $ 12,402 $ 30,836 (1,349)
===========================================
</TABLE>
B-11
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
5. Fair Value Information
The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies. Considerable judgment is
applied, as necessary, 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.
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.
Equity Securities - Fair value is based on quoted market prices.
Mortgage Loans - The fair value of the mortgage 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.
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.
Policyholders' Account Balances - Fair values for policyholders' account
balances are equal to the policy account values.
Short-term Investments - Fair values for short-term investments are based on
quoted market prices or estimates from independent pricing services.
The following table discloses the carrying amounts and estimated fair values of
the Company's financial instruments at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
-------------- ---------- -------------- ----------
(000'S)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities:
Held to maturity $ 405,731 $ 416,102 $ 437,727 $ 454,551
Available for sale 2,236,817 2,236,817 2,144,854 2,144,854
Mortgage loans 46,915 46,692 64,464 63,635
Policy loans 639,782 623,218 569,273 577,975
Equity securities 3,748 3,748 4,036 4,036
Short-term investments 169,830 169,830 228,016 228,016
Financial Liabilities:
Policyholders'
account balances $ 2,188,862 $ 2,188,862 $ 2,218,330 $ 2,218,330
</TABLE>
B-12
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
6. Income Taxes
The Company is a member of a group of affiliated companies which join in filing
a consolidated federal income tax return in addition to separate company state
and local tax returns. The Internal Revenue Code limits the amount of nonlife
insurance losses that may offset life insurance company taxable income.
Companies operating outside the United States are taxed under applicable foreign
statutes.
Pursuant to the tax allocation arrangement, total federal income tax expense is
determined on a separate company basis. Members with losses record tax benefits
to the extent such losses are recognized in the consolidated federal tax
provision. The Company has a net receivable from Prudential of $7.2 million and
$6.4 million as of December 31, 1996 and 1995, respectively.
Deferred income taxes are generally recognized when assets and liabilities have
different values for financial statement and tax reporting purposes.
The components of income taxes are as follows:
YEAR ENDED
DECEMBER 31,
1996 1995 1994
-------------------------------------
(000'S)
Current income tax provision:
Federal income tax $ 59,489 $ 65,131 $ 59,641
State and local income tax 703 1,876 3,036
Foreign income tax 4 7 7
-------------------------------------
Total current income tax 60,196 67,014 62,684
Deferred income tax provision
(benefit):
Federal income tax 18,413 12,196 (14,246)
State and local income tax 526 348 (407)
-------------------------------------
Total deferred income tax 18,939 12,544 (14,653)
-------------------------------------
Total income tax provision $ 79,135 $ 79,558 $ 48,031
=====================================
The income tax provision is different from the amount computed using the
expected federal income tax rate of 35% for the following reasons:
YEAR ENDED
DECEMBER 31,
1996 1995 1994
-------------------------------------
(000'S)
Expected federal income tax expense $ 79,926 $ 81,271 $ 45,474
State income taxes 1,229 2,224 2,629
Other (2,020) (3,937) (72)
=====================================
Total income tax provision $ 79,135 $ 79,558 $ 48,031
=====================================
B-13
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
The components of net deferred income taxes payable are as follows:
YEAR ENDED
DECEMBER 31,
1996 1995
------------------------------
(000'S)
Deferred Income Tax Assets
Insurance liabilities $ 38,532 $ 40,732
Other -- --
------------------------------
Total deferred income tax assets $ 38,532 $ 40,732
==============================
Deferred Income Tax Liabilities
Deferred acquisition costs $ 173,785 $ 153,526
Net investment gains 12,502 28,157
Other 1,205 97
------------------------------
Total deferred income tax liabilities 187,492 181,780
------------------------------
Deferred federal income tax payable $ 148,960 $ 141,048
==============================
The Internal Revenue Service (the "Service") has completed examinations of the
consolidated federal income tax returns through 1989. The Service is examining
the years 1990 through 1992. Discussions are being held with the Service with
respect to proposed adjustments. However, management believes there are adequate
defenses against, or sufficient reserves to provide for, such adjustments.
B-14
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
7. Stockholder's Equity Reconciliation
The reconciliation of statutory net income to GAAP net income, and statutory
surplus to GAAP equity as of December 31, 1996, 1995, and 1994 are as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------------------------------
(000'S)
<S> <C> <C> <C>
Statutory net income $ 73,847 $ 157,751 $ 52,955
Deferred acquisition costs 48,862 (6,103) (34,124)
Deferred premium 1,295 (743) 1,122
Insurance liabilities 10,211 22,890 31,780
Income taxes (7,780) (27,669) 42,755
Interest maintenance reserve 365 5,480 (24,704)
Separate accounts and other 22,422 1,038 12,111
---------------------------------------------------------
GAAP net income $ 149,222 $ 152,644 $ 81,895
=========================================================
Statutory surplus $ 901,645 $ 829,022 $ 676,087
Investment valuation 26,678 70,776 -
Deferred acquisition costs 633,159 566,976 598,294
Deferred premium (11,859) (13,154) (12,412)
Insurance liabilities (124,781) (153,995) (71,076)
Income taxes (124,823) (128,070) (82,167)
Asset valuation reserve and interest
maintenance reserve 68,733 64,551 23,690
Other 30,229 32,087 (49,052)
---------------------------------------------------------
GAAP stockholder's equity $ 1,398,981 $ 1,268,193 $ 1,083,364
=========================================================
</TABLE>
The New York State Insurance Department ("Department") recognizes only
statutory accounting for determining and reporting the financial condition
and results of operations of an insurance company, for determining its
solvency under the New York Insurance Law, and for determining whether its
financial condition warrants the payment of a dividend to its stockholders.
No consideration is given by the Department to financial statements prepared
in accordance with generally accepted accounting principles in making such
determinations.
B-15
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
DECEMBER 31, 1996, 1995, AND 1994
8. Related Party Transactions
A. Service Agreements
The Company, Prudential, and Pruco Securities Corporation, an indirect
wholly-owned subsidiary of 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 $102 million, $98 million and $78 million for
the years ended December 31, 1996, 1995, and 1994, respectively.
B. Pension Plans
The Company is a wholly-owned subsidiary of Prudential which sponsors
several defined benefit pension plans that cover substantially all of its
employees. Benefits are generally based on career average earnings and
credited length of service. 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 1996, 1995, or 1994 because the plan was subject to the full
funding limitation under the Internal Revenue Code.
C. Postretirement Life and Health Benefits
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. 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, 1996, 1995, and 1994.
D. Reinsurance
The Company currently has three reinsurance agreements in place with
Prudential (the reinsurer). Specifically: reinsurance 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 contract, and two yearly renewable term agreements 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. The Company is not
relieved of its primary obligation to the policyholder as a result of these
reinsurance transactions. These agreements had no material effect on net
income for the years ended December 31, 1996, 1995, and 1994.
9. Contingencies
Several actions have been brought against the Company on behalf of those
persons who purchased life insurance policies based on complaints about
sales practices engaged in by Prudential, the Company and agents appointed
by Prudential and the Company. Prudential has agreed to indemnify the
Company for any and all losses resulting from such litigation.
10. 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 twelve 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, 1996, the Company would be permitted a maximum of $48 million in
dividend distribution in 1997, all of which could be paid in cash, without
approval from The State of Arizona Department of Insurance.
B-16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Pruco Life Insurance Company
In our opinion, the accompanying consolidated statement of financial position
and the related consolidated statements of operations, of stockholder's equity
and of cash flows present fairly, in all material respects, the financial
position of Pruco Life Insurance Company and its subsidiaries at December 31,
1996, and the results of their operations and their cash flows for the year in
conformity with generally accepted accounting principles. 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 audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
- --------------------------
PRICE WATERHOUSE LLP
New York, New York
March 21, 1997
B-17
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Board of Directors of
Pruco Life Insurance Company
Newark, New Jersey
We have audited the accompanying consolidated statement of financial position of
Pruco Life Insurance Company and subsidiaries as of December 31, 1995, and the
related consolidated statements of operations, stockholder's equity and cash
flows for the years ended December 31, 1995 and 1994. 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, the accompanying financial statements presents fairly, in all
material respects, the consolidated financial position of Pruco Life Insurance
Company and subsidiaries as of December 31, 1995, and the consolidated results
of operations and cash flows for the years ended December 31, 1995 and 1994 in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company has
retroactively adopted all applicable generally accepted accounting principles
relating to stock life insurance subsidiaries of mutual life insurance companies
and has changed, as of January 1, 1995, the method of accounting for fixed
maturity investments.
/s/ DELOITTE & TOUCHE LLP
Parsippany, N.J.
December 19, 1996
B-18
<PAGE>
[INSERT LOGO]
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
[INSERT LOGO]
<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.
REPRESENTATION WITH RESPECT TO CHARGES
Pruco Life Insurance Company represents that the fees and charges deducted under
the variable life insurance contracts registered by this registration statement,
in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by Pruco Life Insurance
Company.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Prudential Directors' and Officers' Liability and Corporation Reimbursement
Insurance program, purchased by 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 Prudential, any of
its subsidiaries, or certain investment companies affiliated with 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, taxed 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, dishonest or fraudulent acts of omissions or the willful violation
of any law by a director or officer, (2) claims based on or attributable to
directors of 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 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 or organization or Pruco Life, can be found in Section 10-005 of the
Arizona Statutes Annotated. The text of Prudential's by-laws 26, which relates
to indemnification of officers and directors, 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 director, 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 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 ______ pages.
The undertaking to file reports.
The representation with respect to charges.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
1. Price Waterhouse, LLP, independent accountants.
2. Deloitte & Touche LLP, independent auditors.
3. Clifford E. Kirsch, Esq.
4. Paul Haley, FSA, MAAA, 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 4)
(2) Not Applicable
(3) Distributing Contracts:
(a) Distributing Agreement between Pruco Securities
Corporation and Pruco Life Insurance Company. (Note 4)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to
the Sale of the Contracts.
(Note 4)
(c) Revised Schedule of Sales Commissions. (Note 9)
(4) Not Applicable
(5) (a) Flexible Premium Variable Life Insurance Contract.
(Note 4)
(b) Contract jacket for use in Georgia and Maryland. (Note 7)
(c) Contract data page for use in South Dakota. (Note 5)
(d) Contract data page for use in Minnesota. (Note 5)
(e) Contract page 5 for use in Colorado and North Dakota.
(Note 5)
(f) Contract page 6 for use in Colorado and North Dakota.
(Note 5)
(g) Contract page 7 for use in Missouri. (Note 7)
(h) Contract page 8 for use in Missouri. (Note 7)
(i) Contract page 7 for use in South Carolina. (Note 5)
(j) Contract page 7 for use in Oklahoma. (Note 5)
(k) Unisex Endorsement for use in Montana. (Note 6)
(l) Contract jacket for use in Pennsylvania. (Note 7)
(m) Contract jacket for use in Minnesota. (Note 7)
(n) Contract jacket for use in Texas. (Note 7)
(o) Contract jacket for use in Virginia. (Note 7)
(p) Contract page 5 for use in Massachusetts. (Note 7)
(q) Contract page 5 for use in Texas. (Note 7)
(r) Contract page 5 for use in Pennsylvania. (Note 7)
(s) Contract page 6 for use in Pennsylvania. (Note 7)
(t) Contract page 7 for use in Kentucky. (Note 7)
(u) Contract page 7 for use in Texas. (Note 7)
(v) Contract page 7 for use in Connecticut. (Note 7)
(w) Contract page 7 for use in Pennsylvania. (Note 7)
(x) Contract page 9 for use in Connecticut and Kentucky.
(Note 7)
(y) Contract page 9 for use in Texas. (Note 7)
(z) Contract page 11 for use in Massachusetts. (Note 7)
(aa) Contract page 11 for use in Kentucky. (Note 7)
(bb) Contract page 11 for use in Pennsylvania. (Note 7)
II-2
<PAGE>
(cc) Contract page 13 for use in Kentucky. (Note 7)
(dd) Contract page 19 for use in Pennsylvania. (Note 8)
(ee) Contract jacket for use in Massachusetts. (Note 8)
(ff) Contract Endorsement for use in California. (Note 9)
(gg) Contract page 8 for use in Texas. (Note 9)
(hh) Contract page 9 for use in Connecticut. (Note 9)
(ii) Contract page 10 for use in Texas. (Note 9)
(ji) Contract page 11 for use in Texas. (Note 9)
(kk) Contract page 13 for use in Texas. (Note 9)
(ll) Contract page 19 for use in Texas. (Note 9)
(mm) Contract page 12 for use in Texas. (Note 10)
(nn) Contract page 17 for use in Texas (Note 10)
(6)
(a) Articles of Incorporation of Pruco Life Insurance
Company, as amended October 19, 1993. (Note 2)
(b) By-laws of Pruco Life Insurance Company, as amended
June 18, 1996. (Note 3)
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10)
(a) Application Form for Flexible Premium Variable Life
Insurance Contract. (Note 4)
(b) Supplement to the Application for Flexible Premium
Variable Life Insurance Contract. (Note 4)
(c) Supplement to the Application for Flexible Premium
Variable Life Insurance Contract. (Note 10)
(11) Revised Form of Notice of Withdrawal Right. (Note 6)
(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 5)
(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, MAAA, CLU, ChFC, as to
actuarial matters pertaining to the securities being registered.
(Note 1)
7. Powers of Attorney:
(a) Esther H. Milnes, I. Edward Price, Ira J. Kleinman, William
F. Yelverton, William M. Bethke, Mendel A. Melzer (Note 12)
(b) Linda S. Dougherty, (Note 13)
(c) Kiyofumi Sakaguchi (Note 14)
8. Pruco Life Insurance Company's representations regarding mortality and
expense risks and sales load. (Note 5)
27. Financial Data Schedule (Note 1)
II-3
<PAGE>
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Form S-6, Registration No. 333-07451,
filed July 2, 1996, on behalf of the Pruco Life Variable Appreciable
Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 3 to Form
S-1, Registration No. 33-86780, filed April 9, 1997 on behalf of the
Pruco Life Variable Contract Real Property Account.
(Note 4) Incorporated by reference to Registrant's Form S-6, filed July 29,
1985.
(Note 5) Incorporated by reference to Pre-Effective Amendment No. 1 to this
Registration Statement, filed December 13, 1985.
(Note 6) Incorporated by reference to Pre-Effective Amendment No. 2 to this
Registration Statement, filed February 7, 1986.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 1 to this
Registration Statement, filed March 17, 1986.
(Note 8) Incorporated by reference to Post-Effective Amendment No.2 to this
Registration Statement, filed April 29, 1986.
(Note 9) Incorporated by reference to Post-Effective Amendment No.4 to this
Registration Statement, filed October 23, 1986.
(Note 10) Incorporated by reference to Post-Effective Amendment No.4 to this
Registration Statement, filed April 27, 1987.
(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 10-K, Registration No. 33-08698,
filed March 31, 1997 on behalf of the Pruco Life Variable Contract
Real Property Account.
(Note 13) Incorporated by reference to Post-Effective Amendment No. 3 to Form
S-1, Registration No. 33-86780, filed April 9, 1997 on behalf of the
Pruco Life Variable Contract Real Property Account.
(Note 14) Incorporated by reference to Post-Effective Amendment No. 8 to Form
S-6, Registration No. 33-49994, filed April 25, 1997 on behalf of the
Pruco Life PRUvider Variable Appreciable Account.
(Note 15) 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 1993, the Registrant
certified 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 hereto affixed
and attested, all in the City of Newark and the State of New Jersey, on this
_________ day of _________________, 1997.
(SEAL) PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
(Registrant)
BY: PRUCO LIFE INSURANCE COMPANY
(Depositor)
Attest: /s/ CLIFFORD E. KIRSCH By: /s/ ESTHER H. MILNES
---------------------------- ----------------------------
CLIFFORD E. KIRSCH ESTHER H. MILNES
CHIEF LEGAL OFFICER AND PRESIDENT
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 21 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this _______ day of
________________, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
<S> <C> <C>
/s/ * President and Director
- ------------------------------------------
(ESTHER MILNES)
/s/ * Chief Accounting Officer and Comptroller
- ------------------------------------------
(LINDA S. DOUGHERTY)
/s/ * Director
- ------------------------------------------
(WILLIAM M. BETHKE)
/s/ * Director
- ------------------------------------------
(IRA J. KLEINMAN)
/s/ * Director By: /s/ CLIFFORD E. KIRSCH
- ------------------------------------------ -------------------------------
(MENDEL A. MELTZER) CLIFFORD E. KIRSCH
(ATTORNEY-IN-FACT)
* Director
- ------------------------------------------
(I. EDWARD PRICE)
/s/ * Director
- ------------------------------------------
(WILLIAM F. YELVERTON)
/s/ * Director
- ------------------------------------------
(KIYOFUMI SAKAGUCHI)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C> <C>
Consent of Deloitte & Touche LLP, independent auditors. Page II - 7
Consent of Price Waterhouse, LLP, independent accountants. Page II - 8
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the Page II - 9
legality of the securities being registered.
6. Opinion and Consent of Paul Haley, FSA, MAAA, CLU, ChFC, as Page II - 10
to actuarial matters pertaining to the securities being registered
27. Financial Data Schedule Page II - 11
</TABLE>
II-6
We consent to the use in this Post-Effective Amendment No. 21 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 December 19, 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
Parsippany, New Jersey
April 25, 1997
II-7
INDEPENDENT ACCOUNTANT'S CONSENT
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 21 to the registration statement on Form S-6 (the
"Registration Statement") of our report dated March 31, 1997, relating to the
financial statements of Pruco Life Single Premium Variable Life Account, which
appears in such Prospectus.
We also consent to the use in the Prospectus constituting part of this
Registration Statement of our report dated March 21, 1997, relating to the
consolidated financial statements of Pruco Life Insurance Company and
Subsidiaries, which appears in such Prospectus.
We also consent to the reference to us under the heading "Experts" in the
Prospectus.
PRICE WATERHOUSE LLP
1177 Avenues of the Americas
New York, New York 10036
April 24, 1997
II-8
The PRUDENTIAL
CLIFFORD E. KIRSCH
Chief Legal Officer
PRUCO LIFE INSURANCE COMPANY
213 Washington Street
Newark, NJ 07102-2992
201 802-7333 FAX 201 802-8357
April 25, 1997
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.
Very truly yours,
/s/ CLIFFORD E. KIRSCH, ESQ.
- ------------------------------
Clifford E. Kirsch, Esq.
II-9
PRUDENTIAL
PAUL A. HALEY, FSA, MAAA, CLU, ChFC
Vice President & Asst. Actuary
PRUDENTIAL INVESTMENTS
Gateway Center Three, 100 Mulberry Street
Newark, NJ 07102-3777
Tel 201 367-7634 Fax 201 367-8068
EXHIBIT 6
March 27, 1997
Pruco Life Insurance Company
213 Washington Street
Newark, NJ 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 the
Post-Effective Amendment No. 21 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 be 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,
/s/ PAUL HALEY
- -----------------------------------
Paul A. Haley, FSA, MAAA, CLU, ChFC
Vice President & Assistant Actuary
The Prudential Insurance Company of America
II-10
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Exhibit 27
FINANCIAL DATA SCHEDULE
Article 6 of Regulation S-X
Pruco Life Single Premium Variable Life Account
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 246,049
<INVESTMENTS-AT-VALUE> 285,416
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 285,416
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 17,346
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 285,416
<DIVIDEND-INCOME> 10,179
<INTEREST-INCOME> 0
<OTHER-INCOME> 17,866
<EXPENSES-NET> 3,049
<NET-INVESTMENT-INCOME> 7,130
<REALIZED-GAINS-CURRENT> 5,633
<APPREC-INCREASE-CURRENT> 2,047
<NET-CHANGE-FROM-OPS> 32,676
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,732
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
