AS FILED WITH THE SECURITIES EXCHANGE COMMISSION ON APRIL 27, 1998.
REGISTRATION NO. 2-99260
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 22
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
(888) PRU-2888
(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)
Copies to:
CHRISTOPHER E. PALMER LEE D. AUGSBURGER
SHEA & GARDNER ASSISTANT GENERAL COUNSEL
1800 MASSACHUSETTS AVENUE, N.W. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
WASHINGTON, D.C. 20036 751 BROAD STREET
NEWARK, NEW JERSEY 07102-3777
Flexible Premium Variable Life Insurance Contracts.
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, 1998 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>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
(AS REQUIRED BY FORM N-8B-2)
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 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>
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
[GRAPHIC OMITTED]PROSPECTUS
MAY 1, 1998
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") is sued by Pruco Life Insurance Company
("Pruco Life"), a stock life insurance company that is a wholly-owned subsidi
ary 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. 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 PRUDENTIAL ANNUITY SERVICE CENTER
213 Washington Street P.O. Box 14205
Newark, New Jersey 07102-2992 New Brunswick, New Jersey 08906-4205
Telephone: (888) PRU-2888 Telephone: (888) PRU-2888
*DISCOVERY is a registered mark of Prudential.
SPVL-1 Ed 5-98
Catalog No. 6401654
<PAGE>
<TABLE>
<CAPTION>
PROSPECTUS CONTENTS
PAGE
----
<S> <C>
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............................................................................................ 13
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS................................ 14
WHEN PROCEEDS ARE PAID.......................................................................................... 15
REPORTS TO CONTRACT OWNERS...................................................................................... 15
TAX TREATMENT OF CONTRACT BENEFITS.............................................................................. 15
THE FIXED-RATE OPTION........................................................................................... 16
VOTING RIGHTS................................................................................................... 17
SALE OF THE CONTRACT AND SALES COMMISSIONS...................................................................... 17
SUBSTITUTION OF SERIES FUND SHARES.............................................................................. 18
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS ............................................ 18
OTHER GENERAL CONTRACT PROVISIONS............................................................................... 18
STATE REGULATION................................................................................................ 18
ADDITIONAL INFORMATION.......................................................................................... 19
EXPERTS......................................................................................................... 19
LITIGATION...................................................................................................... 19
YEAR 2000 COMPLIANCE............................................................................................ 19
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.
CONTRACT FUND -- The total value attributable to a specific Contract,
representing amounts in all the subaccounts, amounts allocated to the fixed-rate
op tion, 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 con fused with The Prudential Series Fund, Inc. 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 is sued by Pruco Life that is
similar to Discovery Life Plus except that the owner may not invest the Con
tract 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 pe riodically
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 In
vestment Company Act of 1940.
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY AC COUNT (THE "REAL PROPERTY
ACCOUNT") -- A separate account of Pruco Life which, through a partnership,
invests primarily in income-producing real property.
SUBACCOUNT -- A division of the Account, the assets of which are invested in
shares of the corresponding portfolio of the Series Fund.
TARGET LOAN AMOUNT -- The amount, equal to 10% of the initial premium for each
completed Contract year, that may be borrowed as a first loan in any year at the
most favorable net cost to the Contract owner.
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND") -- A mutual fund with
separate portfolios, one or more of which may be chosen as an underlying
investment for the Contract.
VALUATION PERIOD -- The period of time from one determination of the value of
the amount invested in a subaccount to the next. Such determinations are made
when the net asset values of the portfolios of the Series Fund are calculated,
which is generally at 4:15 p.m. New York City time on each day during which the
New York Stock Exchange is open.
VARIABLE INVESTMENT OPTIONS -- The subaccounts and the Real Property Account.
1
<PAGE>
BRIEF DESCRIPTION OF THE CONTRACT
The Discovery Life Plus Contract (the "Contract") provides a way to invest in
one or more securities portfolios with different investment objectives, while at
the same time providing lifetime insurance protection. The Discovery Life Plus
Contract is a variable whole life insurance contract. It is called a "variable"
contract because the value of the Contract depends upon the investment results
of the investment option[s] selected. Under current law, no tax is payable upon
any increase in the value of the Contract until amounts are distributed under
the Contract. The owner may surrender the Contract in full and in that way
withdraw the full cash surrender value of the Contract. Neither partial
surrenders nor Contract splits are permitted. The Contract owner may, however,
borrow against the value of the Contract. See Loans, page 8.
Because the Contract is a Modified Endowment Contract under federal tax law,
loans and other distributions made during the insured's lifetime are includible
in gross income on an income-first basis. A 10% penalty tax may be imposed on
income distributed before the insured attains age 59 1/2. See TAX TREATMENT OF
CONTRACT BENEFITS, page 15.
The Contract is purchased by making an initial premium payment. Generally, the
minimum initial payment is $10,000. For insureds aged 76 through 85, the minimum
initial payment is $50,000. Pruco Life Insurance Company ("Pruco Life") deducts
the amount needed to pay state and/or local premium taxes attributable to the
Contract and allocates the remainder to the variable investment option[s]
selected by the owner and/or to the fixed-rate option. The assets of each
subaccount are invested in a corresponding portfolio of The Prudential Series
Fund, Inc. (the "Series Fund"), a series mutual fund for which The Prudential
Insurance Company of America ("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 mar ket funds; the DIVERSIFIED
BOND PORTFOLIO is invested primarily in high quality medium-term corporate and
govern ment debt securities; the GOVERNMENT INCOME PORTFOLIO is invested
primarily in U.S. Government securities includ ing 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 PORTFO LIOS 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, inter est 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 in struments, 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 Stan dard &
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 securi ties 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 issu ers; 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.
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.
2
<PAGE>
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 de ducted
from the assets of each of the variable investment options for
administrative ex penses.
o A daily charge equivalent to an annual rate of up to 0.9% is de ducted 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. How ever, 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 de creases 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 sur render, 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 Insurance Company 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 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. Prudential is
currently considering reorganizing itself into a stock company. This form of
reorganization, known as demutualization, is a complex process that may take two
or more years to complete. No plan of demutualization has been adopted yet by
Prudential's Board of Directors. Adoption of a plan of demutualization would
occur only after enactment of appropriate legislation in New Jersey and would
have to be approved by Prudential policyholders and appropriate state insurance
regulators. Throughout the process, there will be a continuing evaluation by the
Board of Directors and management of Prudential as to the desirability of
demutualization. The Board of Directors, in its discretion, may choose not to
demutualize or to delay demutualization for a time.
Should Prudential convert to a stock company, the allocation of stock, cash or
other benefits to policyholders and Contract owners would be made in accordance
with procedures set forth in the plan of demutualization. In recent
demutualizations, policyholders and contract owners of the converting mutual
insurer have been eligible to receive consideration while policyholders and
contract owners of the insurer's stock subsidiaries have not. It has not yet
been determined whether any exceptions to that general approach will be made
with respect to policyholders and Contract owners of Prudential's subsidiaries,
including Pruco Life.
As of December 31, 1997, 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
5
<PAGE>
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.
Prudential is the investment advisor for the assets of each of the portfolios of
the Series Fund. Prudential's principal business address is 751 Broad Street,
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 10.
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
value of 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. Automatic monthly transfers must be at least 3% of the amount
initially allocated to the Dollar Cost Averaging account (that is, if $10,000 is
initially allocated the minimum monthly transfer is $300), 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 18. 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 Contract 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.
The Contract was not designed for professional market timing organizations or
other organizations or individuals using programmed, large or frequent
transfers. A pattern of exchanges that coincides with a "market timing" strategy
may be disruptive to the Account and the Series Fund and will be discouraged. If
such a pattern were to be found, Pruco Life may be required to modify the
transfer procedures, including but not limited to, not accepting transfer
requests of an agent acting under a power of attorney on behalf of more than one
owner.
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 the
Prudential Annuity Service Center (previously known as the Pruco Life Home
Office). The cash surrender value of the surrendered Contract will be determined
as of the end of the valuation period during which such notice is received in
the Annuity Service Center. 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 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
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<PAGE>
Contract owner to borrow up to 100% of the portion of the Contract fund
attributable to the fixed-rate option (or any portion of the Contract fund
attributable to a prior loan supported by the fixed-rate option), reduced by any
charges due upon surrender. Loans will be treated as distributions for tax
purposes. See TAX TREATMENT OF CONTRACT BENEFITS, page 15.
When a loan is taken, the amounts allocated to the subaccount[s], the fixed-rate
option or the Real Property Account will be reduced by the amount of any loan.
The reduction will generally be made in the same proportions as the value in
each subaccount, the fixed-rate option, and the Real Property Account bears to
the total value of the Contract. As explained below, however, the principal
amount of the loan continues to be part of the Contract owner's total Contract
fund.
Pruco Life will charge interest at the rate of 6% per year on any outstanding
loan and, if the interest is not paid on the Contract anniversary, the amount of
the interest will be added to the loan. Although the amount of the loan will be
withdrawn from the variable investment options and the fixed-rate option, Pruco
Life will nevertheless credit the amount withdrawn with interest daily at an
effective annual rate of either 5.5% or 4%. The loan plus the interest credited
thereon to the Contract owner remain part of the Contract fund. Determination of
the applicable interest rate credited to the Contract owner on the loan amount
is made as follows. The loan amount is divided into two parts, the "target loan
amount" and the remainder. The target loan amount for any Contract year is 10%
of the initial premium for each Contract year. Thus in the first year it is 10%
of the premium payment, in the second year 20% of the premium payment, and so
on. Any borrowed amount that is part of the target loan amount is credited with
interest daily at an effective annual rate of 5.5%. Amounts borrowed in excess
of the target loan amount, and second loans in any year, are credited daily with
interest at an effective annual rate of 4%. Thus the net cost of the loan to the
Contract owner is about 0.5% per year on the target loan amount and 2% per year
on amounts in excess of the target loan amount and on second loans in any year;
however, since the amount borrowed is not invested in the variable investment
option[s] the cash surrender value does not, to that extent, participate in
either favorable or unfavorable investment performance. Upon each Contract
anniversary any outstanding loan up to the new target loan amount will be
credited interest at the 5.5% rate even if some of that loan had been credited
interest at 4% in the prior year.
Repayment of a loan does not restore the Contract fund or cash surrender value
to what it would have been had no loan been taken, since the loaned amount did
not reflect investment experience during the period the loan was outstanding.
This may also have an effect on the death benefit.
In addition, it should be recognized that a Contract loan will increase the
difference between the gross investment return in the underlying portfolio[s] of
the Series Fund and the net return in the selected subaccount[s]. This is
because the cost of insurance charge (see item 4 under CHARGES, below) is not
reduced by the making of a Contract loan while the amount in the subaccount[s]
from which such charges are deducted is reduced by the amount of the loan.
CHARGES
1. DEDUCTION FROM PREMIUM PAYMENTS. Upon purchase of this Contract, a premium
tax is generally payable. Pruco Life will deduct the amount of premium-based
taxes applicable to the particular Contract from the initial premium payment.
These taxes vary from state to state and also vary in some states by
municipalities and counties. The most common premium tax rate is 2% of the
premium. The tax rates in those jurisdictions that impose a tax generally range
from 0.75% to 5% (but in some instances may exceed 5%). The amount remaining
after the deduction of premium taxes will be allocated to the investment
option[s] as the owner directs. However, if (a) the sum of the initial premiums
under the Contract and all other DISCOVERY Life Plus and DISCOVERY Life
Contracts issued on the same insured equal $50,000 or more, or (b) Contracts are
purchased on all children of a parent or all grandchildren of a grandparent,
each Contract has an initial premium of $25,000 or more and the total initial
premiums add up to $50,000 or more, Pruco Life will deduct for initial and
additional premium taxes only the portion of the applicable state premium taxes
which is in excess of 4% of the premium, and any applicable local premium taxes.
If total premiums under the Contract and all other DISCOVERY Life Plus and
DISCOVERY Life Contracts issued on the same insured equal or exceed $50,000, any
premium taxes previously deducted will be used to increase the Contract fund on
the most recent Contract. Thus, in many cases, if a Contract is purchased with
an initial premium of $50,000 or more, there will be no deduction from the
payment and the entire amount will be invested as the owner directs. During
1997, 1996, and 1995, Pruco Life received a total of approximately $-0-, $1,442,
and $-0-, 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
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<PAGE>
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 1997, 1996, and
1995, Pruco Life received a total of approximately $33,566, $177,363, and
$64,204, 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 1997, 1996, and
1995, Pruco Life received a total of approximately $1,033,988, $974,407, and
$951,203, 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 there was a
substantial market drop) in order to bring about an increase in the insurance
charge.
5. CHARGES FOR ASSUMING MORTALITY AND EXPENSE RISKS. Pruco Life makes a charge
for assuming the risk that its estimates of longevity and of the expenses it
expects to incur, over the lengthy periods that this Contract may be in
effect--estimates that are the basis for the level of the other charges it makes
under the Contracts--will turn out to be incorrect. The mortality and expense
risk charge will be made by deducting daily, from the assets of each of the
subaccounts and/or the Real Property Account, a percentage of those assets
equivalent to an effective annual rate of up to 0.9% (.00245475%, daily). During
1997, 1996, and 1995, Pruco Life received a total of approximately $2,651,601,
$2,498,810, and $2,439,304, 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
10
<PAGE>
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 1997 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% 0.04% 0.44%
ZERO COUPON BOND PORTFOLIO2000 0.40% 0%* 0.40%*
ZERO COUPON BOND PORTFOLIO 2005 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% 0.02% 0.57%
STOCK INDEX PORTFOLIO 0.35% 0.02% 0.37%
EQUITY INCOME PORTFOLIO 0.40% 0.01% 0.41%
EQUITY PORTFOLIO 0.45% 0%* 0.40%*
PRUDENTIAL JENNISON PORTFOLIO 0.60% 0.04% 0.64%
SMALL CAPITALIZATION STOCK PORTFOLIO 0.40% 0.10% 0.50%
GLOBAL PORTFOLIO 0.75% 0.10% 0.85%
NATURAL RESOURCES PORTFOLIO 0.45% 0.09% 0.54%
- --------------------------------------------------------------------------------------------------------------
</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., in which the Account previously invested. For the Money Market,
Diversified Bond, Zero Coupon Bond Portfolio 2000, Zero Coupon Bond Portfolio
2005, Conservative Balanced, Flexible Managed, 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 0.43% for the Money Market Portfolio, 0.43% for the Diversified
Bond Portfolio, 0.66% for the Zero Coupon Bond Portfolio 2000, 0.74% for the
Zero Coupon Bond Port-folio 2005, 0.56% for the Conservative Balanced Portfolio,
0.62% for the Flexible Managed Portfolio, and 0.46% for the Equity Portfolio in
1997. 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
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.
11
<PAGE>
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%.
----------------------------------------------------------------------------
AGE OF FACE AMOUNT FACE AMOUNT
INSURED FOR $10,000 FOR $50,000
ON THE PREMIUM PREMIUM
CONTRACT ------------------------------------------------------------
DATE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------
5 $231,211 $298,154 $1,179,644 $1,521,193
15 $151,173 $198,359 $ 771,290 $1,012,032
25 $104,157 $129,799 $ 531,412 $ 662,236
35 $ 66,654 $ 82,561 $ 340,069 $ 421,229
45 $ 42,601 $ 52,980 $ 217,353 $ 270,304
55 $ 28,260 $ 35,032 $ 144,183 $ 178,734
65 $ 19,832 $ 23,624 $ 101,180 $ 120,529
75 $ 14,982 $ 16,631 $ 76,439 $ 84,850
-----------------------------------------------------------------------------
In some states the figures in the above table for males will apply to both males
and females. The table does not apply to certain Contracts issued to employers
and employee organizations based on unisex rates. See LEGAL CONSIDERATIONS
RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS, page 18.
2. INCREASE IN DEATH BENEFIT DUE TO FAVORABLE INVESTMENT EXPERIENCE. It is
likely that the amount of insurance will not change for several years after the
Contract date. Then, if investment experience is sufficiently favorable (by
which is generally meant an average annual net return of greater than 6%), the
death benefit may increase. The Contract provides that the death benefit will
never be less than the face amount or a stated multiple (which changes every
year with the attained age of the insured) of the Contract fund. 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.
--------------------------------------------------------
DEATH BENEFIT IS NO LESS THAN
THE CONTRACT FUND TIMES THE
FOLLOWING MULTIPLE (ASSUMES NO LOAN)
AGE OF ---------------------------------------------
INSURED MALE FEMALE
--------------------------------------------------------
5 4.80 7.50
15 4.80 7.50
25 4.56 6.11
35 3.76 4.52
45 2.27 2.64
55 1.55 1.82
65 1.23 1.40
75 1.09 1.15
85 1.05 1.05
95 1.02 1.02
---------------------------------------------------------
12
<PAGE>
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 18.
LAPSE AND REINSTATEMENT
If the investment results of a Contract's variable investment option[s] have
been so unfavorable that the net cash surrender value on any Monthly date has
decreased to zero or less, the Contract will go into default.
Should this happen, Pruco Life will send the Contract owner a notice of default
setting forth the payment necessary to keep the Contract in force. This payment
must be received at the Pruco Life Home Office within the 61 day grace period
after the notice of default is mailed or the Contract will lapse. A Contract
that lapses with an outstanding Contract loan may have tax consequences. See TAX
TREATMENT OF CONTRACT BENEFITS on page 15.
A Contract that has lapsed may be reinstated within 3 years after the date of
default unless the Contract has been surrendered for its cash surrender value.
To reinstate a lapsed Contract, Pruco Life requires renewed evidence of
insurability, and submission of certain payments due under the Contract.
A Contract that has lapsed has no value and provides no benefits.
ADDITIONAL PREMIUM PAYMENTS
After the Contract has been in force for several years, the Contract owner may
be allowed the option of paying additional premium payments in order to increase
his or her Contract fund. Such premium payments are allowed when they will not
cause the Contract to fail to qualify as life insurance for tax purposes and
will not then increase the amount of insurance. Upon request, Pruco Life will
tell the Contract owner whether an additional premium payment can be made and
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. 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
13
<PAGE>
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 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.
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 0.47% (taking into account the offsets described under EXPENSES
INCURRED BY THE PRUDENTIAL SERIES FUND, INC. page11), 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 0.47% 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 -1.72%, 2.28%, 6.28%, and 10.28%.
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.
14
<PAGE>
ILLUSTRATIONS
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ---------- ----------------- -------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307
15 $ 36,019 $133,307 $133,307 $133,307 $ 150,028
20 $ 43,822 $133,307 $133,307 $133,307 $ 196,879
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 270,741
30 $ 64,868 $ 0 $133,307 $133,307 $ 385,391
35 $ 78,922 $ 0 $ 0(2) $155,351 $ 566,137
40 $ 96,020 $ 0 $ 0 $193,877 $ 849,885
45 $116,824 $ 0 $ 0 $248,201 $1,308,770
<CAPTION>
CASH SURRENDER VALUE
-----------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
ANNUAL INVESTMENT RETURN OF
END OF -----------------------------------------------------------
POLICY 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ---------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
1 $17,424 $18,134 $ 18,906 $ 19,686
2 $17,209 $18,639 $ 20,125 $ 21,752
3 $16,995 $19,155 $ 21,492 $ 24,018
4 $16,781 $19,684 $ 22,949 $ 26,604
5 $16,568 $20,226 $ 24,502 $ 29,473
6 $16,356 $20,779 $ 26,158 $ 32,649
7 $16,644 $22,006 $ 28,785 $ 37,281
8 $16,093 $22,373 $ 30,410 $ 40,868
9 $15,347 $22,746 $ 32,126 $ 44,799
10 $14,571 $23,126 $ 33,940 $ 49,109
15 $10,130 $25,120 $ 44,661 $ 77,734
20 $ 4,184 $26,679 $ 58,770 $ 123,049
25 $ 0(2) $22,345 $ 77,336 $ 194,777
30 $ 0 $12,618 $101,767 $ 308,312
35 $ 0 $ 0(2) $133,923 $ 488,048
40 $ 0 $ 0 $176,251 $ 772,622
45 $ 0 $ 0 $231,963 $1,223,149
</TABLE>
- ------------------
(1) ILLUSTRATED VALUES ASSUME 2% STATE AND/OR LOCAL PREMIUM TAXES, NO CONTRACT
LOAN, AND THE DEDUCTION OF THE MONTHLY COST OF INSURANCE CHARGE IN
ACCORDANCE WITH THE STANDARD EXPLAINED IN THE PROSPECTUS. THE CASH
SURRENDER VALUES REFLECT THE CONTINGENT DEFERRED SALES CHARGES APPLICABLE
TO SURRENDERS WITHIN THE FIRST 6 CONTRACT YEARS. THE FACE AMOUNT IS BASED
UPON THE ASSUMPTION THAT AT ISSUANCE THE FIXED-RATE OPTION IS NOT BEING
CREDITED MORE THAN 6%.
(2) BASED ON A GROSS RETURN OF 0%, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY
YEAR 23 UNLESS AN ADDITIONAL PREMIUM PAYMENT WAS MADE. BASED ON A GROSS
RETURN OF 4%, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 34 UNLESS
AN ADDITIONAL PREMIUM PAYMENT WAS MADE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T-1
<PAGE>
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL OF MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ---------- ----------------- -------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307
15 $ 36,019 $133,307 $133,307 $133,307 $ 142,897
20 $ 43,822 $133,307 $133,307 $133,307 $ 187,517
25 $ 53,317 $ 0(2) $133,307 $133,307 $ 257,798
30 $ 64,868 $ 0 $ 0(2) $133,307 $ 366,895
35 $ 78,922 $ 0 $ 0 $133,307 $ 538,805
40 $ 96,020 $ 0 $ 0 $133,307 $ 808,533
45 $ 116,824 $ 0 $ 0 $164,351 $ 1,243,578
<CAPTION>
CASH SURRENDER VALUE
-----------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
ANNUAL INVESTMENT RETURN OF
END OF -----------------------------------------------------------
POLICY 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- ---------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
1 $17,306 $18,016 $ 18,777 $ 19,556
2 $16,953 $18,384 $ 19,872 $ 21,480
3 $16,579 $18,742 $ 21,083 $ 23,610
4 $16,180 $19,087 $ 22,362 $ 26,033
5 $15,753 $19,415 $ 23,708 $ 28,711
6 $15,295 $19,721 $ 25,126 $ 31,671
7 $15,259 $20,621 $ 27,440 $ 36,025
8 $14,562 $20,668 $ 28,759 $ 39,354
9 $13,836 $20,680 $ 30,132 $ 43,007
10 $13,079 $20,653 $ 31,562 $ 47,020
15 $ 8,723 $19,800 $ 39,639 $ 74,040
20 $ 2,839 $17,065 $ 49,414 $ 117,198
25 $ 0(2) $10,852 $ 61,057 $ 185,466
30 $ 0 $ 0(2) $ 75,094 $ 293,516
35 $ 0 $ 0 $ 92,595 $ 464,486
40 $ 0 $ 0 $117,028 $ 735,029
45 $ 0 $ 0 $153,599 $1,162,222
</TABLE>
- ------------------
(1) ILLUSTRATED VALUES ASSUME 2% STATE AND/OR LOCAL PREMIUM TAXES, NO CONTRACT
LOAN, AND THE DEDUCTION OF MAXIMUM MONTHLY COST OF INSURANCE CHARGES. THE
CASH SURRENDER VALUES REFLECT THE CONTINGENT DEFERRED SALES CHARGES
APPLICABLE TO SURRENDERS WITHIN THE FIRST 6 CONTRACT YEARS. THE FACE AMOUNT
IS BASED UPON THE ASSUMPTION THAT AT ISSUANCE THE FIXED-RATE OPTION IS NOT
BEING CREDITED MORE THAN 6%.
(2) BASED ON A GROSS RETURN OF 0% AND THE DEDUCTION OF MAXIMUM COST OF
INSURANCE CHARGES, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 22
UNLESS AN ADDITIONAL PREMIUM PAYMENT WAS MADE. BASED ON A GROSS RETURN OF
4% AND THE DEDUCTION OF MAXIMUM COST OF INSURANCE CHARGES, THE CONTRACT
WOULD GO INTO DEFAULT IN POLICY YEAR 30 UNLESS AN ADDITIONAL PREMIUM
PAYMENT WAS MADE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T-2
<PAGE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- --------- ----------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468
2 $108,160 $357,468 $357,468 $357,468 $ 357,468
3 $112,486 $357,468 $357,468 $357,468 $ 357,468
4 $116,986 $357,468 $357,468 $357,468 $ 357,468
5 $121,665 $357,468 $357,468 $357,468 $ 357,468
6 $126,532 $357,468 $357,468 $357,468 $ 357,468
7 $131,593 $357,468 $357,468 $357,468 $ 357,468
8 $136,857 $357,468 $357,468 $357,468 $ 357,468
9 $142,331 $357,468 $357,468 $357,468 $ 357,468
10 $148,024 $357,468 $357,468 $357,468 $ 360,800
15 $180,094 $357,468 $357,468 $357,468 $ 511,626
20 $219,112 $ 0(2) $357,468 $357,468 $ 734,532
25 $266,584 $ 0 $357,468(2) $434,039 $ 1,093,142
<CAPTION>
CASH SURRENDER VALUE
-----------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
ANNUAL INVESTMENT RETURN OF
END OF -----------------------------------------------------------
POLICY 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- --------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
1 $88,900 $ 92,668 $ 96,644 $100,620
2 $87,802 $ 95,095 $102,678 $111,166
3 $86,708 $ 97,732 $109,652 $122,726
4 $85,618 $100,430 $117,087 $135,734
5 $84,531 $103,192 $125,011 $150,375
6 $83,449 $106,017 $133,457 $166,576
7 $84,920 $112,277 $146,864 $190,210
8 $82,960 $114,150 $155,153 $208,508
9 $78,562 $116,054 $163,910 $228,567
10 $73,329 $117,989 $173,162 $250,555
15 $40,982 $128,164 $227,865 $396,609
20 $ 0(2) $139,215 $299,849 $627,804
25 $ 0 $151,219(2) $394,581 $993,765
</TABLE>
- -----------------
(1) ILLUSTRATED VALUES ASSUME NO DEDUCTION FOR STATE AND/OR LOCAL PREMIUM
TAXES, NO CONTRACT LOAN, AND THE DEDUCTION OF THE MONTHLY COST OF INSURANCE
CHARGE IN ACCORDANCE WITH THE STANDARD EXPLAINED IN THE PROSPECTUS. THE
CASH SURRENDER VALUES REFLECT THE CONTINGENT DEFERRED SALES CHARGES
APPLICABLE TO SURRENDERS WITHIN THE FIRST 6 CONTRACT YEARS. THE FACE AMOUNT
IS BASED UPON THE ASSUMPTION THAT AT ISSUANCE THE FIXED-RATE OPTION IS NOT
BEING CREDITED MORE THAN 6%.
(2) BASED ON A GROSS RETURN OF 0%, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY
YEAR 20 UNLESS AN ADDITIONAL PREMIUM PAYMENT WAS MADE. BASED ON A GROSS
RETURN OF 4%, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 33 UNLESS
AN ADDITIONAL PREMIUM PAYMENT WAS MADE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T-3
<PAGE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
<TABLE>
<CAPTION>
DEATH BENEFIT
------------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ------------------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- --------- ----------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468
2 $108,160 $357,468 $357,468 $357,468 $ 357,468
3 $112,486 $357,468 $357,468 $357,468 $ 357,468
4 $116,986 $357,468 $357,468 $357,468 $ 357,468
5 $121,665 $357,468 $357,468 $357,468 $ 357,468
6 $126,532 $357,468 $357,468 $357,468 $ 357,468
7 $131,593 $357,468 $357,468 $357,468 $ 357,468
8 $136,857 $357,468 $357,468 $357,468 $ 357,468
9 $142,331 $357,468 $357,468 $357,468 $ 357,468
10 $148,024 $357,468 $357,468 $357,468 $ 357,468
15 $180,094 $357,468 $357,468 $357,468 $ 475,293
20 $219,112 $ 0(2) $357,468 $357,468 $ 682,125
25 $266,584 $ 0 $ 0(2) $357,468 $1,014,643
<CAPTION>
CASH SURRENDER VALUE
-----------------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET)
ANNUAL INVESTMENT RETURN OF
END OF -----------------------------------------------------------
POLICY 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR (-1.72% NET) (2.28% NET) (6.28% NET) (10.28% NET)
- --------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
1 $87,723 $ 91,371 $ 95,345 $ 99,318
2 $85,294 $ 92,581 $100,164 $108,438
3 $82,713 $ 93,727 $105,657 $118,539
4 $79,975 $ 94,771 $111,458 $130,189
5 $77,061 $ 95,692 $117,582 $143,133
6 $73,939 $ 96,458 $124,033 $157,517
7 $72,746 $ 100,024 $134,857 $178,873
8 $68,229 $ 99,307 $140,715 $195,187
9 $63,407 $ 98,264 $146,759 $213,201
10 $58,225 $ 96,842 $152,985 $233,135
15 $25,809 $ 82,758 $187,644 $368,444
20 $ 0(2) $ 48,106 $229,442 $583,012
25 $ 0 $ 0(2) $280,678 $922,403
</TABLE>
- -----------------
(1) ILLUSTRATED VALUES ASSUME NO DEDUCTION FOR STATE AND/OR LOCAL PREMIUM TAXES,
NO CONTRACT LOAN, AND THE DEDUCTION OF MAXIMUM MONTHLY COST OF INSURANCE
CHARGES. THE CASH SURRENDER VALUES REFLECT THE CONTINGENT DEFERRED SALES
CHARGES APPLICABLE TO SURRENDERS WITHIN THE FIRST 6 CONTRACT YEARS. THE
FACE AMOUNT IS BASED UPON THE ASSUMPTION THAT AT ISSUANCE THE FIXED-RATE
OPTION IS NOT BEING CREDITED MORE THAN 6%.
(2) BASED ON A GROSS RETURN OF 0% AND THE DEDUCTION OF MAXIMUM COST OF
INSURANCE CHARGES, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 18
UNLESS AN ADDITIONAL PREMIUM PAYMENT WAS MADE. BASED ON A GROSS RETURN OF
4% AND THE DEDUCTION OF MAXIMUM COST OF INSURANCE CHARGES, THE CONTRACT
WOULD GO INTO DEFAULT IN POLICY YEAR 24 UNLESS AN ADDITIONAL PREMIUM
PAYMENT WAS MADE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH SURRENDER VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, 8%,
AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES
FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T-4
<PAGE>
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).
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
15
<PAGE>
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 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 generally
excludable 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 gift. estate and/or income 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,
16
<PAGE>
Pruco Life guarantees that the part of the Contract fund allocated to the
fixed-rate option will accrue interest daily at an effective annual rate that
Pruco Life declares periodically, but not less than an effective annual rate of
3%. Currently, declared interest rates remain in effect from the date money is
allocated to the fixed-rate option until the third Contract anniversary
following the date of the allocation. Thereafter, a new crediting rate will be
declared each year, and will remain in effect for the calendar year. Pruco Life
reserves the right to change this practice. Pruco Life is not obligated to
credit interest at a higher rate than 3%, although in its sole discretion it may
do so. Different crediting rates may be declared for different portions of the
Contract fund allocated to the fixed-rate option. On request, a Contract owner
will be advised of the interest rates that currently apply to his or her
Contract.
Transfers from the fixed-rate option are subject to strict limits. (See
TRANSFERS, page 8. The payment of any cash surrender value attributable to the
fixed-rate option may be delayed up to 6 months (see WHEN PROCEEDS ARE PAID,
page 15). For Contracts issued in Texas, the fixed-rate option is not available.
VOTING RIGHTS
As stated above, all of the assets held in the subaccounts of the Account will
be invested in shares of the corresponding portfolios of the Series Fund. Pruco
Life is the legal owner of those shares and as such has the right to vote on any
matter voted on at Series Fund shareholders meetings. However, Pruco Life will,
as required by law, vote the shares of the Series Fund at any regular and
special shareholders meetings it is required to hold in accordance with voting
instructions received from Contract owners. The Series Fund will not hold annual
shareholders meetings when not required to do so under Maryland law or the
Investment Company Act of 1940. Series Fund shares for which no timely
instructions from Contract owners are received, and any shares attributable to
general account investments of Pruco Life will be voted in the same proportion
as shares in the respective portfolios for which instructions are received.
Should the applicable federal securities laws or regulations, or their current
interpretation, change so as to permit Pruco Life to vote shares of the Series
Fund in its own right, it may elect to do so.
Matters on which Contract owners may give voting instructions include the
following: (1) election of the Board of Directors of the Series Fund; (2)
ratification of the independent accountant of the Series Fund; (3) approval of
the investment advisory agreement for a portfolio of the Series Fund
corresponding to the Contract owner's selected subaccount[s]; (4) any change in
the fundamental investment policy of a portfolio corresponding to the Contract
owner's selected subaccount[s]; and (5) any other matter requiring a vote of the
shareholders of the Series Fund. With respect to approval of the investment
advisory agreement or any change in a portfolio's fundamental investment policy,
Contract owners participating in such portfolios will vote separately on the
matter, pursuant to the requirements of Rule 18f-2 under the 1940 Act.
The number of Series Fund shares for which instructions may be given by a
Contract owner is determined by dividing the portion of the value of the
Contract derived from participation in a subaccount, by the value of one share
in the corresponding portfolio of the Series Fund. The number of votes for which
each Contract owner may give Pruco Life instructions will be determined as of
the record date chosen by the Board of Directors of the Series Fund. Pruco Life
will furnish Contract owners with proper forms and proxies to enable them to
give these instructions. Pruco Life reserves the right to modify the manner in
which the weight to be given voting instructions is calculated where such a
change is necessary to comply with current federal regulations or
interpretations of those regulations.
Pruco Life may, if required by state insurance regulations, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment objectives of one or more
of the Series Fund's portfolios, or to approve or disapprove an investment
advisory contract for the Series Fund. In addition, Pruco Life itself may
disregard voting instructions that would require changes in the investment
policy or investment advisor of one or more of the Series Fund's portfolios,
provided that Pruco Life reasonably disapproves such changes in accordance with
applicable federal regulations. If Pruco Life does disregard voting
instructions, it will advise Contract owners of that action and its reasons for
such action in the next annual or semi-annual report to contract owners.
SALE OF THE CONTRACT AND SALES COMMISSIONS
Currently, Pruco Securities Corporation ("Prusec"), an indirect wholly-owned
subsidiary of Prudential, which was organized in 1971 under New Jersey law, acts
as the principal underwriter of the Contract. Pruco Life expects that during the
second quarter of 1998 Prusec's responsibilities as principal underwriter will
be assigned to Prudential Investment Management Services LLC ("PIMS"). PIMS,
also an indirect wholly-owned subsidiary of Prudential, is a limited liability
corporation organized under Delaware law in 1996. PIMS will act as principal
underwriter under substantially the same terms as Prusec does currently. Both
Prusec and PIMS are registered as broker-dealers under the Securities Exchange
Act of 1934 and are members of the National Association of Securities Dealers,
Inc. The principal business address of both Prusec and PIMS is 751 Broad Street,
Newark, New Jersey 07102-3777.
17
<PAGE>
The Contract is currently sold by registered representatives of the principal
underwriter and may also be sold through other broker-dealers authorized by the
principal underwriter, including broker-dealers otherwise unaffiliated with
Prudential. Registered representatives of such other unaffiliated broker-dealers
may be paid on a different basis than registered representatives of the
principal underwriter or broker-dealers affiliated with Prudential. The maximum
commission that will be paid to the broker-dealer to cover both the individual
representative's commission and other distribution expenses will not exceed 6%
of the purchase payment. In addition, trail commissions based on the size of the
Contract fund may be paid.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life expects to recover its total sales expenses over the periods
the Contracts are in effect. To the extent that the sales charges are
insufficient to cover total sales expenses, the sales expenses will be recovered
from Pruco Life's surplus, which may include the amounts derived from the
mortality and expense risk charge, described in item 5 under CHARGES, page 9.
SUBSTITUTION OF SERIES FUND SHARES
Although Pruco Life believes it to be unlikely, it is possible that in the
judgment of its management, one or more of the portfolios of the Series Fund may
become unsuitable for investment by Contract owners because of investment policy
changes, tax law changes or the unavailability of shares for investment. In that
event, Pruco Life may seek to substitute the shares of another portfolio or of
an entirely different mutual fund. Before this can be done, the approval of the
SEC, and possibly one or more state insurance departments, will be required.
Contract owners will be notified of such substitution.
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS
The Contract generally employs mortality tables that distinguish between males
and females. Thus, initial amounts of insurance that a given premium will buy,
cost of insurance charges, and benefits under Contracts issued on males and
females of the same age will generally differ. However, in those states that
have adopted regulations prohibiting sex-distinct insurance rates, initial
amounts of insurance, cost of insurance charges and benefits will be based on
male mortality tables whether the insured is male or female. In addition,
employers and employee organizations considering purchase of a Contract should
consult their legal advisors to determine whether purchase of a Contract based
on sex-distinct actuarial tables is consistent with Title VII of the Civil
Rights Act of 1964 or other applicable law. Pruco Life may offer the Contract
with unisex mortality rates to such prospective purchasers.
OTHER GENERAL CONTRACT PROVISIONS
BENEFICIARY. The beneficiary is designated and named in the application by the
Contract owner. Thereafter, the owner may change the beneficiary, provided it is
in accordance with the terms of the Contract. Should the insured die with no
surviving beneficiary, the insured's estate will become the beneficiary.
INCONTESTABILITY. After the Contract has been in force during the insured's
lifetime for 2 years from the Contract date, Pruco Life will not contest its
liability under the Contract in accordance with its terms.
MISSTATEMENT OF AGE OR SEX. If the insured's stated age or sex (except where
unisex rates apply) or both are incorrect in the Contract, Pruco Life will
adjust the benefits payable, as required by law, to reflect what the premium
would have purchased for the correct age and sex.
SUICIDE EXCLUSION. Generally, if the insured, whether sane or insane, dies by
suicide within 2 years from the Contract date, Pruco Life will pay no more under
the Contract than the sum of the premiums paid.
ASSIGNMENT. This Contract may not be assigned if such assignment would violate
any federal, state or local law or regulation. Generally, the Contract may not
be assigned to another insurance company without Pruco Life's consent. Pruco
Life assumes no responsibility for the validity or sufficiency of any
assignment, and it will not be obligated to comply with any assignment unless it
has received a copy at one of its Home Offices.
SETTLEMENT OPTIONS. The Contract grants to most owners, or to the beneficiary, a
wide variety of optional ways of receiving Contract proceeds, other than in a
lump sum. Any Pruco Life representative authorized to sell this Contract can
explain these options upon request.
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.
18
<PAGE>
Pruco Life is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business to determine solvency and compliance with local
insurance laws and regulations.
In addition to the annual statements referred to above, Pruco Life is required
to file with Arizona and other jurisdictions a separate statement with respect
to the operations of all its variable contract accounts, in a form promulgated
by the National Association of Insurance Commissioners.
ADDITIONAL INFORMATION
A registration statement has been filed with the SEC under the Securities Act of
1933, relating to the offering described in this prospectus. This prospectus
does not include all of the information set forth in the registration statement.
Certain portions have been omitted pursuant to the rules and regulations of the
SEC. The omitted information may, however, be obtained from the SEC's principal
office in Washington, D.C., upon payment of a prescribed fee.
Further information may also be obtained from Pruco Life's office. The address
and telephone number are set forth on the cover of this prospectus.
EXPERTS
The financial statements included in this prospectus for the years ended
December 31, 1997 and 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 the year ended December
31, 1995 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 replaced 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 Ikwhan Oh,
FSA, MAA, Vice President and Actuary of Pruco Life 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.
YEAR 2000 COMPLIANCE
The services provided to the Contract owners by Pruco Life, Prusec and PIMS
depend on the smooth functioning of their respective computer systems. The year
2000, however, holds the potential for a significant disruption in the operation
of these systems. Many computer programs cannot distinguish the year 2000 from
the year 1900 because of the way in which dates are encoded. Left uncorrected,
the year "00" could cause systems to perform date comparisons and calculations
incorrectly that in turn could compromise the integrity of business records and
lead to serious interruption of business processes.
Prudential, as Pruco Life's, Prusec's and PIMS's ultimate corporate parent,
identified this issue as a critical priority in 1995 and has established quality
assurance procedures including a certification process to monitor and evaluate
enterprise-wide conversion and upgrading of systems for "Year 2000" compliance.
Prudential has also initiated an analysis of potential exposure that could
result from the failure of major service providers such as suppliers, custodians
and brokers to achieve Year 2000 compliance. Prudential expects to complete its
adaptation, testing and certification of software for Year 2000 compliance by
December 31, 1998. During 1999, Prudential plans to conduct additional internal
testing, to participate in securities industry-wide test efforts and to complete
major service provider analysis and contingency planning.
19
<PAGE>
The expenses of Prudential's Year 2000 compliance are allocated across its
various businesses, including those businesses not engaged in providing services
to Contract owners. Accordingly, while the expense is substantial in the
aggregate, it is not expected to have a material impact on Pruco Life's,
Prusec's and PIMS's abilities to meet their commitments to Contract owners.
Prudential believes that it is well positioned to achieve the necessary
modifications and mitigate Year 2000 risks. However, if such efforts are not
completed on a timely basis, the Year 2000 issue could have a material adverse
impact on Prudential's operations, those of its subsidiary and affiliate
companies and/or the Account. Moreover, there can be no assurance that the
measures taken by Prudential's external service providers will be sufficient to
avoid any material adverse impact on Prudential's operations or those of its
subsidiary and affiliate companies.
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
JAMES J. AVERY, JR., Chairman and Director -- Senior Vice President, Chief
Actuary and CFO, Prudential Individual Insurance since 1997; 1995 to 1997:
President, Prudential Select; 1993 to 1995: Chief Operating Officer, Prudential
Select. Age 46.
WILLIAM M. BETHKE, Director -- Chief Investment Officer since 1997; Prior to
1997: President, Prudential Capital Markets Group. Age 51.
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. Age 51.
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. Age 37.
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. Age
47.
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. Age 55.
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. Age 55.
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. Age 40.
C. EDWARD CHAPLIN, Treasurer -- Vice President and Treasurer of Prudential since
1995; 1993 to 1995: Managing Director and Assistant Treasurer of Prudential. Age
41.
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. Age 55.
CLIFFORD E. KIRSCH, Chief Legal Officer -- Chief Counsel, Variable Products, Law
Department of Prudential since 1995; 1994 to 1995: Associate General Counsel
with PaineWebber. Age 38.
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. Age 53.
EDWARD A. MINOGUE, Senior Vice President -- Vice President, Annuity Services,
Prudential Investments since 1997; Prior to 1997: Director, Merrill Lynch. Age
55.
JAMES M. SCHLOMANN, Vice President, Comptroller & Chief Accounting Officer --
Vice President & Associate Comptroller, Prudential, since 1997; Prior to 1997:
Senior Executive Vice President & CFO, USLife Corp. Age 49.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary -- Vice President and
Associate Actuary, Prudential. Age 43.
JAMES A. TIGNANELLI, Senior Vice President -- Vice President, Compliance,
Prudential Individual Insurance since 1996; Prior to 1996, Vice President Field
Operations. Age 45.
The business address of all directors and officers of Pruco Life is 213
Washington Street, Newark, New Jersey 07102-2992. Pruco Life directors and
officers are elected annually.
21
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1997
SUBACCOUNTS
-------------------------------------------------------------------------
ZERO COUPON
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE BOND
MARKET BOND EQUITY MANAGED BALANCED 2000
----------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The
Prudential Series Fund, Inc.
Portfolios at net asset
value [Note 3] ............. $14,339,522 $8,909,872 $55,251,646 $72,877,705 $87,296,515 $2,650,826
Receivable from Pruco Life
Insurance Company [Note 2] . 0 0 0 0 0 40,451
----------- ---------- ----------- ----------- ----------- ----------
Net Assets ................. $14,339,522 $8,909,872 $55,251,646 $72,877,705 $87,296,515 $2,691,277
=========== ========== =========== =========== =========== ==========
NET ASSETS, representing:
Equity of Contract owners .... $14,204,369 $8,754,797 $55,224,088 $72,860,805 $87,113,008 $2,691,277
Equity of Pruco Life
Insurance Company .......... 135,153 155,075 27,558 16,900 183,507 0
----------- ---------- ----------- ----------- ----------- ----------
$14,339,522 $8,909,872 $55,251,646 $72,877,705 $87,296,515 $2,691,277
=========== ========== =========== =========== =========== ==========
</TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1997
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------
ZERO COUPON
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE BOND
MARKET BOND EQUITY MANAGED BALANCED 2000
-------- --------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions
received ........................ $812,540 $ 730,224 $ 1,252,483 $ 2,170,546 $ 4,020,882 $ 153,810
EXPENSES
Charges to Contract owners
for assuming mortality risk
and expense risk and for
administration [Notes 5A
and 5B] ......................... 190,711 126,244 685,445 907,245 1,096,279 36,334
Reimbursement for excess
expenses [Note 5C] .............. (3,465) (2,547) (42,912) (165,166) (144,445) (7,849)
-------- --------- ----------- ----------- ----------- ---------
NET EXPENSES ...................... 187,246 123,697 642,533 742,079 951,834 28,485
-------- --------- ----------- ----------- ----------- ---------
NET INVESTMENT INCOME (LOSS) ...... 625,294 606,527 609,950 1,428,467 3,069,048 125,325
-------- --------- ----------- ----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions
received ........................ 0 116,326 3,061,685 10,983,219 9,442,317 122,909
Realized gain (loss) on shares
redeemed [average cost basis] ... 0 92,708 3,103,596 2,316,946 1,726,707 31,433
Net change in unrealized gain
(loss) on investments ........... 0 (116,684) 4,613,512 (3,350,945) (4,126,123) (101,802)
-------- --------- ----------- ----------- ----------- ---------
NET GAIN (LOSS) ON INVESTMENTS .... 0 92,350 10,778,793 9,949,220 7,042,901 52,540
-------- --------- ----------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ....................... $625,294 $ 698,877 $11,388,743 $11,377,687 $10,111,949 $ 177,865
======== ========= =========== =========== =========== =========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------------------------------------------------
HIGH ZERO COUPON SMALL
YIELD STOCK EQUITY NATURAL GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
BOND INDEX INCOME RESOURCES GLOBAL INCOME 2005 JENNISON STOCK
---------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$6,614,286 $12,767,370 $18,663,709 $3,513,172 $4,610,993 $3,317,808 $1,184,723 $3,365,755 $3,013,139
19,182 0 23,278 0 0 0 60,068 4,054 0
---------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
$6,633,468 $12,767,370 $18,686,987 $3,513,172 $4,610,993 $3,317,808 $1,244,791 $3,369,809 $3,013,139
========== =========== =========== ========== ========== ========== ========== ========== ==========
$6,633,468 $12,725,476 $18,686,987 $3,493,364 $4,575,973 $3,313,215 $1,244,791 $3,369,809 $2,975,092
0 41,894 0 19,808 35,020 4,593 0 0 38,047
---------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- -------------
$6,633,468 $12,767,370 $18,686,987 $3,513,172 $4,610,993 $3,317,808 $1,244,791 $3,369,809 $3,013,139
========== =========== =========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------
HIGH ZERO COUPON SMALL
YIELD STOCK EQUITY NATURAL GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
BOND INDEX INCOME RESOURCES GLOBAL INCOME 2005 JENNISON STOCK
- -------- ---------- ---------- ----------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$620,079 $ 167,019 $ 421,273 $ 22,099 $ 57,845 $206,624 $ 82,336 $ 5,707 $ 13,030
81,445 136,243 200,384 54,219 59,939 39,739 17,408 30,596 23,358
0 0 0 0 0 0 (4,673) 0 0
- -------- ---------- ---------- ----------- --------- -------- --------- --------- ---------
81,445 136,243 200,384 54,219 59,939 39,739 12,735 30,596 23,358
- -------- ---------- ---------- ----------- --------- -------- --------- --------- ---------
538,634 30,776 220,889 (32,120) (2,094) 166,885 69,601 (24,889) (10,328)
- -------- ---------- ---------- ----------- --------- -------- --------- --------- ---------
0 354,981 1,682,299 456,104 220,780 0 29,827 190,081 199,000
(634) 565,902 499,434 75,644 217,305 10,360 32,242 79,675 68,599
221,974 1,893,795 2,374,752 (1,044,069) (195,352) 79,214 18,525 328,629 97,148
- -------- ---------- ---------- ----------- --------- -------- --------- --------- ---------
221,340 2,814,678 4,556,485 (512,321) 242,733 89,574 80,594 598,385 364,747
- -------- ---------- ---------- ----------- --------- -------- --------- --------- ---------
$759,974 $2,845,454 $4,777,374 $ (544,441) $ 240,639 $256,459 $ 150,195 $ 573,496 $ 354,419
======== ========== ========== =========== ========= ======== ========= ========= =========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1997, 1996 and 1995
SUBACCOUNTS
--------------------------------------------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND
-------------------------------------------- --------------------------------------------
1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ...... $ 625,294 $ 654,806 $ 945,085 $ 606,527 $ 597,724 $ 677,150
Capital gains distributions
received ........................ 0 0 0 116,326 0 28,095
Realized gain (loss) on shares
redeemed [average cost basis] ... 0 0 0 92,708 46,177 33,240
Net change in unrealized gain
(loss) on investments ........... 0 0 0 (116,684) (366,764) 1,427,282
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ........................ 625,294 654,806 945,085 698,877 277,137 2,165,767
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS [Note 7] ...... (1,729,693) (5,721,859) (2,005,207) (2,743,619) (2,217,069) (1,097,631)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
EQUITY TRANSFERS [Note 8] ......... 106,939 (915,025) 381,338 103,316 43,136 (33,382)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ........................ (997,460) (5,982,078) (678,784) (1,941,426) (1,896,796) 1,034,754
NET ASSETS:
Beginning of year ................. 15,336,982 21,319,060 21,997,844 10,851,298 12,748,094 11,713,340
------------ ------------ ------------ ------------ ------------ ------------
End of year ....................... $ 14,339,522 $ 15,336,982 $ 21,319,060 $ 8,909,872 $ 10,851,298 $ 12,748,094
============ ============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------
FLEXIBLE
EQUITY MANAGED
- ------------------------------------------------------ ------------------------------------------------------
1997 1996 1995 1997 1996 1995
- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 609,950 $ 632,954 $ 422,966 $ 1,428,467 $ 1,439,109 $ 1,462,510
3,061,685 4,590,879 1,688,154 10,983,219 6,748,281 2,961,811
3,103,596 1,516,095 1,098,551 2,316,946 1,582,636 1,224,987
4,613,512 1,084,389 8,034,144 (3,350,945) (1,468,777) 8,437,634
- ------------ ------------ ------------ ------------ ------------ ------------
11,388,743 7,824,317 11,243,815 11,377,687 8,301,249 14,086,942
- ------------ ------------ ------------ ------------ ------------ ------------
(7,797,946) (4,080,845) (2,240,812) (9,503,739) (7,933,681) (7,589,195)
- ------------ ------------ ------------ ------------ ------------ ------------
(95,520) 83,397 (226,203) (476,182) 215,390 (272,194)
- ------------ ------------ ------------ ------------ ------------ ------------
3,495,277 3,826,869 8,776,800 1,397,766 582,958 6,225,553
51,756,369 47,929,500 39,152,700 71,479,939 70,896,981 64,671,428
- ------------ ------------ ------------ ------------ ------------ ------------
$ 55,251,646 $ 51,756,369 $ 47,929,500 $ 72,877,705 $ 71,479,939 $ 70,896,981
============ ============ ============ ============ ============ ============
</TABLE>
SUBACCOUNTS (CONTINUED)
- --------------------------------------------
CONSERVATIVE
BALANCED
- --------------------------------------------
1997 1996 1995
- ------------ ------------ ------------
$ 3,069,048 $ 2,589,376 $ 2,622,038
9,442,317 5,364,643 2,993,129
1,726,707 1,560,460 1,093,958
(4,126,123) (59,931) 6,125,443
- ------------ ------------ ------------
10,111,949 9,454,548 12,834,568
- ------------ ------------ ------------
(10,144,349) (9,872,985) (8,311,674)
- ------------ ------------ ------------
(26,817) (92,223) (149,732)
- ------------ ------------ ------------
(59,217) (510,660) 4,373,162
87,355,732 87,866,392 83,493,230
- ------------ ------------ ------------
$ 87,296,515 $ 87,355,732 $ 87,866,392
============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A4
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1997, 1996 and 1995
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------------
ZERO COUPON HIGH
BOND YIELD
2000 BOND
----------------------------------------- -----------------------------------------
1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ............ $ 125,325 $ 103,734 $ 116,219 $ 538,634 $ 528,747 $ 556,857
Capital gains distributions received .... 122,909 0 141,727 0 0 0
Realized gain (loss) on shares redeemed
[average cost basis] ................... 31,433 61,546 44,810 (634) (8,889) (36,010)
Net change in unrealized gain (loss) on
investments ............................ (101,802) (156,572) 374,726 221,974 89,453 299,046
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .............................. 177,865 8,708 677,482 759,974 609,311 819,893
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS [Note 7] ............ (502,896) (883,895) (24,144) (363,077) (652,164) 421,112
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
EQUITY TRANSFERS [Note 8] ............... (103,168) 85,488 (116,790) 7,704 (26,102) (28,631)
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS .............................. (428,199) (789,699) 536,548 404,601 (68,955) 1,212,374
NET ASSETS:
Beginning of year ....................... 3,119,476 3,909,175 3,372,627 6,228,867 6,297,822 5,085,448
----------- ----------- ----------- ----------- ----------- -----------
End of year ............................. $ 2,691,277 $ 3,119,476 $ 3,909,175 $ 6,633,468 $ 6,228,867 $ 6,297,822
=========== =========== =========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
STOCK EQUITY
INDEX INCOME
- --------------------------------------------------- -----------------------------------------------------
1997 1996 1995 1997 1996 1995
- ------------ ----------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
$ 30,776 $ 46,500 $ 56,753 $ 220,889 $ 278,603 $ 295,255
354,981 97,668 48,697 1,682,299 428,472 520,438
565,902 322,008 188,339 499,434 258,878 131,128
1,893,795 980,432 1,283,063 2,374,752 1,389,905 1,045,497
- ------------ ----------- ---------- ------------ ------------ -----------
2,845,454 1,446,608 1,576,852 4,777,374 2,355,858 1,992,318
- ------------ ----------- ---------- ------------ ------------ -----------
1,333,982 694,843 666,899 194,694 (1,077,303) 933,260
- ------------ ----------- ---------- ------------ ------------ -----------
(16,739) (5,765) 14,385 (14,032) (36,611) 26,506
- ------------ ----------- ---------- ------------ ------------ -----------
4,162,697 2,135,686 2,258,136 4,958,036 1,241,944 2,952,084
8,604,673 6,468,987 4,210,851 13,728,951 12,487,007 9,534,923
- ------------ ----------- ---------- ------------ ------------ -----------
$ 12,767,370 $ 8,604,673 $6,468,987 $ 18,686,987 $ 13,728,951 $12,487,007
============ =========== ========== ============ ============ ===========
</TABLE>
SUBACCOUNTS (CONTINUED)
- -----------------------------------------
NATURAL
RESOURCES
- -----------------------------------------
1997 1996 1995
- ----------- ----------- -----------
$ (32,120) $ (21,304) $ 6,686
456,104 531,704 179,705
75,644 207,066 156,751
(1,044,069) 223,037 428,732
- ----------- ----------- -----------
(544,441) 940,503 771,874
- ----------- ----------- -----------
(329,203) 405,943 (371,555)
- ----------- ----------- -----------
3,421 (372,815) 391,993
- ----------- ----------- -----------
(870,223) 973,631 792,312
4,383,395 3,409,764 2,617,452
- ----------- ----------- -----------
$ 3,513,172 $ 4,383,395 $ 3,409,764
=========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A6
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1997, 1996 and 1995
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
GOVERNMENT
GLOBAL INCOME
----------------------------------------- ----------------------------------------
1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .............. $ (2,094) $ 45,382 $ 10,910 $ 166,885 $ 170,895 $ 159,003
Capital gains distributions received ...... 220,780 67,416 41,171 0 0 0
Realized gain (loss) on shares redeemed
[average cost basis] ..................... 217,305 44,616 83,503 10,360 19,693 14,056
Net change in unrealized gain (loss) on
investments .............................. (195,352) 399,470 110,391 79,214 (151,572) 311,921
----------- ----------- ----------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ................................ 240,639 556,884 245,975 256,459 39,016 484,980
----------- ----------- ----------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS [Note 7] .............. (172,011) 1,711,765 634,220 (261,680) (20,151) 116,346
----------- ----------- ----------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
EQUITY TRANSFERS [Note 8] ................. (1,051) (8,688) (71,057) (3,582) (301,155) 288,428
----------- ----------- ----------- ----------- ----------- ----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ................................ 67,577 2,259,961 809,138 (8,803) (282,290) 889,754
NET ASSETS:
Beginning of year .......................... 4,543,416 2,283,455 1,474,317 3,326,611 3,608,901 2,719,147
----------- ----------- ----------- ----------- ----------- ----------
End of year ................................ $ 4,610,993 $ 4,543,416 $ 2,283,455 $ 3,317,808 $ 3,326,611 $3,608,901
=========== =========== =========== =========== =========== ==========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------------
ZERO COUPON SMALL
BOND PRUDENTIAL CAPITALIZATION
2005 JENNISON* STOCK*
- ----------------------------------------- --------------------------------------- ---------------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 69,601 $ 75,875 $ 42,858 $ (24,889) $ (10,713) $ (1,556) $ (10,328) $ (1,975) $ (98)
29,827 20,412 25,337 190,081 0 0 199,000 16,901 2,435
32,242 4,000 199,655 79,675 9,875 926 68,599 8,724 397
18,525 (134,741) 218,240 328,629 151,305 14,845 97,148 67,298 7,555
- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ---------
150,195 (34,454) 486,090 573,496 150,467 14,215 354,419 90,948 10,289
- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ---------
(419,095) 95,080 (1,066,375) 1,286,255 893,360 454,167 1,315,574 708,061 482,228
- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ---------
(378,102) 351,597 (214,736) 18,394 (35,955) 15,410 26,783 22,215 2,622
- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ---------
(647,002) 412,223 (795,021) 1,878,145 1,007,872 483,792 1,696,776 821,224 495,139
1,891,793 1,479,570 2,274,591 1,491,664 483,792 0 1,316,363 495,139 0
- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ---------
$ 1,244,791 $ 1,891,793 $ 1,479,570 $ 3,369,809 $ 1,491,664 $ 483,792 $ 3,013,139 $ 1,316,363 $ 495,139
=========== =========== =========== =========== =========== ========= =========== =========== =========
</TABLE>
* Commenced Business on 5/1/95
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A8
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 1997
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. Proceeds from sales of the Pruco Life Discovery
Life Plus product are invested in the Account as directed by the
Contract owners.
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 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 liquidity purposes including unit purchases and
redemptions, 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 the Account's Statements of Net Assets as a receivable
from Pruco Life. The receivable does not have an effect on the Contract
owner's account or related unit value.
A9
<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, 1997 were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
-----------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Number of Shares: 1,433,952 808,383 1,778,348 4,217,389 5,831,345
Net asset value per share: $ 10.00000 $ 11.02185 $ 31.06909 $ 17.28029 $ 14.97022
Cost: $14,339,522 $8,760,461 $37,326,756 $66,556,444 $81,651,283
PORTFOLIOS (CONTINUED)
-----------------------------------------------------------------------------------
ZERO COUPON HIGH YIELD STOCK EQUITY NATURAL
BOND 2000 BOND INDEX INCOME RESOURCES
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Number of Shares: 210,269 812,114 422,487 833,671 230,459
Net asset value per share: $ 12.60686 $ 8.14453 $ 30.21956 $ 22.38737 $ 15.24426
Cost: $ 2,553,076 $6,560,981 $8,336,040 $13,719,346 $4,057,340
PORTFOLIOS (CONTINUED)
----------------------------------------------------------------------------------
SMALL
GOVERNMENT ZERO COUPON PRUDENTIAL CAPITALIZATION
GLOBAL INCOME BOND 2005 JENNISON STOCK
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Number of Shares: 257,260 287,933 94,056 189,818 189,136
Net asset value per share: $ 17.92348 $ 11.52286 $ 12.59597 $ 17.73151 $ 15.93104
Cost: $4,354,519 $3,238,914 $1,150,734 $2,870,976 $ 2,841,138
</TABLE>
Note 4: Contract Owner Unit Information
Outstanding Contract owner units, unit values and total value of
Contract owner equity at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding ....... 8,160,991.448 3,591,372.750 10,688,174.670 20,453,706.063 29,454,151.094
Unit Value ............................. $ 1.74052 $ 2.43773 $ 5.16684 $ 3.56223 $ 2.95758
-------------- -------------- --------------- --------------- ---------------
TOTAL CONTRACT OWNER EQUITY ............ $ 14,204,369 $ 8,754,797 $ 55,224,088 $ 72,860,805 $ 87,113,008
============== ============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
ZERO COUPON HIGH YIELD STOCK EQUITY NATURAL
BOND 2000 BOND INDEX INCOME RESOURCES
-------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding ....... 999,300.842 2,890,614.322 3,352,638.491 4,591,228.103 1,415,394.720
Unit Value ............................. $ 2.69316 $ 2.29483 $ 3.79566 $ 4.07015 $ 2.46812
-------------- -------------- --------------- --------------- ---------------
TOTAL CONTRACT OWNER EQUITY ............ $ 2,691,277 $ 6,633,468 $ 12,725,476 $ 18,686,987 $ 3,493,364
============== ============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
SMALL
GOVERNMENT ZERO COUPON PRUDENTIAL CAPITALIZATION
GLOBAL INCOME BOND 2005 JENNISON STOCK
-------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding ....... 3,317,004.142 1,769,057.617 555,958.637 1,842,090.120 1,710,668.329
Unit Value ............................. $ 1.37955 $ 1.87287 $ 2.23900 $ 1.82934 $ 1.73914
-------------- -------------- --------------- --------------- ---------------
TOTAL CONTRACT OWNER EQUITY ............ $ 4,575,973 $ 3,313,215 $ 1,244,791 $ 3,369,809 $ 2,975,092
============== ============== =============== =============== ===============
</TABLE>
A10
<PAGE>
NOTE 5: 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 Contract owners may not live as long as estimated and expense
risk is that the cost of issuing and administering the policies may
exceed the estimated expenses. For 1997, the amount of these charges
paid to Pruco Life was $2,651,601.
B. 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 1997, the
amount of these charges paid to Pruco Life was $1,033,988.
C. Expense Reimbursement
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
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 1997, the amount of these reimbursements totaled
$371,057.
D. 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 1997, the amount of these charges paid
to Pruco Life was $33,566.
NOTE 6: TAXES
Pruco Life is taxed as a "life insurance company" as defined by the
Internal Revenue Code and the results of operations of the Account form
a part of Pruco Life's consolidated federal tax return. Under current
federal law, no federal income taxes are payable by the Account. As
such, no provision for tax liability has been recorded in these
financial statements.
A11
<PAGE>
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
The following amounts represent components of Contract owner activity
for the year ended December 31, 1997:
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Contract Owner Net Payments ........................ $ 2,455 $ 28,055 $ 202,208 $ 288,737 $ 219,959
Policy Loans ....................................... (504,190) (342,659) (1,731,662) (2,609,808) (2,403,648)
Policy Loan Repayments and Interest ................ 832,657 656,320 2,080,991 2,179,726 2,631,712
Surrenders, Withdrawals, and Death Benefits ........ (3,173,140) (2,236,152) (6,467,482) (6,737,097) (8,978,479)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ................................ 1,219,681 (778,186) (1,503,850) (2,119,657) (1,016,900)
Administrative and Other Charges ................... (107,156) (70,997) (378,151) (505,640) (596,993)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
ZERO HIGH
COUPON BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
--------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Contract Owner Net Payments ......................... $ 0 $ 87,727 $ 150,392 $ 101,609 $ 30,997
Policy Loans ........................................ (32,633) (390,814) (493,833) (539,621) (132,941)
Policy Loan Repayments and Interest ................. 37,545 330,877 225,133 273,356 78,125
Surrenders, Withdrawals, and Death Benefits ......... (192,247) (571,349) (815,101) (956,562) (284,770)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ................................. (295,618) 233,793 2,343,353 1,428,935 10,453
Administrative and Other Charges .................... (19,943) (53,311) (75,962) (113,023) (31,067)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------
ZERO SMALL
GOVERNMENT COUPON BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Contract Owner Net Payments ......................... $ 12,437 $ 1,959 $ 0 $ 48,980 $ 47,025
Policy Loans ........................................ (244,308) (267,116) (20,480) (122,317) (30,825)
Policy Loan Repayments and Interest ................. 235,021 121,127 16,234 18,884 11,340
Surrenders, Withdrawals, and Death Benefits ......... (460,434) (100,728) (37,869) (129,973) (87,528)
Net Transfers From (To) Other Subaccounts or
Fixed Rate Options ................................. 319,629 6,179 (367,259) 1,487,125 1,387,801
Administrative and Other Charges .................... (34,356) (23,101) (9,721) (16,444) (12,239)
</TABLE>
NOTE 8: 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.
A12
<PAGE>
NOTE 9: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) for the
years ended December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND EQUITY
------------------------------ ------------------------------ -------------- ---------------
1997 1996 1997 1996 1997 1996
-------------- -------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 5,466,809.61 7,216,650.45 651,968.69 1,291,974.73 1,048,053.69 1,690,948.389
Contract Owner Redemptions: (6,468,088.97) (10,746,897.81) (1,808,895.31) (2,326,211.04) (2,683,803.59) (2,764,409.903)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------------------
FLEXIBLE CONSERVATIVE ZERO COUPON
MANAGED BALANCED BOND 2000
------------------------------ ------------------------------ -------------------------------
1997 1996 1997 1996 1997 1996
-------------- -------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 1,082,825.067 1,350,356.208 1,593,154.914 1,965,621.835 16,350.545 150,307.163
Contract Owner Redemptions: (3,925,583.520) (4,146,398.162) (5,145,688.362) (5,968,854.234) (207,678.459) (504,229.043)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------------------------
HIGH YIELD STOCK EQUITY
BOND INDEX INCOME
-------------------------------- ------------------------------- ------------------------------
1997 1996 1997 1996 1997 1996
--------------- --------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 841,648.078 797,423.665 1,245,597.829 1,062,803.613 808,743.976 595,202.784
Contract Owner Redemptions: (1,005,588.243) (1,128,838.367) (856,443.811) (795,554.570) (764,149.606) (1,007,416.435)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------------------
GOVERNMENT
NATURAL RESOURCES GLOBAL INCOME
---------------------------- -------------------------------- ----------------------------
1997 1996 1997 1996 1997 1996
------------- ------------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 454,152.474 916,222.712 1,536,856.515 2,603,487.570 218,187.485 294,632.366
Contract Owner Redemptions: (584,278.735) (755,613.643) (1,659,345.344) (1,186,505.179) (369,775.041) (305,047.606)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------------------
ZERO COUPON PRUDENTIAL SMALL CAPITALIZATION
BOND 2005 JENNISON STOCK
---------------------------- ------------------------------- -------------------------------
1997 1996 1997 1996 1997 1996
------------- ------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 277,366.098 363,945.684 1,274,986.357 1,293,924.433 1,446,652.971 1,030,250.081
Contract Owner Redemptions: (470,672.649) (320,641.624) (490,571.718) (605,796.030) (665,591.858) (516,974.354)
</TABLE>
A13
<PAGE>
NOTE 10: PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
in the Series Fund 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, 1997
Purchases .................................. $ 5,690,000 $ 621,000 $ 925,000 $ 936,000 $ 298,000
Sales ...................................... $(7,500,000) $(3,385,000) $(9,461,000) $(11,658,000) $(11,421,000)
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
-----------------------------------------------------------------------------
ZERO COUPON HIGH YIELD STOCK EQUITY NATURAL
BOND 2000 BOND INDEX INCOME RESOURCES
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1997
Purchases ...................................... $ 0 $ 1,095,000 $ 2,760,000 $ 1,690,000 $ 681,000
Sales .......................................... $(675,000) $(1,551,000) $(1,579,000) $(1,733,000) $(1,061,000)
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
-----------------------------------------------------------------------------
SMALL
GOVERNMENT ZERO COUPON PRUDENTIAL CAPITALIZATION
GLOBAL INCOME BOND 2005 JENNISON STOCK
----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1997
Purchases ...................................... $ 1,462,000 $ 291,000 $ 474,000 $ 1,713,000 $ 2,119,000
Sales .......................................... $(1,695,000) $(596,000) $(1,344,000) $ (443,000) $ (800,000)
</TABLE>
A14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of the
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 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 of the Pruco Life Single Premium Variable Life Account at
December 31, 1997, the results of each of their operations for the year then
ended and the changes in each of their net assets for each of the two years in
the period 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,
1997, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
March 20, 1998
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 in the year 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>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 1997 AND 1996 (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------
1997 1996
----------------- -----------------
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale, at fair value (amortized cost, 1997: $2,526,554;
1996: $2,210,150) $ 2,563,852 $ 2,236,817
Held to maturity, at amortized cost (fair value, 1997: $350,056; 1996:
$416,102) 338,848 405,731
Equity securities - available for sale, at fair value (cost, 1997: $1,289;
1996: $3,626) 1,982 3,748
Mortgage loans on real estate 22,787 46,915
Policy loans 703,955 639,782
Short-term investments 316,355 169,830
Other long-term investments 1,317 4,528
----------------- -----------------
Total investments 3,949,096 3,507,351
Cash 71,358 73,766
Deferred policy acquisition costs 655,242 633,159
Accrued investment income 67,000 62,110
Income taxes receivable - 7,191
Reinsurance recoverable on unpaid losses 25,882 27,014
Other assets 60,810 62,924
Separate Account assets 8,022,079 5,336,851
----------------- -----------------
TOTAL ASSETS $12,851,467 $9,710,366
================= =================
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Policyholders' account balances $ 2,282,191 $ 2,188,862
Future policy benefits and other policyholder liabilities 570,729 557,351
Cash collateral for loaned securities 143,421 -
Income taxes payable 71,703 -
Deferred income tax liability 138,483 148,960
Payable to affiliate 70,375 49,828
Other liabilities 120,260 88,930
Separate Account liabilities 7,948,788 5,277,454
----------------- -----------------
TOTAL LIABILITIES 11,345,950 8,311,385
----------------- -----------------
CONTINGENCIES - (SEE NOTE 10)
STOCKHOLDER'S EQUITY
Common stock, $10 par value;
1,000,000 shares, authorized;
250,000 shares, issued and outstanding at
December 31, 1997 and 1996 2,500 2,500
Paid-in-capital 439,582 439,582
Retained earnings 1,050,871 944,497
Net unrealized investment gains 17,129 14,104
Foreign currency translation adjustments (4,565) (1,702)
----------------- -----------------
TOTAL STOCKHOLDER'S EQUITY 1,505,517 1,398,981
----------------- -----------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $12,851,467 $9,710,366
================= =================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
B-1
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
REVENUES
Premiums $ 49,496 $ 51,525 $ 42,089
Policy charges and fee income 330,292 324,976 319,012
Net investment income 259,634 247,328 246,618
Realized investment gains, net 10,974 10,835 13,200
Other income 33,801 20,818 26,986
----------------- ----------------- -----------------
TOTAL REVENUES 684,197 655,482 647,905
----------------- ----------------- -----------------
BENEFITS AND EXPENSES
Policyholders' benefits 179,419 186,873 153,987
Interest credited to policyholders' account balances 110,815 118,246 126,926
General, administrative and other expenses 225,721 122,006 134,790
----------------- ----------------- -----------------
TOTAL BENEFITS AND EXPENSES 515,955 427,125 415,703
----------------- ----------------- -----------------
Income from operations before income taxes 168,242 228,357 232,202
----------------- ----------------- -----------------
Income taxes
Current 73,326 60,196 67,014
Deferred (11,458) 18,939 12,544
----------------- ----------------- -----------------
Total income taxes 61,868 79,135 79,558
----------------- ----------------- -----------------
NET INCOME $ 106,374 $ 149,222 $ 152,644
================= ================= =================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
B-2
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------
NET FOREIGN
UNREALIZED CURRENCY TOTAL
COMMON PAID-IN- RETAINED INVESTMENT TRANSLATION STOCKHOLDER'S
STOCK CAPITAL EARNINGS GAINS ADJUSTMENTS EQUITY
------------- ------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 $ 2,500 $ 439,582 $ 642,631 $(41,761) $ 650 $1,043,602
Net income -- -- 152,644 -- -- 152,644
Change in foreign
currency translation
adjustments -- -- -- -- (1,870) (1,870)
Change in net
unrealized
investment gains -- -- -- 73,817 -- 73,817
------------- ------------- ------------- ------------- ----------- -------------
BALANCE, DECEMBER 31, 1995 2,500 439,582 795,275 32,056 (1,220) 1,268,193
Net income -- -- 149,222 -- -- 149,222
Change in foreign
currency translation
adjustments -- -- -- -- (482) (482)
Change in net
unrealized
investment gains -- -- -- (17,952) -- (17,952)
------------- ------------- ------------- ------------- ----------- -------------
BALANCE, DECEMBER 31, 1996 2,500 439,582 944,497 14,104 (1,702) 1,398,981
Net income -- -- 106,374 -- -- 106,374
Change in foreign
currency translation
adjustments -- -- -- -- (2,863) (2,863)
Change in net
unrealized
investment gains -- -- -- 3,025 -- 3,025
------------- ------------- ------------- ------------- ----------- -------------
BALANCE, DECEMBER 31, 1997 $ 2,500 $ 439,582 $1,050,871 $ 17,129 $ (4,565) $1,505,517
============= ============= ============= ============= =========== =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
B-3
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
--------------- -------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 106,374 $ 149,222 $ 152,644
Adjustments to reconcile net income to net cash provided by
operating activities:
Policy charges and fee income (40,783) (50,286) (56,637)
Interest credited to policyholders' account balances 110,815 118,246 126,926
Net increase in Separate Accounts (13,894) (38,025) (3,520)
Realized investment gains, net (10,974) (10,835) (13,200)
Amortization and other non-cash items (5,525) 26,709 (8,106)
Change in:
Future policy benefits and other policyholders' liabilities 13,378 56,151 22,877
Accrued investment income (4,890) (2,248) (480)
Payable to affiliate 20,547 16,519 10,569
Policy loans (64,173) (70,509) (75,411)
Deferred policy acquisition costs (22,083) (66,183) 31,318
Income taxes payable/receivable 78,894 (816) 12,031
Reinsurance recoverable on unpaid losses 1,132 900 750
Deferred income tax liability (10,477) 7,912 30,779
Other, net 34,094 7,564 (76,702)
--------------- -------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES 192,435 144,321 153,838
--------------- -------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 2,828,665 3,886,254 1,886,687
Held to maturity 138,626 138,127 144,898
Equity securities 6,939 7,527 5,557
Mortgage loans on real estate 24,925 19,226 7,395
Other long-term investments 3,276 288 1,559
Investment real estate -- 4,488 2,926
Payments for the purchase of:
Fixed maturities:
Available for sale (3,141,785) (4,008,810) (1,741,139)
Held to maturity (70,532) (114,494) (135,092)
Equity securities (4,594) (4,697) (4,279)
Other long-term investments (51) (657) (1,674)
Cash collateral for loaned securities, net 143,421 -- --
Short-term investments, net (147,030) 58,186 (36,482)
--------------- -------------- ------------
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES (218,140) (14,562) 130,356
--------------- -------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 2,099,600 536,370 95,039
Withdrawals (2,076,303) (633,798) (365,578)
--------------- -------------- ------------
CASH FLOWS FROM (USED IN)FINANCING ACTIVITIES 23,297 (97,428) (270,539)
--------------- -------------- ------------
Net (decrease) increase in Cash (2,408) 32,331 13,655
Cash, beginning of year 73,766 41,435 27,780
--------------- -------------- ------------
CASH, END OF YEAR $ 71,358 $ 73,766 $ 41,435
=============== ============== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes (received) paid $ (7,904) $ 61,760 $ 53,107
=============== ============== ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
B-4
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BUSINESS
Pruco Life Insurance Company (the Company) is a stock life insurance company,
organized in 1971 under the laws of the state of Arizona. The Company markets
individual life insurance, variable life insurance, variable life insurance,
variable annuities, and deferred annuities (the Contracts) in all states except
New York, the District of Columbia and Guam. In addition, the Company markets
individual life insurance through its branch office in Taiwan. The Company has
two subsidiaries, Pruco Life Insurance Company of New Jersey (PLNJ) and The
Prudential Life Insurance company of Arizona (PLICA). PLNJ is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
It is licenced to sell individual life insurance and deferred annuities only in
the states of New Jersey and New York. PLICA is a stock life insurance company
organized in 1988 under the laws of the state of Arizona. PLICA had no new
business sales in 1977 and at this time will not be issuing new business.
The only reportable industry segment of the Company is "Life Insurance."
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company, a
stock life insurance company, and its subsidiaries. The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles ("GAAP"). All significant intercompany balances and transactions have
been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP 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 period. Actual results could differ from those estimates.
INVESTMENTS
FIXED MATURITIES classified as "available for sale" are carried at estimated
fair value. Fixed maturities that the Company has both the positive intent and
ability to hold to maturity are stated at amortized cost and classified as "held
to maturity". The amortized cost of fixed maturities are written down to
estimated fair value when considered impaired and the decline in value is
considered to be other than temporary. Unrealized gains and losses on fixed
maturities "available for sale", net of income tax, the effect on deferred
policy acquisition costs and participating annuity contracts that would result
from the realization of unrealized gains and losses are included in a separate
component of equity, "Net unrealized investment gains."
EQUITY SECURITIES, available for sale, comprised of common and non-redeemable
preferred stock, are carried at estimated fair value. The associated unrealized
gains and losses, net of income tax, the effect on deferred policy acquisition
costs and participating annuity contracts that would result from the realization
of unrealized gains and losses, are included in separate component of equity,
"Net unrealized investment gains."
MORTGAGE LOANS ON REAL ESTATE are stated primarily at unpaid principal balances,
net of unamortized discounts
POLICY LOANS are carried at unpaid principal balances.
SHORT-TERM INVESTMENTS, including highly liquid debt instruments purchased with
an original maturity of twelve months or less, are carried at amortized cost,
which approximates fair value.
OTHER LONG-TERM INVESTMENTS primarily represent the Company's investments in
joint ventures and partnerships in which the Company does not have control.
These investments are recorded using the equity method of accounting, reduced
for other than temporary declines in value.
REALIZED INVESTMENT GAINS, NET are computed using the specific identification
method. Costs of fixed maturity and equity securities are adjusted for
impairments considered to be other than temporary.
CASH
Cash includes cash on hand, amounts due from banks, and money market
instruments.
DEFERRED POLICY ACQUISITION COSTS
The costs which vary with and that are related primarily to the production of
new insurance business are deferred to the extent such costs are deemed
recoverable from future profits. Such costs include certain commissions, costs
of policy issuance and underwriting, and certain variable field office expenses.
Deferred policy acquisition costs are subject to recoverability testing at the
time of policy issue and loss recognition testing at the end of each accounting
period. Deferred policy acquisition costs are
B-5
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
adjusted for the impact of unrealized gains or losses on investments as if these
gains or losses had been realized, with corresponding credits or charges
included in equity.
Acquisition costs related to interest-sensitive life products and
investment-type contracts are deferred and amortized in proportion to total
estimated gross profits arising principally from investment results, mortality
and expense margins and surrender charges based on historical and anticipated
future experience. Amortization periods range from 15 to 30 years. Amortization
of deferred policy acquisition costs was $149,851 thousand, $9,309 thousand, and
$54,371 thousand for the years ended December 31, 1997, 1996, and 1995,
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 of revisions to estimated gross profits on unamortized
deferred acquisition costs is reflected in earnings in the period such estimated
gross profits are revised.
FUTURE POLICY BENEFITS AND POLICYHOLDERS' ACCOUNT BALANCES
Future policy benefits includes reserves for annuities in payout status as well
as reserves for riders and supplemental benefits. Reserves for annuities in
payout status are generally calculated as the present value of estimated future
benefit payments and related expenses, using interest rates ranging from 6.5% to
11.0%. The mortality assumption is generally the 1983 Individual Annuity
Mortality Table. Reserves for riders and supplemental benefits are calculated
using interest rates ranging from 2.5% to 7.25% and various mortality and
morbidity tables derived from company or industry experience. Reserves for
business in the Company's Taiwan branch are generally calculated using interest
rates ranging from 6.25% to 7.5% and the 1989 Taiwan Standard Ordinary
Experience Mortality table with modifications.
For the above categories, premium deficiency reserves are established, if
necessary, when the liabilities for future policy benefits plus the present
value of expected future gross premiums are insufficient to provide for expected
future policy benefits and expenses.
Policyholders' account balances for interest-sensitive life and investment-type
contracts are equal to the policy account values. The policy account values
represent an accumulation of gross premium payments plus credited interest, less
expense and mortality charges and withdrawals. Interest crediting rates on life
insurance products range from 4.2% to 6.5% and on investment-type products range
from 3.15% to 7.9%.
SECURITIES LOANED are recorded at the amount of cash received as collateral. The
Company obtains collateral in an amount equal to 102% of the fair value of the
domestic securities. The Company monitors the market value of securities loaned
on a daily basis with additional collateral obtained as necessary. Non-cash
collateral received is not reflected in the consolidated statements of financial
position. Substantially, all of the Company's securities loaned are with large
brokerage firms.
These transactions are used to generate net investment income and facilitate
trading activity. These instruments are short-term in nature (usually 30 days or
less) and are collateralized principally by U.S. Government and mortgage-backed
securities. The carrying amounts of these instruments approximate fair value
because of the relatively short period of time between the origination of the
instruments and their expected realization.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
Separate Account assets and liabilities are reported at estimated fair value and
represent segregated funds which are invested for certain policyholders, pension
funds and other customers. The assets consist of common stocks, fixed
maturities, real estate related securities, and short-term investments. The
assets of each account are legally segregated and are not subject to claims that
arise out of any other business of the Company. Investment risks associated with
market value changes are generally borne by the customers, except to the extent
of minimum guarantees made by the Company with respect to certain accounts. The
investment income and gains or losses for Separate Accounts generally accrue to
the policyholders and are not included in the Consolidated Statement of
Operations. Mortality, policy administration and surrender charges on the
accounts are included in "Policy charges and fee income."
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.
B-6
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INSURANCE REVENUE AND EXPENSE RECOGNITION
Amounts received as payment for interest-sensitive life, investment contracts
and deferred annuities are reported as deposits to "Policyholders' account
balances." Revenues from these contracts are reflected as "Policy charges and
fee income" and consist primarily of fees assessed during the period against the
policyholders' account balances for mortality charges, policy administration
charges, surrender charges, and interest earned from the investment of these
account balances. Benefits and expenses for these products include claims in
excess of related account balances, expenses of contract administration,
interest credited and amortization of deferred policy acquisition costs.
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
Assets and liabilities of the Taiwan branch reported in other than U.S. dollars
are translated at the exchange rate in effect at the end of the period.
Revenues, benefits and other expenses are translated at the average rate
prevailing during the period. Translation adjustments arising from the use of
differing exchange rates from period to period are charged or credited directly
to equity. The cumulative effect of changes in foreign exchange rates are
included in "Foreign currency translation adjustments."
DERIVATIVE FINANCIAL INSTRUMENTS
Derivatives include futures subject to market risk, all of which are used by the
Company in other than trading activities. Income and expenses related to
derivatives used to hedge are recorded on the accrual basis on the Statements of
Financial Position. Gains and losses relating to derivatives used to hedge the
risks associated with anticipated transactions are realized in "Realized
investment gains, net." If it is determined that the transaction will not close,
such gains and losses are included in "Realized investment gains, net."
Derivatives held for purposes other than trading are primarily used to hedge or
reduce exposure to interest rate and foreign currency risks associated with
assets held or expected to be purchased or sold, and liabilities incurred or
expected to be incurred. Additionally, other than trading derivatives are used
to change the characteristics of the Company's asset/liability mix consistent
with the Company's risk management activities.
INCOME TAXES
The Company and its subsidiaries are members 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. 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. Deferred income taxes
are generally recognized, based on enacted rates, when assets and liabilities
have different values for financial statement and tax reporting purposes. A
valuation allowance is recorded to reduce a deferred tax asset to that portion
which management believes is more likely than not to be realized.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued the
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
("SFAS 125"). The statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities
and provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. SFAS 125
became effective January 1, 1997 and is to be applied prospectively. Subsequent
to June 1996, FASB issued SFAS No. 127 "Deferral of the Effective Date of
Certain Provisions of SFAS 125" ("SFAS 127"). SFAS 127 delays the implementation
of SFAS 125 for one year for certain provisions, including repurchase
agreements, dollar rolls, securities lending and similar transactions. The
Company will delay implementation with respect to those affected provisions.
Adoption of SFAS 125 has not, and will not have a material impact on the
Company's results of operations, financial condition and liquidity.
In June of 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which is effective for years beginning after December 15, 1997. This statement
defines comprehensive income as "the change in equity of a business enterprise
during a
B-7
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
period from transactions and other events and circumstances from non-owner
sources, excluding investments by owners and distributions to owners" and
establishes standards for reporting and displaying comprehensive income and its
components in financial statements. The statement requires that the Company
classify items of other comprehensive income by their nature and display the
accumulated balance of other comprehensive income separately from retained
earnings in the equity section of the Statement of Financial Position. In
addition, reclassification of financial statements for earlier periods must be
provided for comparative purposes.
RECLASSIFICATIONS
Certain amounts in the prior years have been reclassified to conform to current
year presentation.
B-8
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVESTMENTS
FIXED MATURITIES AND EQUITY SECURITIES:
The following tables provide additional information relating to fixed maturities
and equity securities as of December 31,:
<TABLE>
<CAPTION>
1997
----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated Fair
Cost Gains Losses Value
------------------ ---------------- ------------- ----------------
(In Thousands)
<S> <C> <C> <C> <C>
FIXED MATURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $ 177,691 $ 1,231 $ 20 $ 178,902
Foreign government bonds 83,889 1,118 19 84,988
Corporate securities 2,263,898 36,857 2,017 2,298,738
Mortgage-backed securities 1,076 180 32 1,224
------------------ ---------------- ------------- ----------------
Total fixed maturities available for sale $2,526,554 $ 39,386 $ 2,088 $2,563,852
================== ================= ============== ===============
------------------ ---------------- ------------- ----------------
EQUITY SECURITIES AVAILABLE FOR SALE $ 1,289 $ 802 $ 109 $ 1,982
================== ================= ============== ===============
------------------ ---------------- ------------- ----------------
FIXED MATURITIES HELD TO MATURITY
Corporate securities $ 338,848 $ 11,427 $ 219 $ 350,056
------------------ ---------------- ------------- ----------------
Total fixed maturities held to maturity $ 338,848 $ 11,427 $ 219 $ 350,056
================== ================= ============== ===============
1996
----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated Fair
Cost Gains Losses Value
------------------ ---------------- ------------- ----------------
(In Thousands)
FIXED MATURITIES 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
------------------ ---------------- ------------- ----------------
Total fixed maturities available for sale $2,210,150 $ 31,252 $ 4,585 $2,236,817
================== ================= ============== ===============
------------------ ---------------- ------------- ----------------
EQUITY SECURITIES AVAILABLE FOR SALE $ 3,626 $ 819 $ 697 $ 3,748
================== ================= ============== ===============
------------------ ---------------- ------------- ----------------
FIXED MATURITIES HELD TO MATURITY
Corporate securities $ 405,731 $ 10,947 $ 576 $ 416,102
------------------ ---------------- ------------- ----------------
Total fixed maturities held to maturity $ 405,731 $ 10,947 $ 576 $ 416,102
================== ================= ============== ===============
</TABLE>
B-9
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
The amortized cost and estimated fair value of fixed maturities, categorized by
contractual maturities at December 31, 1997, are shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
---------------------------------- -----------------------------------
ESTIMATED ESTIMATED
FAIR FAIR
AMORTIZED COST VALUE AMORTIZED COST VALUE
----------------- ---------------- ----------------- -----------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 29,759 $ 29,731 $ 13,736 $ 13,838
Due after one year through five years 1,738,532 1,758,946 204,298 212,050
Due after five years through ten years 555,194 567,928 98,192 101,143
Due after ten years 201,993 206,023 22,622 23,025
Mortgage-backed securities 1,076 1,224 -- --
----------------- ---------------- ----------------- -----------------
Total $2,526,554 $2,563,852 $ 338,848 $ 350,056
================= ================ ================= =================
</TABLE>
Actual maturities will differ from contractual maturities because issuers have
the right to call or prepay obligations.
Proceeds from the sale of fixed maturities available for sale during 1997, 1996,
and 1995 were $2,796,306 thousand, $3,667,062 thousand, and $1,807,584 thousand,
respectively. Gross gains of $18,635 thousand, $22,078 thousand, and $25,909
thousand and gross losses of $7,990 thousand, $17,718 thousand, and $13,907
thousand were realized on those sales during 1997, 1996, and 1995, respectively.
Proceeds from the maturity of fixed maturities available for sale during 1997,
1996, and 1995 were $32,359 thousand, $219,192 thousand, and $79,103 thousand,
respectively. During the years ended December 31, 1997, 1996 and 1995, there
were no securities classified as held to maturity that were sold.
The following table describes the amortized cost and estimated fair value of
fixed maturity securities by rating agency equivalent as of December 31, 1997:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
-------------------------------- -------------------------------
AMORTIZED ESTIMATED FAIR AMORTIZED ESTIMATED FAIR
COST VALUE COST VALUE
--------------- ---------------- --------------- ---------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
AAA/AA/A $ 1,319,527 $ 1,334,823 $ 187,692 $ 194,797
BBB 1,047,203 1,062,641 128,481 131,820
BB 80,136 83,293 20,540 21,264
B 73,717 76,781 2,132 2,172
CCC or lower 5,943 6,288 -- --
In or near default 28 26 3 3
--------------- ---------------- --------------- ---------------
Total $ 2,526,554 $ 2,563,852 $ 338,848 $ 350,056
=============== ================ =============== ===============
</TABLE>
The NAIC rates certain public and private placement securities as "in or near
default" if they are currently non-performing or believed subject to default in
the near term. The Company's holdings of these securities, in the aggregate,
comprised less than 1% of total invested assets at December 31, 1997 and 1996.
B-10
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
MORTGAGE LOANS ON REAL ESTATE
The Company's mortgage loans were collateralized by the following property types
at December 31,
1997 1996
---------------------- -----------------------
(In Thousands)
Office buildings $ 4,607 20% $ 18,497 39%
Retail stores 8,090 35% 8,731 19%
Apartment complexes 6,080 27% 11,771 25%
Industrial buildings 4,010 18% 7,916 17%
---------------------- -----------------------
Net carrying value $ 22,787 100% $ 46,915 100%
====================== =======================
The mortgage loans are geographically dispersed throughout the United States
with the largest concentrations in Washington (29%) and Pennsylvania (27%).
SPECIAL DEPOSITS
Fixed maturities of $8,302 thousand and $8,744 thousand at December 31, 1997 and
1996, respectively, were on deposit with governmental authorities or trustees as
required by certain insurance laws.
OTHER LONG-TERM INVESTMENTS
The Company's "Other long-term investments" of $1,317 thousand and $4,528
thousand as of December 31, 1997 and 1996, respectively, are comprised of
non-real estate related interests. The Company's share of net income from these
entities is $2,158 thousand, $1,434 thousand and $345 thousand for the years
ended December 31, 1997, 1996 and 1995, respectively, and is reported in "Net
investment income."
B-11
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES
NET INVESTMENT INCOME arose from the following sources for the years ended
December 31:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities - available for sale $ 161,140 $ 152,445 $ 160,740
Fixed maturities - held to maturity 26,936 33,419 33,458
Equity securities 76 44 104
Mortgage loans on real estate 2,585 5,669 7,757
Investment real estate - 613 647
Policy loans 37,398 33,449 29,775
Short-term investments 22,011 16,780 15,092
Other 14,920 9,438 3,949
----------------- ----------------- -----------------
Gross investment income 265,066 251,857 251,522
Less: investment expenses (5,432) (4,529) (4,904)
----------------- ----------------- -----------------
Net investment income $ 259,634 $ 247,328 $ 246,618
================= ================= =================
</TABLE>
REALIZED INVESTMENT GAINS ,NET including charges for other than temporary
reductions in value, for the years ended December 31, were from the following
sources:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities - available for sale $ 9,039 $ 9,036 $ 11,359
Fixed maturities - held to maturity 821 - -
Equity securities 8 781 2,020
Mortgage loans on real estate 797 1,677 (90)
Investment real estate - 487 (99)
Other 309 (1,146) 10
----------------- ----------------- -----------------
Realized investment gains, net $ 10,974 $ 10,835 $ 13,200
================= ================= =================
</TABLE>
NET UNREALIZED INVESTMENT GAINS on securities available for sale are included in
the consolidated statement of financial position as a component of equity, net
of tax. Changes in these amounts for the years ended December 31, are as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Thousands)
<S> <C> <C> <C>
Balance, beginning of year $ 14,104 $ 32,056 $ (41,761)
Changes in unrealized investment gains
(losses) attributable to:
Fixed maturities 10,631 (43,853) 110,932
Equity securities 571 1,403 68
Participating group annuity contracts 1,292 (3,855) 5,092
Deferred policy acquisition costs (8,412) 17,321 (25,214)
Deferred federal income taxes (1,057) 11,032 (17,061)
----------------- ----------------- -----------------
Balance, end of year $ 17,129 $ 14,104 $ 32,056
================= ================= =================
</TABLE>
B-12
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. INCOME TAXES
The components of income taxes for the years ended December 31, are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------- --------------------- ---------------------
(In Thousands)
<S> <C> <C> <C>
Current tax expense:
U.S. $71,989 $59,489 $65,131
State and local 1,337 703 1,876
Foreign -- 4 7
--------------------- --------------------- ---------------------
Total 73,326 60,196 67,014
--------------------- --------------------- ---------------------
Deferred tax (benefit) expense:
U.S. (11,458) 18,413 12,196
State and local -- 526 348
--------------------- --------------------- ---------------------
Total (11,458) 18,939 12,544
--------------------- --------------------- ---------------------
Total income tax expense $61,868 $79,135 $79,558
===================== ===================== =====================
</TABLE>
The Company's income tax expense for the years ended December 31, differs from
the amount computed by applying the expected federal income tax rate of 35% to
income from operations before income taxes for the following reasons:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------- --------------------- --------------------
(In Thousands)
<S> <C> <C> <C>
Expected federal income tax expense $58,885 $79,925 $81,271
State income taxes 869 1,229 2,224
Other 2,114 (2,019) (3,937)
--------------------- --------------------- ---------------------
Total income tax expense $61,868 $79,135 $79,558
===================== ===================== ====================
</TABLE>
B-13
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. INCOME TAXES (CONTINUED)
Deferred tax assets and liabilities at December 31, resulted from the items
listed in the following table:
<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
(In Thousands)
<S> <C> <C>
Deferred income tax assets
Insurance reserves $ 40,896 $ 38,532
-------------------- --------------------
Total deferred income tax assets 40,896 38,532
-------------------- --------------------
Deferred income tax liabilities
Deferred acquisition costs 168,702 173,785
Net investment gains 8,161 12,502
Other 2,516 1,205
-------------------- --------------------
Total deferred income tax liabilities 179,379 187,492
-------------------- --------------------
Deferred federal income tax liabilities $ 138,483 $ 148,960
==================== ====================
</TABLE>
Management believes that based on its historical pattern of taxable income, the
Company will produce sufficient income in the future to realize its deferred tax
assets after valuation allowance. Adjustments to the valuation allowance will be
made if there is a change in management's assessment of the amount of the
deferred tax assets that are realizable.
The Internal Revenue Service (the "Service") has completed examinations of the
consolidated federal income tax returns through 1989. The Service has examined
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. The
Service has begun their examination of the years 1993 through 1995.
5. REINSURANCE
The Company assumes and cedes reinsurance with Prudential and other companies.
The effect of reinsurance for the years ended December 31, is summarized as
follows:
1997 1996 1995
----------- ----------- -----------
Life insurance premiums
Gross Amount $ 51,851 $ 53,776 $ 44,357
Ceded to other companies (3,724) (3,379) (2,268)
Assumed from other companies 1,369 1,128 --
----------- ----------- -----------
Net amount $ 49,496 $ 51,525 $ 42,089
=========== =========== ===========
1997 1996 1995
----------- ----------- -----------
Life insurance in force
Gross Amount $47,328,495 $47,430,580 $47,822,892
Ceded to other companies (1,292,395) (1,172,449) (822,619)
----------- ----------- -----------
Net amount $46,036,100 $46,258,131 $47,000,273
=========== =========== ===========
B-14
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. EQUITY
RECONCILIATION OF STATUTORY SURPLUS AND NET INCOME
Accounting practices used to prepare statutory financial statements for
regulatory purposes differ in certain instances from GAAP. The following table
reconciles the Company's statutory net income and surplus as of and for the
years ended December 31, determined in accordance with accounting practices
prescribed or permitted by the Arizona Department of Banking and Insurance with
net income and equity determined using GAAP.
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ ------------------
(In Thousands)
<S> <C> <C> <C>
STATUTORY NET INCOME $ 12,778 $ 48,846 $ 113,565
Adjustments to reconcile to net income on a GAAP basis:
Statutory income of subsidiaries 18,553 25,001 44,186
Deferred acquisition costs 38,003 48,862 (6,103)
Deferred premium 1,144 1,295 (743)
Insurance liabilities 26,517 28,662 32,665
Deferred taxes 11,458 (7,780) (27,669)
Valuation of investments 506 365 5,480
Other, net (2,585) 3,971 (8,737)
------------------ ------------------ ------------------
GAAP NET INCOME $ 106,374 $ 149,222 $ 152,644
================== ================== ==================
<CAPTION>
1997 1996
-------------------- --------------------
(In Thousands)
<S> <C> <C>
STATUTORY SURPLUS $ 853,130 $ 901,645
Adjustments to reconcile to equity on a GAAP basis:
Valuation of investments 97,787 95,411
Deferred acquisition costs 655,242 633,159
Deferred premium (14,817) (11,859)
Insurance liabilities (107,525) (124,781)
Deferred taxes (113,461) (124,823)
Other, net 135,161 30,229
-------------------- --------------------
GAAP STOCKHOLDER'S EQUITY $ 1,505,517 $ 1,398,981
==================== ====================
</TABLE>
The New York State Insurance Department ("Department") recognizes only statutory
accounting for determining and reporting the financial condition 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 GAAP in making such determinations.
B-15
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values presented below have been determined using available information
and valuation methodologies. Considerable judgment is applied in interpreting
data to develop the estimates of fair value. Accordingly, such estimates
presented may not be realized in a current market exchange. The use of different
market assumptions and/or estimation methodologies could have a material effect
on the estimated fair values. The following methods and assumptions were used in
calculating the fair values (for all other financial instruments presented in
the table, the carrying value approximates fair value.)
FIXED MATURITIES AND EQUITY SECURITIES
Fair values for fixed maturities and equity securities, 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 credit quality and its remaining
average life. The estimated fair value of certain non-performing private
placement securities is based on amounts estimated by management.
MORTGAGE LOANS ON REAL ESTATE
The fair value of the mortgage loan portfolio is primarily based upon the
present value of the scheduled future 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 of policy loans is calculated using a discounted cash
flow model based upon current U.S. Treasury rates and historical loan
repayments.
DERIVATIVE FINANCIAL INSTRUMENTS
The fair value of futures is estimated based on market quotes for a transactions
with similar terms.
The following table discloses the carrying amounts and estimated fair values of
the Company's financial instruments at December 31,:
<TABLE>
<CAPTION>
1997 1996
------------------------------------- --------------------------------------
ESTIMATED ESTIMATED
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
------------------ ------------------ ------------------ -------------------
(In Thousands)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities:
Available for sale $ 2,563,852 $ 2,563,852 $ 2,236,817 $ 2,236,817
Held to maturity 338,848 350,056 405,731 416,102
Equity securities 1,982 1,982 3,748 3,748
Mortgage loans 22,787 24,994 46,915 46,692
Policy loans 703,955 703,605 639,782 623,218
Short-term investments 316,355 316,355 169,830 169,830
Cash 71,358 71,358 73,766 73,766
Separate Account assets 8,022,079 8,022,079 5,336,851 5,336,851
Financial Liabilities:
Policyholders'
account balances $ 2,282,191 $ 2,282,191 $ 2,188,862 $ 2,188,862
Cash collateral for loaned
securities 143,421 143,421 -- --
Separate Account liabilities 7,948,788 7,948,788 5,277,454 5,277,454
Derivatives 653 653 -- --
</TABLE>
B-16
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. DERIVATIVE INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS
The fair value of liability positions in future instruments, which represents
the Company's current exposure to credit loss from other parties'
non-performance, was $653 thousand at December 31, 1997. This includes the
estimated fair values of outstanding derivative positions only and does not
include the fair values of associated financial and non-financial assets and
liabilities, which generally offset derivative notional amounts. The fair value
amounts presented also do not reflect the netting of amounts pursuant to right
of setoff, qualifying master netting agreements with counterparties or
collateral arrangements.
9. RELATED PARTY TRANSACTIONS
SERVICE AGREEMENTS
Prudential, and Pruco Securities Corporation, an indirect wholly-owned
subsidiary of Prudential, operate under service and lease agreements whereby
services of officers and employees (except for those agents employed by the
Company in Taiwan), supplies, use of equipment and office space are provided.
The net cost of these services allocated to the Company were $139,489 thousand,
$101,662 thousand and $98,119 thousand for the years ended December 31, 1997,
1996, and 1995, respectively.
REINSURANCE
The Company currently has three reinsurance agreements in place with Prudential
(the reinsurer). Specifically a 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, 1997, 1996,
and 1995.
10. 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.
In the normal course of business, the Company is subject to various claims and
assessments. Management believes the settlement of these matters would not have
a material effect on the financial position or results of operations of the
Company.
11. 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 statutory surplus as of December 31 of the preceding year
or the net gain from operations of the preceding calendar year. Cash dividends
may only be paid out of surplus derived from realized net profits. Based on
these limitations and the Company's surplus position at December 31, 1997, the
Company would be permitted a maximum of $15,260 thousand in dividend
distribution in 1998, all of which could be paid in cash, without approval from
The State of Arizona Department of Insurance.
B-17
<PAGE>
Report of Independent Accountants
---------------------------------
To the Board of Directors of
Pruco Life Insurance Company
In our opinion, the accompanying consolidated statements of financial position
and the related consolidated statements of operations, of changes in
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, 1997 and 1996, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
managememt; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with 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 provide a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
New York, New York
March 23, 1998
B-18
<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 operations, changes
in stockholder's equity, and cash flows of Pruco Life Insurance Company and
subsidiaries for the year ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such consolidated statements of operations, changes in
stockholder's equity, and cash flows present fairly, in all material respects,
the results of operations and cash flows of Pruco Life Insurance Company and
subsidiaries for the year ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Parsippany, NJ
December 19, 1996
B-19
<PAGE>
[LOGO]
SINGLE PREMIUM VARIABLE LIFE ACCOUNT
VARIABLE LIFE INSURANCE CONTRACTS
- ----------------------------------------------------============================
----------------
BULK RATE
U.S. Postage
PAID
Summit, NJ
Permit No. 657
----------------
A SUBSIDIARY OF
[LOGO]
PRUCO LIFE INSURANCE COMPANY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (888) PRU-2888
<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 Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
Arizona, being the state of organization of Pruco Life Insurance Company
("Pruco"), permits entities organized under its jurisdiction to indemnify
directors and officers with certain limitations. The relevant provisions of
Arizona law permitting indemnification can be found in Section 10-850 et seq. of
the Arizona Statues Annotated. The text of Pruco's By-law, Article VIII, which
relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its Form 10-Q filed August 15, 1997.
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 20 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. Ikwhan Oh, FSA, MAAA, 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 1)
(2) Not Applicable
(3) Distribution Contracts:
(a) Distribution Agreement between Pruco Securities
Corporation and Pruco Life Insurance Company. (Note 1)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to
the Sale of the Contracts. (Note 1)
(c) Revised Schedule of Sales Commissions. (Note 9)
(4) Not Applicable
(5) (a) Flexible Premium Variable Life Insurance Contract.
(Note 1)
(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 May 6,
1997. (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_Ikwhan Oh, FSA, MAAA, 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 M.
Bethke, Mendel A. Melzer (Note 12)
(b) James M. Schlomann (Note 13)
(c) Kiyofumi Sakaguchi (Note 14)
(d) James J. Avery, Jr. (Note 16)
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 Exhibit 3(ii) to Form 10-Q for Pruco
Life Insurance Company, File No. 33-37587, filed August 15, 1997.
(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. 4 to
Form S-1, Registration No. 33-86780, filed April 9, 1998 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 , 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.
(Note 16) Incorporated by reference to Post-Effective Amendment No. 2 to
Form S-6, Registration No. 333-07451, filed June 25, 1997 on
behalf of the Pruco Life Variable Appreciable Account.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993, the Registrant
certifies that this Amendment is filed solely for one or more of the purposes
specified in Rule 485(b)(1) under the Securities Act of 1933 and that no
material event requiring disclosure in the prospectus, other than one listed in
Rule 485(b)(1), has occurred since the effective date of the most recent
Post-Effective Amendment to the Registration Statement which included a
prospectus, and has caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal hereto affixed
and attested, all in the City of Newark and the State of New Jersey, on this 24
day of April, 1998.
(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 SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 22 to the Registration Statement has been signed
below by the following persons in the capacities indicated on this 24 day of
April, 1998.
SIGNATURES TITLE
---------- -----
/s/ * President and Director
- -------------------------------------
(ESTHER MILNES)
/s/ * Chief Accounting Officer and Comptroller
- -------------------------------------
(JAMES M. SCHLOMANN)
/s/ * Director
- -------------------------------------
(JAMES J. AVERY, JR.)
/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)
/s/ * Director
- -------------------------------------
(I. EDWARD PRICE)
/s/ * Director
- -------------------------------------
(KIYOFUMI SAKAGUCHI)
II-5
<PAGE>
EXHIBIT INDEX
A1. Resolution of the Board of Directors Page II-7
A3(a). Distribution Agreement Page II-9
A3(b). Selected Broker Agreement Page II-19
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to Page II-29
the legality of the securities being registered.
5. Flexible Premium Variable Life Insurance Contract Page II-30
6. Opinion and Consent of Ikwhan Oh, FSA, MAAA, as Page II-53
to actuarial matters pertaining to the securities
being registered
10(a) Consent of Deloitte & Touche LLP, independent auditors. Page II-54
10(b) Consent of Price Waterhouse, LLP, independent accountants. Page II-55
27 Financial Data Schedule
II-6
I, Thomas C. Castano, the undersigned, Assistant Secretary of Pruco Life
Insurance Company, do hereby certify that the following is a true copy of a
resolution duly adopted by Written Unanimous Consent of the Executive Committee
of the Board of Directors of said Company effective April 15, 1985 and that the
said resolution is in full force and effect at this date:
"RESOLVED, that the Company hereby establishes, pursuant to Section 20-651 of
the Arizona Insurance Code, a variable contract account to be designated
initially as the "Pruco Life Single Premium Variable Life Account" (hereinafter
in these resolutions referred to as the ("Account"); and
"FURTHER RESOLVED, that the Company shall receive and hold in the Account
amounts arising from (i) purchase payments received made pursuant to certain
Single Premium Variable Life Insurance Contracts ("Variable Contracts") of the
Company sold as part of its Single Premium Variable Life Insurance Program
("Program") and (ii) such assets of the Company as the proper officers of the
Company may deem prudent and appropriate to have invested in the same manner as
the assets applicable to its reserve liability under Variable Contracts and
lodged in the Account, and such amounts and the dividends, interest and gains
produced thereby shall be invested and reinvested, subject to the rights of the
holders of such Variable Contracts, in shares of Pruco Life Series Fund, Inc.,
an open-end diversified management investment company of the series type, at the
net asset value of such shares at the time of acquisition; and
"FURTHER RESOLVED, that the Account shall be registered as a unit investment
trust under the Investment Company Act of 1940, and that the proper officers of
the Company be and they hereby are authorized to sign and file, or cause to be
filed, with the Securities and Exchange Commission a registration statement, on
behalf of the Account, as registrant, under the Investment Company Act of 1940
("Investment Company Act Registration"), and to sign and file, or cause to be
filed, an application, including any amendments thereto, for an order under
Section 6 (c) of the Investment Company Act of 1940 for such exemptions from the
provisions of that Act as may be necessary or desirable ("Investment Company Act
Application"); and
"FURTHER RESOLVED, that the Company shall as part of its Program sell Variable
Contracts on a variable basis and that the proper officers of the Company be and
they hereby are authorized to sign and file, or cause to be filed, with the
Securities and Exchange Commission, on behalf of the Company, as issuer, a
registration statement, including the financial statements and schedules,
exhibits and form of prospectus required as a part thereof, for the registration
of the offering and sale of such Variable Contracts, to the extent
II-7
<PAGE>
they represent participating interests in the Account, under the Securities Act
of 1933 ("Securities Act Registration"); and to pay the registration fees
required in connection therewith; and
"FURTHER RESOLVED, that the proper officers of the Company are authorized and
directed to sign and file, or cause to be filed, such amendment or amendments of
such Investment Company Act Registration, Investment Company Act Application and
Securities Act Registration as they may find necessary or advisable from time to
time; and
"FURTHER RESOLVED, that the signature of any director or officer required by law
to affix his signature to such Investment Company Act Registration, Investment
Company Act Application and Securities Act Registration, or to any amendment
thereof, may be affixed by said director or officer personally, or by an
attorney-in-fact duly constituted in writing by said director or officer to sign
his name thereto; and
"FURTHER RESOLVED, that the Senior Vice President and General Counsel of the
Company is appointed agent of the Company to receive any and all notices and
communications from the Securities and Exchange Commission relating to such
Investment Company Act Registration, Investment Company Act Application and
Securities Act Registration and any and all amendments thereof; and
"FURTHER RESOLVED, that the proper officers of the Company be and they hereby
are authorized to take whatever steps may be necessary or desirable to comply
with such of the laws and regulations of the several states as may be applicable
to the Company's Program; and
"FURTHER RESOLVED, that the proper officers of the Company be and they hereby
are authorized, in the name and on behalf of the Company, to execute and deliver
such corporate documents and certificates and to take such further action as may
be necessary or desirable, including, but not limited to, the payment of
applicable fees, in order to effectuate the purposes of the foregoing
resolutions or any of them."
July 25, 1985
/s/ Thomas C. Castano
(SEAL) ------------------------------------
Assistant Secretary
II-8
DISTRIBUTION AGREEMENT--SINGLE PREMIUM CONTRACTS
------------------------------------------------
AGREEMENT made this 25th day of July, 1985, by and between Pruco Life
Insurance Company, an Arizona corporation ("Company"), on its own behalf and on
behalf of the Pruco Life Single Premium Variable Life Account and the Pruco Life
Single Premium Variable Annuity Account (collectively, "Accounts") and Pruco
Securities Corporation, a New Jersey corporation ("Distributor").
WITNESSETH:
WHEREAS, the Company has established and maintains the Pruco Life Single
Premium Variable Life Account and the Pruco Life Single Premium Variable Annuity
Account, separate investment accounts, pursuant to the laws of Arizona for the
purpose of selling single premium variable life insurance contracts and single
payment variable annuity contracts (collectively, "Contracts"), respectively, to
commence after the effectiveness of respective Registration Statements filed
with the Securities and Exchange Commission on Form S-6 pursuant to the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, The Accounts are registered as unit investment trusts under the
Investment Company Act of 1940 (the "1940 Act"); and
II-9
<PAGE>
WHEREAS, Distributor is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Securities Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Company and the Distributor wish to enter into an agreement to
have the Distributor act as the Company's principal underwriter for the sale of
the Contracts through the Accounts;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of the Distributor
-------------------------------
The Company agrees that during the term of this agreement it will take all
action which is required to cause the Contracts to comply as insurance products
and registered securities with all applicable federal and state laws and
regulations. The Company appoints the Distributor and the Distributor agrees to
act as the principal underwriter for the sale of Contracts to the public, during
the term of this Agreement, in each state and other jurisdiction in which such
Contracts may lawfully be sold. Distributor shall offer the Contracts for sale
and distribution at premium rates set by the Company. Applications for the
Contracts shall be solicited only by representatives duly and appropriately
licensed or otherwise qualified for the sale
II-10
<PAGE>
of such Contracts in each state or other jurisdiction. Company shall undertake
to appoint Distributor's qualified representatives as life insurance agents of
Company. Completed applications for Contracts shall be transmitted directly to
the Company for acceptance or rejection in accordance with underwriting rules
established by the Company. Initial premium payments under the Contracts shall
be made by check payable to the Company and shall be held at all times by
Distributor or its representatives in a fiduciary capacity and remitted promptly
to the Company. Anything in this Agreement to the contrary notwithstanding, the
Company retains the ultimate right to control the sale of the Contracts and to
appoint and discharge life insurance agents of the Company. The Distributor
shall be held to the exercise of reasonable care in carrying out the provisions
of this Agreement.
2. Sales Agreements
----------------
Distributor is hereby authorized to enter into separate written agreements,
on such terms and conditions as Distributor may determine not inconsistent with
this Agreement, with one or more organizations which agree to participate in the
distribution of either or both of the single premium variable life contracts or
the single premium variable annuity contracts. Such organization (hereafter
"Dealer") shall be both registered as a broker/dealer under
II-11
<PAGE>
the Securities Exchange Act and a member of NASD. Dealer and its agents or
representatives soliciting applications for Contracts shall be duly and
appropriately licensed, registered or otherwise qualified for the sale of such
Contracts (and the riders and other policies offered in connection therewith)
under the insurance laws and any applicable blue-sky laws of each state or other
jurisdiction in which the Company is licensed to sell the Contracts.
Distributor shall have the responsibility for ensuring that Dealer
supervises its representatives. Dealer shall assume any legal responsibilities
of Company for the acts, commissions or defalcations of such representatives
insofar as they relate to the sale of the Contracts. Applications for Contracts
solicited by such Dealer through its agents or representatives shall be
transmitted directly to the Company, and if received by Distributor, shall be
forwarded to Company. All premium payments under the Contracts shall be made by
check to Company and, if received by the Distributor, shall be held at all times
in a fiduciary capacity and remitted promptly to Company.
3. Life Insurance Agents
---------------------
Company shall be responsible for insuring that Dealers are duly qualified,
under the insurance laws of the applicable jurisdictions, to sell the Contracts.
II-12
<PAGE>
4. Suitability
-----------
Company wishes to ensure that Contracts sold by Distributor will be issued
to purchasers for whom the Contract will be suitable. Distributor shall take
reasonable steps to ensure that the various representatives appointed by it
shall not make recommendations to an applicant to purchase a Contract in the
absence of reasonable grounds to believe that the purchase of the Contract is
suitable for such applicant. While not limited to the following, a determination
of suitability shall be based on information furnished to a representative after
reasonable inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and the likelihood that
the applicant will continue to make any premium payments contemplated by the
Contract.
5. Promotion Materials
-------------------
Company shall have the responsibility for furnishing to Distributor and its
representatives sales promotion materials and individual sales proposals related
to the sale of the Contracts. Distributor shall not use any such materials that
have not been approved by Company.
II-13
<PAGE>
6. Compensation
------------
Company shall arrange for the payment of commissions directly to those
registered representatives of Distributor who are entitled thereto in connection
with the sale of the Contracts on behalf of Distributor, in the amounts and on
such terms and conditions as Company and Distributor shall determine; provided
that such terms, conditions and commissions shall be as are set forth in or as
are not inconsistent with a Prospectus included as part of the Registration
Statement for the Contracts and effective under the 1993 Act.
Company shall arrange for the payment of commissions directly to those
Dealers who sell Contracts under agreements entered into pursuant to paragraph
2, hereof, in amounts as may be agreed to among the parties and specified in
such written agreements.
Company shall reimburse Distributor for the costs and expenses incurred by
Distributor in furnishing or obtaining the services, materials and supplies
required by the terms of this Agreement in the initial sales efforts and the
continuing obligations hereunder.
II-14
<PAGE>
7. Records
-------
Distributor shall have the responsibility for maintaining the records of
representatives licensed, registered and otherwise qualified to sell the
Contracts. Distributor shall maintain such other records as are required of it
by applicable laws and regulations. The books, accounts and records of Company,
the Accounts and Distributor shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions. All records maintained by
the Distributor in connection with this Agreement shall be the property of the
Company and shall be returned to the Company upon termination of this Agreement
free from any claims or retention of rights by the Distributor. The Distributor
shall keep confidential any information obtained pursuant to this Agreement and
shall disclose such information only if the Company has authorized such
disclosure, or if such disclosure is expressly required by applicable federal or
state regulatory authorities.
8. Investigation and Proceeding
----------------------------
(a) Distributor and Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Contracts distributed under this Agreement. Distributor and
Company
II-15
<PAGE>
further agree to cooperate fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to Company, Distributor, their
affiliates and their agents or representatives to the extent that such
investigation or proceeding is in connection with Contracts distributed under
this Agreement. The Distributor shall furnish applicable federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement which such authorities may request in order to
ascertain whether the Company's operations are being conducted in a manner
consistent with any applicable law or regulation.
(b) In the case of a substantive customer complaint, Distributor and
Company will cooperate in investigating such complaint and any response to such
complaint will be sent to the other party to this Agreement for approval not
less than five business days prior to its being sent to the customer or
regulatory authority, except that if a more prompt response is required, the
proposed response shall be communicated by telephone or telegraph.
9. Termination
-----------
This Agreement shall terminate automatically upon its assignment without
the prior written consent of both parties. This Agreement may be terminated at
any time by
II-16
<PAGE>
either party on 60 days' written notice to the other party, without the
payment of any penalty. Upon termination of this Agreement all authorizations,
rights and obligations shall cease except the obligation to settle accounts
hereunder, including commissions on premiums subsequently received for Contracts
in effect at the time of termination, and the agreements contained in paragraph
8. hereof.
10. Regulation
----------
This Agreement shall be subject to the provisions of the 1940 Act and the
Securities Exchange Act and the rules, regulations, and rulings therunder and of
the applicable rules and regulations of the NASD, from time to time in effect,
and the terms hereof shall be interpreted and construed in accordance therewith.
11. Severability
------------
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
II-17
<PAGE>
12. Applicable Law
----------------
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PRUCO LIFE INSURANCE COMPANY
By /s/ DONALD G. SOUTHWELL
-------------------------
President
PRUCO SECURITIES CORPORATION
By /s/ GEORGE E. HERTZ
------------------------------
President
II-18
SELECTED BROKER AGREEMENT
AGREEMENT dated ____________, 1985, by and between Pruco Securities
Corporation (Distributor), a New Jersey corporation, and _________________
(Broker), a _______________ corporation.
WITNESSETH:
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:
A. Definitions
(1) Contracts -- The single premium variable life insurance contracts
and/or single payment variable annuity contracts which Pruco Life
Insurance Company (Company), an Arizona corporation, proposes to issue
and for which Distributor has been appointed the principal underwriter
pursuant to a Distribution Agreement, a copy of which has been
furnished to Broker.
(2) Pruco Life Single Premium Variable Life Account and/or Pruco Life
Single Premium Variable Annuity Account (collectively the "Account")
-- Separate accounts established and maintained by Company pursuant to
the laws of Arizona to fund the benefits under the Contracts.
(3) Pruco Life Series Fund, Inc., or the Fund -- An open-end management
investment company registered under the 1940 Act, shares of which are
sold to the Account in connection with the sale of the Contracts.
(4) Registration Statement -- The registration statements and amendments
thereto relating to the Contracts, the Account, and the Fund,
including financial statements and all exhibits.
II-19
<PAGE>
(5) Prospectus -- The prospectuses included within the registration
Statements referred to herein.
(6) 1933 Act-- The Securities Act of 1933, as amended.
(7) 1934 Act -- The Securities Exchange Act of 1934, as amended.
(8) SEC -- The Securities and Exchange Commission.
B. Agreements of Distributor
(1) Pursuant to the authority delegated to it by Company, Distributor
hereby authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons provided that there
is an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that the
Contracts are qualified for sale under all applicable securities and
insurance laws of the state or jurisdiction in which the application
will be solicited. In connection with the solicitation of applications
for Contracts, Broker is hereby authorized to offer riders that are
available with the Contracts in accordance with instructions furnished
by Distributor or Company.
(2) Distributor, during the term of this Agreement, will notify Broker of
the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation of
any proceedings for that purpose or for any other purpose relating to
the registration and/or offering of the Contracts and of any other
action or circumstance that may prevent the lawful sale of the
Contracts in any state or jurisdiction.
(3) During the term of this Agreement, Distributor shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.
II-20
<PAGE>
C. Agreements of Broker
(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the National Association of
Securities Dealers, Inc. and that the agents or representatives of
Broker who will be soliciting applications for the Contracts also will
be duly registered representatives of Broker.
(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use its best efforts to find purchasers for the
contracts acceptable to Company. In meeting its obligation to use its
best efforts to solicit applications for Contracts, Broker shall,
during the term of this Agreement, engage in the following activities:
(a) Continuously utilize training, sales and promotional materials
which have been approved by Company;
(b) Establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its agents or
representatives and submit periodic reports to Distributor as may
be requested on the results of such inspections and the
compliance with such procedures.
(c) Broker shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to
an applicant to purchase a Contract in the absence of reasonable
grounds to believe that the purchase of the Contract is suitable
for such applicant. While not limited to the following, a
determination of
II-21
<PAGE>
suitability shall be based on information furnished to a
representative after reasonable inquiry of such applicant
concerning the applicant's insurance and investment objectives,
financial situation and needs, and the likelihood that the
applicant will continue to make the premium payments contemplated
by the Contract.
(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms and
other required documentation to an office of the Company designated by
Distributor. Checks or money orders in payment of initial premiums
shall be drawn to the order of "Pruco Life Insurance Company." Broker
acknowledges that the Company retains the ultimate right to control
the sale of the Contracts and that the Distributor or Company shall
have the unconditional right to reject, in whole or in part, any
application for the Contract. In the event Company or Distributor
rejects an application, Company immediately will return all payments
directly to the purchaser and Broker will be notified of such action.
In the event that any purchaser of a Contract elects to return such
Contract pursuant to Rule 6e-2(b)(13)(viii) of the 1940 Act, the
purchaser will receive a refund of any premium payments, plus or minus
any change due to investment performance in the value of the invested
portion of such premiums; however, if applicable state law so
requires, the purchaser who exercises his short-term cancellation
right will receive a refund of all payments made, unadjusted for
investment experience prior to the cancellation. The Broker will be
notified of any such action.
II-22
<PAGE>
(4) Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its agents or representatives, or
any employees thereof as employees of Company or Distributor in
connection with the solicitation of applications for Contracts.
Broker, its agents or representatives, and its employees shall not
hold themselves out to be employees of Company or Distributor in this
connection or in any dealings with the public.
(5) Broker agrees that any material it develops, approves or uses for
sales, training, explanatory or other purposes in connection with the
solicitation of applications for Contracts hereunder (other than
generic advertising materials which do not make specific reference to
the Contracts) will not be used without the prior written consent of
Distributor and, where appropriate, the endorsement of Company to be
obtained by Distributor.
(6) Solicitation and other activities by Broker shall be undertaken only
in accordance with applicable laws and regulations. No agent or
representative of Broker shall solicit applications for the contracts
until duly licensed and appointed by Company as a life insurance and
variable contract broker or agent of Company in the appropriate states
or other jurisdictions. Broker shall ensure that such agents or
representatives fulfill any training requirements necessary to be
licensed. Broker understands and acknowledges that neither it nor its
agents or representatives is authorized by Distributor or Company to
give any information or make any representation in connection with
this Agreement or the offering of the Contracts other than those
contained in the Prospectus or other solicitation material authorized
in writing by Distributor or Company.
II-23
<PAGE>
(7) Broker shall not have authority on behalf of Distributor or Company
to: make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies
or premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract
for the expenditure of the funds of Distributor, nor shall Broker
possess or exercise any authority on behalf of Broker by this
Agreement.
(8) Broker shall have the responsibility for maintaining the records of
its representatives licensed, registered and otherwise qualified to
sell the Contracts. Broker shall maintain such other records as are
required of it by applicable laws and regulations. The books, accounts
and records of Company, the Account, Distributor and Broker relating
to the sale of the Contracts shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions. All
records maintained by the Broker in connection with this Agreement
shall be the property of the Company and shall be returned to the
Company upon termination of this Agreement, free from any claims or
retention of rights by the Broker. The Broker shall keep confidential
any information obtained pursuant to this Agreement and shall disclose
such information, only if the Company has authorized such disclosure,
or if such disclosure is expressly required by applicable federal or
state regulatory authorities.
D. Compensation
(1) Pursuant to the Distribution Agreement between Distributor and
Company, Distributor shall cause Company to arrange for the
II-24
<PAGE>
payment of commissions to Broker as compensation for the sale of each
contract sold by an agent or representative of Broker. The amount of
such compensation shall be based on a schedule to be determined by
agreement of Company, Distributor and Broker. Company shall identify
to Broker with each such payment the name of the agent or
representative of Broker who solicited each Contract covered by the
payment.
(2) Neither Broker nor any of its agents or representatives shall have any
right to withhold or deduct any part of any premium it shall receive
for purposes of payment of commission or otherwise. Neither Broker nor
any of its agents or representatives shall have an interest in any
compensation paid by Company to Distributor, now or hereafter, in
connection with the sale of any Contracts hereunder.
E. Complaints and Investigations
(1) Broker and Distributor jointly agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts marketed under
this Agreement. Broker and Distributor further agree to cooperate
fully in any securities regulatory investigation or proceeding or
judicial proceeding with respect to Broker, Distributor, their
affiliates and their agents or representatives to the extent that such
investigation or proceeding is in connection with Contracts marketed
under this Agreement. Broker shall furnish applicable federal and
state regulatory authorities with any information or reports in
connection with its services under this Agreement which such
authorities may request in order to ascertain whether the
II-25
<PAGE>
Company's operations are being conducted in a manner consistent with
any applicable law or regulation.
F. Term of Agreement
(1) This Agreement shall continue in force for one year from its effective
date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally
terminate this Agreement upon thirty (30) days' written notice to the
other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in Section
E hereof; (b) the indemnity set forth in Section G hereof; and (c) the
obligations to settle accounts hereunder, including payments on
premiums subsequently received for Contracts in effect at the time of
termination or issued pursuant to applications received by Broker
prior to termination.
G. Indemnity
(1) Broker shall be held to the exercise of reasonable care in carrying
out the provisions of this Agreement.
(2) Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liabilities, joint or several, to which Broker or such officer or
director become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact, required to be stated
therein or necessary to make the statements therein not misleading,
contained in any Registration Statement or any
II-26
<PAGE>
post-effective amendment thereof or in the Prospectus or any amendment
or supplement to the Prospectus.
(3) Broker agrees to indemnify and hold harmless Company and Distributor
and each of their current and former directors and officers and each
person, if any, who controls or has controlled Company or Distributor
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which Company or Distributor
and any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by Brokers; or
(b) Claims by agents or representatives or employees of Broker for
commissions, service fees, development allowances or other
compensation or renumeration of any type;
(c) The failure of Broker, its officers, employees, or agents to
comply with the provisions of this Agreement; and Broker will
reimburse Company and Distributor and any director or officer or
controlling person of either for any legal or other expenses
reasonably incurred by Company, Distributor, or such director,
officer or controlling person in connection with investigating or
defending any such loss, claims, damage, liability or action.
This indemnity agreement will be in addition to any liability
which Broker may otherwise have.
II-27
<PAGE>
H. Assignability
This Agreement shall not be assigned by either party without the written
consent of the other.
I. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey.
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PRUCO SECURITIES CORPORATION
(Distributor)
By______________________________
(Broker)
By_______________________________
II-28
CLIFFORD I. KIRSCH
Chief Legal Officer
PRUCO LIFE INSURANCE COMPANY
[LOGO] 213 Washington Street, Newark, NJ 07102-2992
201 802-7333 Fax: 201 802-8357
April 27, 1998
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 of New Jersey as a separate account for assets
applicable to certain single premium variable life insurance contracts, pursuant
to the provisions of Section 17B:28-7 of the Revised Statutes of New Jersey. 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 Number 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 New Jersey
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 of New Jersey may
conduct.
(4) The single premium variable life insurance contracts are legal and
binding obligations of Pruco Life of New Jersey in accordance with
their terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as I judged to be necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Clifford E. Kirsch, Esq.
II-29
EXHIBIT 99.5
PRUCO LIFE INSURANCE COMPANY
Phoenix, Arizona
PRUDENTIAL [LOGO] A STOCK COMPANY SUBSIDIARY OF
The Prudential Insurance Company of America
================================================================================
INSURED CONTRACT NUMBER
CONTRACT DATE
FACE AMOUNT
AGENCY
================================================================================
We will pay the beneficiary the proceeds of this contract promptly if
we receive due proof that the Insured died. We make this promise
subject to all the provisions of the contract.
The cash value may increase or decrease daily depending on the payment
of premiums, the investment experience of the separate account and the
level of mortality charges made. There is no guaranteed minimum.
The Death Benefit will be the insurance amount which is the greater
of (1) the face amount we show above, and (2) the contract fund times
the attained age factor that applies.
Please read this contract with care. A guide to its contents is on
the last page before the back cover. A summary is on page 5. If there
is ever a question about it, or if there is a claim, just see a
Company representative or get in touch with one of our offices.
RIGHT TO CANCEL CONTRACT.--You may return this contract to us within
(1) 10 days after you get it, or (2) 45 days after Part 1 of the
application was signed, or (3)10 days after we mail or deliver the
Notice of Withdrawal Right, whichever is latest. All you have to do is
take the contract or mail it to one of our offices or to the
representative who sold it to you. It will be canceled from the start
and we will promptly give you the value of your Contract Fund on the
date you return the contract to us. We will also give back any charges
we made in accord with this contract.
Signed for Pruco Life Insurance Company,
an Arizona Corporation.
/s/ [SPECIMEN] /s/ [SPECIMEN]
Secretary President
VARIABLE LIFE INSURANCE POLICY WITH PREMIUM FLEXIBILITY. INITIAL PREMIUM, WITH
ADDITIONAL PREMIUMS PAYABLE DURING INSURED'S LIFETIME AS STATED IN THE CONTRACT.
BENEFITS REFLECT PREMIUM PAYMENTS, INVESTMENT RESULTS AND MORTALITY CHARGES.
INSURANCE PAYABLE ONLY UPON DEATH. NON-PARTICIPATING.
VFL--85
II-30
<PAGE>
Page 2 (VFL--85)
II-31
<PAGE>
CONTRACT DATA
INSURED'S SEX AND ISSUE AGE M-35
RATING CLASS STANDARD
INSURED JOHN DOE XX XXX XXX CONTRACT NUMBER
JULY 1, 1985 CONTRACT DATE
FACE AMOUNT $100,000--
AGENCY R-NK 1
BENEFICIARY CLASS 1 MARY DOE, WIFE
CLASS 2 ROBERT DOE, SON
SCHEDULE OF PREMIUMS
INITIAL PREMIUM IS $XX,XXX.XX
*****END OF SCHEDULE*****
INTEREST RATES
FOR THE PORTION OF THE CONTRACT FUND IN THE FIXED ACCOUNT: SEE GUARANTEED
INTEREST AND EXCESS INTEREST ON PAGES 10 AND 11.
FOR THE PORTION OF THE CONTRACT FUND EQUAL TO ANY CONTRACT LOAN: SEE INTEREST
CREDIT ON PAGE 10.
CONTRACT DATA CONTINUED ON NEXT PAGE
PAGE 3 (85)
II-32
<PAGE>
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
LIST OF SUBACCOUNTS AND PORTFOLIOS
EACH SUBACCOUNT OF THE PRUCO LIFE SINGLE PREMIUM VARIABLE LIFE ACCOUNT INVESTS
IN A SPECIFIC PORTFOLIO OF THE PRUCO LIFE SERIES FUND. WE SHOW BELOW THE
SUBACCOUNTS AND THE FUND PORTFOLIOS THEY INVEST IN.
FUND
SUBACCOUNT PORTFOLIO
- ---------- ---------
MONEY MARKET MONEY MARKET
BOND BOND
COMMON STOCK COMMON STOCK
AGGRESSIVELY MANAGED FLEXIBLE AGGRESSIVELY MANAGED FLEXIBLE
CONSERVATIVELY MANAGED FLEXIBLE CONSERVATIVELY MANAGED FLEXIBLE
ZERO COUPON BOND (1990) ZERO COUPON BOND (1990)
ZERO COUPON BOND (1995) ZERO COUPON BOND (1995)
ZERO COUPON BOND (2000) ZERO COUPON BOND (2000)
*****END OF LIST*****
PRUCO LIFE WILL MAIL TO THE CONTRACT OWNER A CONFIRMATION OF THE INITIAL PREMIUM
PAYMENT. THIS CONFIRMATION WILL SHOW THE INITIAL ALLOCATION OF THE INVESTED
PREMIUM AMOUNT (SEE PAGE 10) TO THE SUBACCOUNTS AND/OR THE FIXED ACCOUNT (SEE
PAGE 9).
SERVICE OFFICE--PLEASE DIRECT ANY COMMUNICATIONS ABOUT THIS CONTRACT TO:
PRUCO LIFE INSURANCE COMPANY, P.O. BOX 2925, PHOENIX, ARIZONA 85062.
Page 3A(85)
II-33
<PAGE>
POLICY NO. XXX XXX XXX
ENDORSEMENTS
(ONLY WE CAN ENDORSE THIS POLICY.)
PAGE 4 (85)
II-34
<PAGE>
CONTRACT SUMMARY
We offer this summary to help you understand this contract. We do not intend
that it change any of the provisions of the contract.
This is a contract of life insurance. It calls for the payment of an initial
premium. Additional premiums may be payable as described on page 8. The initial
premium minus any applicable deductions for state and/or local premium taxes is
the contract fund at the start. The value of the contract fund will vary with
the payment of premiums, the investment performance of those subaccounts of the
Pruco Life Single Premium Variable Life Account that you select, the extent to
which interest is credited to any portion allocated to the fixed account and
the extent to which the monthly mortality charges are less than the guaranteed
maximums.
We describe on page 8 the way in which the contract may go into default. If the
contract remains in default at the end of its days of grace, the contract will
end and have no value.
Proceeds is a word we use to mean the amount we would pay if we were to settle
the contract in one sum. To compute the proceeds that may arise from the
Insured's death, we start with a basic amount. We may adjust that amount if
there is a loan. The table below tells what the basic amount is. The table will
refer you to the parts of the contract that tell you how we may adjust the basic
amount. If you surrender the contract, the proceeds will be the net cash value.
We describe it under Cash Value Option on page 11.
Proceeds often are not taken in one sum. For instance, on surrender, you may be
able to put proceeds under a settlement option to provide retirement income or
for some other purpose. Also, for all or part of the proceeds that arise from
the Insured's death, you may be able to choose a manner of payment for the
beneficiary. If the Insured dies and an option has not been chosen, the
beneficiary may be able to choose one. We will pay interest under Option 3 from
the date of death on any proceeds to which no other manner of payment applies.
This will be automatic as we state on page 17. There is no need to ask for it.
You and we may agree on a change in the ownership of this contract. Also, unless
we endorse it to say otherwise, the contract gives you these rights, among
others:
O You may change the beneficiary under it.
O You may borrow on it up to its loan value.
O You may surrender it for its net cash value.
O You may change the allocation of additional premiums, minus any deductions
for state and/or local premium taxes, among the subaccounts and the fixed
account.
O You may transfer amounts among subaccounts and the fixed account.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE OF BASIC AMOUNTS
- -----------------------------------------------------------------------------------------------------------------------------------
When the proceeds arise from the Insured's death:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
And the Contract Is In Force: Then The Basic Amount Is: And We Adjust The Basic Amount For:
- -----------------------------------------------------------------------------------------------------------------------------------
other than during the days of grace the insurance amount contract debt
(see page 8) (see page 10) (see page 12)
- -----------------------------------------------------------------------------------------------------------------------------------
during the days of grace the insurance amount contract debt and any additional premium
due in the days of grace (see pages 12
and 8)
- -----------------------------------------------------------------------------------------------------------------------------------
This table is part of the Contract Summary and of the Contract.
</TABLE>
Page 5 (VFL--85)
II-35
<PAGE>
GENERAL PROVISIONS
DEFINITIONS.--We define here some of the words and phrases used all through this
contract. We explain others, not defined here, in other parts of the text.
WE, OUR, US, AND COMPANY.--Pruco Life Insurance Company, an Arizona Corporation.
YOU AND YOUR.--The owner of the contract.
INSURED.--The person named as the Insured on the first page. He or she need not
be the owner.
Example: Suppose we issue a contract on the life of your spouse. You applied for
it and named no one else as owner. Your spouse is the Insured and you are the
owner.
SEC.--The Securities and Exchange Commission.
ISSUE DATE.--The contract date.
MONTHLY DATE.--The contract date and the same day as the contract date in each
later month. But if the contract date is the 29th, 30th or 31st day of the month
and the later month has fewer days, then the monthly date will be the first day
of the next month.
Example: If the contract date is March 9, 1986, the Monthly Dates are each March
9, April 9, May 9 and so on.
ANNIVERSARY OR CONTRACT ANNIVERSARY.--The same day and month as the contract
date in each later year.
Example: If the contract date is March 9, 1986, the first anniversary is March
9, 1987. The second is March 9, 1988, and so on.
CONTRACT YEAR.--A year that starts on the contract date or on an anniversary.
Example: If the contract date is March 9, 1986, the first contract year starts
then and ends on March 8, 1987. The second starts on March 9, 1987 and ends on
March 8, 1988, and so on.
CONTRACT MONTH.--A month that starts on a Monthly Date.
Example: If March 9, 1986 is a Monthly Date, a contract month starts then and
ends on April 8. 1986. The next contract month starts on April 9, 1986 and ends
on May 8, 1986, and so on.
ATTAINED AGE.--The Insured's attained age at any time is the issue age plus the
length of time since the contract date. You will find the issue age near the top
of page 3.
THE CONTRACT.--This policy and the application, a copy of which is attached,
form the whole contract. We assume that all statements in the application were
made to the best of the knowledge and belief of the person(s) who made them; in
the absence of fraud they are deemed to be representations and not warranties.
We relied on those statements when we issued the contract. We will not use any
statement, unless made in the application, to try to void the contract or to
deny a claim.
CONTRACT MODIFICATIONS.--Only a Company officer may agree to modify this
contract, and then only in writing.
NON-PARTICIPATING.--This contract will not share in our profits or surplus
earnings. We will pay no dividends on it.
SERVICE OFFICE.--This is the office that will service this contract. Its mailing
address is the one we show in the Contract Data pages, unless we notify you of
another one.
OWNERSHIP AND CONTROL.--Unless we endorse this contract to say otherwise: (1)
the owner of the contract is the Insured; and (2) while the Insured is living
the owner alone is entitled to (a) any contract benefit and value, and (b) the
exercise of any right and privilege granted by the contract or by us.
SUICIDE EXCLUSION.--If the Insured. whether sane or insane, dies by suicide
within two years from the issue date, we will pay no more under this contract
than the sum of the premiums paid.
CURRENCY.--Any money we pay, or that is paid to us, must be in United States
currency. Any amount we owe will be payable at our Service Office.
(Continued on Next Page)
Page 6 (VFL--85)
II-36
<PAGE>
GENERAL PROVISIONS (Continued)
MISSTATEMENT OF AGE OR SEX.--If the Insured's stated age or sex or both are not
correct, we will adjust each benefit and any amount to be paid to reflect the
correct age and sex. Where required, we have given the insurance regulator a
detailed statement of how we will make these adjustments.
INCONTESTABILITY.--Except for default, we will not contest this contract after
it has been in force during the Insured's lifetime for two years from the issue
date.
ASSIGNMENT.--We will not be deemed to know of an assignment unless we receive
it, or a copy of it, at our Service Office. We are not obliged to see that an
assignment is valid or sufficient. This contract may not be assigned to another
insurance company without our consent.
ANNUAL REPORT.--Once each contract year after the first we will send you a
report. It will show: (1) the insurance amount; (2) the amount of the contract
fund; (3) the investment amount in each subaccount; (4) the amount in the fixed
account; (5) the net cash value; (6) the premiums paid, interest credited and
monthly charges made during the year; (7) the interest rate that will be
credited until further notice to the amount in the Fixed Account; (8) any
additional premium which you have the right to pay; and (9) any outstanding
contract debt. The report will include any other data that may be currently
required where this contract is delivered. You may ask for a report like this at
any time. But, except for the report we send you once a year, we have the right
to charge a fee for each report.
PAYMENT OF DEATH CLAIM.--If we settle this contract in one sum as a death claim,
we will usually pay the proceeds within 7 days after we receive at our Service
Office proof of death and any other information we need to pay the claim. But we
have the right to defer paying any portion of the proceeds greater than the face
amount shown on page 3 if (1) the New York Stock Exchange is closed; or (2) the
SEC requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payment to protect our contract owners.
BENEFICIARY
You may designate or change a beneficiary. Your request must be in writing and
in a form which meets our needs. It will take effect only when we file it at our
Service Office; this will be after you send the contract to us to be endorsed,
if we ask you to do so. Then any previous beneficiary's interest will end as of
the date of the request. It will end then even if the Insured is not living when
we file the request. Any beneficiary's interest is subject to the rights of any
assignee of whom we know.
When a beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. To show priority, we may use numbered classes, so that
the class with first priority is called class 1, the class with next priority is
called class 2, and so on. When we use numbered classes, these statements apply
to beneficiaries unless the form states otherwise:
1. One who survives the Insured will have the right to be paid only if no one in
a prior class survives the Insured.
2. One who has the right to be paid will be the only one paid if no one else in
the same class survives the Insured.
3. Two or more in the same class who have the right to be paid will be paid in
equal shares.
4. If none survives the Insured, we will pay in one sum to the Insured's estate.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. We owe Jane the proceeds if she is living at the Insured's
death. We owe Paul and John the proceeds if they are living then but Jane is
not. But if only one of them is living, we owe him the proceeds. If none of them
is living we owe the Insured's estate.
Beneficiaries who do not have a right to be paid under these terms may still
have a right to be paid under the Automatic Mode of Settlement.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as beneficiaries.
If beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
Page 7 (VFL--85)
II-37
<PAGE>
PREMIUMS
INITIAL PREMIUM.--The initial premium, which we show on page 3, is due on the
contract date. It may be paid at our Service Office or to one of our
representatives. If we are asked to do so, we will give a signed receipt. The
initial premium minus any applicable deductions for state and/or local premium
taxes, becomes the contract fund. (See page 10.)
ADDITIONAL PREMIUMS.--Additional premiums may be paid as we describe below:
1. An additional premium may be paid if (1) it is permitted according to the
definition of life insurance contained in the applicable federal tax law, and
(2) it does not result in an increase in the insurance amount. If you ask us to
do so, we will let you know the amount of any additional premium allowed and
when it can be paid. We will also include that information as part of the annual
report. (See page 7.)
2. If the contract goes into default, an additional premium sufficient to bring
the contract out of default may be paid during the grace period.
Additional premiums paid in accord with 1 or 2 above minus any applicable
deductions for state and/or local premium taxes, will be added to the contract
fund but will not increase the insurance amount.
PREMIUM TAXES.--State and local taxes on premiums paid vary according to
jurisdiction. We will deduct from each premium paid the appropriate amount
applicable for these taxes.
DEFAULT.--If on any monthly date the net cash value equals zero, this contract
is in default. In this case we will tell you what premium payment is needed to
bring the contract out of default.
GRACE PERIOD.--We grant 61 days of grace from any Monthly Date on which the
contract goes into default. We will send you a notice of default and state the
amount to pay that will bring the contract out of default. This amount is the
amount that, after deduction of any state and/or local premium taxes, is
sufficient to pay the mortality charges (See page 11.) for the Monthly Date on
which the contract goes into default and the next Monthly Date. If that amount
has not been paid by the end of the grace period the contract will end and have
no value.
The Insured might die while the contract is in default during its days of grace.
If so, the proceeds will be reduced by the amount that, after deduction of any
state and/or local premium taxes, is sufficient to pay the mortality charges
which have not yet been deducted for Monthly Dates prior to the date on which
death occurred.
REINSTATEMENT.--If this contract ends as we describe under Grace Period, you may
reinstate it, if all these conditions are met:
1. No more than three years must have elapsed since the date of default.
2. You must give us any facts we need to satisfy us that the Insured is
insurable for the contract.
3. We must be paid an amount that, after deduction of any state and/or local
premium taxes, leaves the balance equal to the sum of:
(a) the mortality charges not previously made for the grace period; and
(b) the mortality charges for the first two monthly dates on or after the
date of reinstatement.
If we approve the reinstatement, these statements apply. The date of
reinstatement will be the date of your request or the date the required premium
is paid, if later. The face amount will be the same as it was at the end of the
grace period. The contract debt will be equal to the contract debt at the end of
the grace period. The contract fund as of the date of reinstatement will be
equal to the amount paid to reinstate the contract, minus any applicable
deductions for state and/or local premium taxes, minus the charges in (a) above,
and plus the contract debt. And we will start to make monthly charges and
credits again as of the first Monthly Date on or after the date of
reinstatement.
Page 8 (VFL--85)
II-38
<PAGE>
SEPARATE ACCOUNT
THE ACCOUNT.--The word account, where we use it in this contract without
qualification, means the Pruco Life Single Premium Variable Life Account. This
is a unit investment trust registered with the SEC under the Investment Company
Act of 1940. It is also subject to the laws of Arizona. We own the assets of the
account; we keep them separate from the assets of our general investment
account. We established the account to support variable life insurance
contracts.
SUBACCOUNTS.--The account has several subaccounts. We list them on the Contract
Data page(s). You determine, using percentages, how invested premium amounts
will be allocated among the subaccounts. You may choose to allocate nothing to a
particular subaccount. But any allocation you make must be at least 10%; you may
not choose a fractional percent.
Example: You may choose a percentage of 0, or 100, or 10, 11, 12, and so on, up
to 90. But you may not choose a percentage of 1 through 9, or 91 through 99, or
any percent that is not a whole number.
You may change the allocation for additional invested premium amounts at any
time if the contract is not in default. To do so, you must notify us in writing
in a form that meets our needs. The change will take effect on the date we
receive your notice at our Service Office.
TRANSFERS AMONG SUBACCOUNTS AND THE FIXED ACCOUNT.--You may transfer amounts
among subaccounts and to the fixed account as often as four times in a contract
year, if the contract is not in default. In addition, at any time in the first
two contract years, the entire amount in the subaccounts may be transferred to
the Fixed Account. Transfers out of the fixed account to the subaccounts will be
allowed only with the Company's consent. To do so, you must notify us in writing
in a form that meets our needs. The transfer will take effect on the date we
receive your notice at our Service Office.
THE FUND.--The word fund, where we use it in this contract without
qualification, means the fund we identify in the Contract Data pages. The fund
is registered with the SEC under the Investment Company Act of 1940 as an
open-end diversified management investment company. The fund has several
portfolios; there is a portfolio that corresponds to each of the subaccounts of
the account. We list these portfolios in the Contract Data pages.
ACCOUNT INVESTMENTS.--We use the assets of the account to buy shares in the
fund. Each subaccount is invested in a corresponding specific portfolio. Income
and realized and unrealized gains and losses from assets in each subaccount are
credited to, or charged against, the subaccount. This is without regard to
income, gains, or losses in our other investment accounts.
We will determine the value of the assets in the account at the end of each
business day. When we use the term business day, we mean a day when the New York
Stock Exchange is open for trading. We might need to know the value of an asset
on a day that is not a business day or on which trading in that asset does not
take place. In this case, we will use the value of that asset as of the end of
the last prior business day on which trading took place.
Example: If we need to know the value of an asset on a Sunday, we will normally
use the value of the asset as of the end of business on Friday.
We will always keep assets in the account with a total value at least equal to
the amount of the investment amounts under contracts like this one. (See page
10.) To the extent those assets do not exceed this amount, we use them only to
support those contracts; we do not use those assets to support any other
business we conduct. We may use any excess over this amount in any way we
choose.
CHANGE IN INVESTMENT POLICY.--A portfolio of the fund might make a material
change in its investment policy. In that case, we will send you a notice of the
change.
CHANGE OF FUND.--A portfolio might, in our judgment, become unsuitable for
investment by a subaccount. This might happen because of a change in investment
policy, or a change in the laws or regulations, or because the shares are no
longer available for investment, or for some other reason. If that occurs, we
have the right to substitute another portfolio of the fund, or to invest in a
fund other than the one we show on the Contract Data page(s). But we would first
seek approval from the SEC and, where required, the insurance regulator where
this contract is delivered.
FIXED ACCOUNT
THE FIXED ACCOUNT.--In addition to allocating your invested premium amount to
one or more of the subaccounts described above, you may direct all or part of
your invested premium amount into the fixed account. The fixed account is funded
by the general account of Pruco Life. The fixed account is credited with
interest as described under Guaranteed Interest and Excess Interest on pages 10
and 11. As described above, you may also transfer amounts from the subaccounts
to the fixed account. Transfers from the fixed account to the subaccounts may be
made only with the consent of and to the extent allowed by the Company.
RIGHT TO TRANSFER.--You may at any time transfer that portion of your contract
fund allocated to one or more of the subaccounts into the fixed account. The
fixed account earns a fixed rate of interest as described on page 10.
Page 9 (VFL--85)
II-39
<PAGE>
INSURANCE AMOUNT AND CONTRACT FUND
INSURANCE AMOUNT.--The insurance amount at any time is the greater of (1) the
face amount which we show on page 3, and (2) the contract fund times the
attained age factor that applies. We show the attained age factors on page 18.
CONTRACT FUND.--On the contract date the contract fund is equal to the invested
premium amounts received, (see below), minus any of the charges described in
items (f) through (i) below which may have been due on that date. On any day
after that the contract fund is equal to what it was on the previous day, plus
any invested premium amounts received, plus these items:
(a) any increase due to investment results in the value of the subaccounts
to which that portion of the contract fund that is in the investment
amount is allocated; (we explain investment amount below); and
(b) interest at the rates shown below on that portion of the contract fund
that is equal to any contract loan; and
(c) guaranteed interest at 3% on that portion of the contract fund that is
in the fixed account; and
(d) any excess interest on that portion of the contract fund that is in
the fixed account. (See page 11.)
Minus these items:
(e) any decrease due to investment results in the value of the subaccounts
to which that portion of the contract fund that is in the investment
amount is allocated;
(f) a charge against the investment amount at a rate of .00245475% a day
(.90% a year) for mortality and expense risks that we assume;
(g) a charge against the investment amount at a rate of .00095723% a day
(.35% a year) for the cost of administering the contract;
(h) any amount charged against the Contract Fund for Federal or State
income taxes;
(i) a charge for the cost of expected mortality;
We describe under Reinstatement on page 8 what the contract fund will be equal
to on any reinstatement date.
INVESTED PREMIUM AMOUNT.--This is the portion of each premium paid that we add
to the contract fund. It is equal to the premium paid, minus any applicable
deduction for state and/or local premium taxes.
INVESTMENT AMOUNT.--The investment amount for this contract is the amount we use
to compute the investment return. The investment amount is allocated among the
subaccounts. The amount of the investment amount and its allocation to
subaccounts depend on (1) how you choose to allocate invested premium amounts;
(2) whether or not you transfer amounts among subaccounts; (3) the investment
performance of the subaccounts to which amounts are allocated or transferred;
(4) the amount and timing of any additional premium payments you make; and (5)
whether or not you take any loan. The account, subaccounts, and account
investments are described on page 9.
The investment amount at any time is equal to the contract fund, minus the
portion of the contract fund equal to any contract loan, minus the portion of
the contract fund that is in the fixed account.
INTEREST CREDIT.--On the portion of the contract fund equal to any contract
loan: During each contract year we will use a monthly rate that is equivalent to
an effective annual rate of 5 1/2% on the part of the contract fund equal to the
first amount you borrow in each contract year up to the excess of the target
loan amount over any existing loan. Interest due but not paid on any loan amount
eligible for the 5 1/2% crediting rate will become part of the loan and will
also be credited with interest at 5 1/2%.
For any part of the contract fund equal to the loan amount not eligible for the
5 1/2% crediting rate as described above, we will use a monthly rate that is
equivalent to an effective annual rate of not less than 4%.
On each contract anniversary, we will transfer the part of the contract fund
equal to any contract loan (up to the target loan amount) not eligible for the
5 1/2% crediting rate to the portion of the contract fund eligible for the
5 1/2% crediting rate.
Target loan amount means an amount equal to 10% of the initial premium for each
completed contract year since the contract date.
Example: Suppose the initial premium is $20,000 and the loan value is enough to
provide the amounts stated here. The target loan amount in the second contract
year is $2,000 (10% of $20,000). In that year you borrow $1,000. Since it is the
first amount you have borrowed, we will credit interest on that part of the
contract fund equal to $1,000 at a monthly rate equivalent to an effective
annual rate of 5 1/2%. If you borrow an additional amount in that contract year,
we will credit interest on that part of the contract fund equal to the
additional loan at a monthly rate equivalent to an effective annual rate of not
less than 4%. In the next contract year your target loan amount would be $4,000
($2,000 for each of the two completed contract years since the Contract Date).
GUARANTEED INTEREST.--The guaranteed interest rate credited on that portion of
the contract fund in the fixed account is an effective rate of 3% a year.
Page 10 (VFL--85)
II-40
<PAGE>
INSURANCE AMOUNT AND CONTRACT FUND (Continued)
EXCESS INTEREST.--Excess interest on that portion of the contract fund in the
fixed account may be credited in addition to the 3% guaranteed interest rate.
The rate of any excess interest is not guaranteed. It will be determined from
time to time and will continue thereafter until a new rate is determined. We may
use different rates of excess interest for different portions of the contract
fund that are in the fixed account.
MORTALITY CHARGE.--At the beginning of each contract month we will deduct a
mortality charge from the contract fund. The maximum charge we can deduct is
determined by applying to the coverage amount a monthly rate determined as
indicated in the Basis of Computation. The coverage amount is the difference
between the insurance amount and the contract fund.
We may deduct a lower monthly charge than we describe above. The actual monthly
mortality charges we deduct are based on our expectations as to future mortality
experience. At least once every five years, but not more often than once a year,
we will consider the need to change the basis for the charges. We will make such
a change only if we do so for all contracts like this one dated in the same year
as this one.
Where required, we have given the insurance regulator where this contract is
delivered a detailed description of our method for determining mortality
charges.
CASH VALUE OPTION
CASH VALUE OPTION.--You may surrender this contract for its net cash value. To
do so, you must ask us in writing and in a form that meets our needs. You must
also send the contract to us.
As of any date the net cash value is the cash value minus any contract debt.
(See page 12.) The cash value is equal to the contract fund minus any surrender
charge that applies.
We will usually pay any net cash value within 7 days after we receive your
request and the contract at our Service Office.
But we have the right to defer payment if (1) the New York Stock Exchange is
closed; or (2) the SEC requires that trading be restricted or declares an
emergency; or (3) the SEC lets us defer payments to protect our contract owners.
SURRENDER CHARGE.--For each of the first six contract years the surrender charge
is the contract fund times the surrender factor that applies. We show the
surrender factors below. But the surrender charge will not exceed 9% of the
initial premium. For the seventh and later contract years there is no surrender
charge.
- --------------------------------------------------------------------------------
TABLE OF SURRENDER FACTORS
- --------------------------------------------------------------------------------
Contract Surrender Contract Surrender
Year Factor Year Factor
- --------------------------------------------------------------------------------
1 .09 5 .05
2 .08 6 .04
3 .07 7 and later .00
4 .06
- --------------------------------------------------------------------------------
Page 11 (VFL--85)
II-41
<PAGE>
LOANS
LOAN REQUIREMENTS.--On or after the first contract anniversary, you may borrow
from us on the contract. All these conditions must be met:
1. The Insured is living.
2. The contract is in force.
3. The contract debt will not be more than the loan value. (We explain these
terms below.)
4. As sole security for the loan, you assign the contract to us in a form that
meets our needs.
If there is already contract debt when you borrow from us, we will add the new
amount you borrow to that debt.
CONTRACT DEBT.--Contract debt at any time means the loan on the contract, plus
the interest we have charged that is not yet due and that we have not yet added
to the loan.
Example 1: Suppose the contract date is in 1987 and the initial premium was
$10,000. Three months before the anniversary in 1992 the contract has a contract
fund of $15,000. Six months ago you borrowed $1,500. By now there is interest of
$45 charged but not yet due. The contract debt is now $1,545, which is made up
of the $1,500 loan and the $45 interest.
LOAN VALUE.--You may borrow any amount up to the difference between the loan
value and any existing contract debt. On any day, the loan value is 90% of the
contract fund minus any surrender charge that may apply.
Example 2: Suppose, in example 1, you want to borrow all that you can. We will
lend you $11,280, which is the difference between the $12,825 loan value and the
$1,545 contract debt. This will increase the contract debt to $12,825. We will
add the new amount borrowed to the existing loan and will charge interest on it,
too.
INTEREST CHARGE.--We will charge interest daily on any loan at an effective rate
of 6% a year.
Interest is due on each contract anniversary, or when the loan is paid back if
that comes first. If interest is not paid when due, it will become part of the
loan. Then we will start to charge interest on it, too.
Example 3: Suppose the contract date is in 1987. Six months before the
anniversary in 1996 you borrow $1,000 out of a $15,000 loan value. We charge 6%
a year.
Four months later, but still two months before the anniversary, we will have
charged about $20 interest. This amount will be a few cents more or less than
$20 since some months have more days than others. The interest will not be due
until the anniversary unless the loan is paid back sooner. The loan will still
be $1,000. The contract debt will be $1,020, since contract debt includes
interest charged but not yet due.
On the anniversary in 1996 we will have charged about $30 interest. The interest
will then be due.
Example 4: Suppose the $30 interest in example 3 was paid on the anniversary.
The loan and contract debt each became $1,000 right after the payment.
Example 5: Suppose the $30 interest in example 3 was not paid on the
anniversary. The interest became part of the loan, and we began to charge
interest on it, too. The loan and contract debt each became $1,030.
REPAYMENT.--All or part of any contract debt may be paid back at any time while
the Insured is living and the contract is not in default. A repayment will first
be applied to reduce the part of the loan, if any, that is subject to the lowest
interest crediting rate. When we settle the contract, any contract debt is due
us. We will make an adjustment so that the proceeds will not include the amount
of that debt.
EFFECT OF A LOAN.--When you take a loan, the amount of any loan continues to be
a part of the contract fund. However, the amount equal to the amount of the loan
is credited with interest only at the rates we state on page 10.
We will reduce the contract fund by this amount, and by loan interest that
becomes part of the loan because it is not paid when due. When you repay part or
all of a loan we will increase the contract fund by the amount of loan you
repay, plus, if you repay all the loan, interest credits accrued on the loan (at
the rates we state on page 10) since the last Monthly Date. We will not increase
the contract fund by loan interest that is paid before we make it part of
the loan.
(Continued on Next Page)
Page 12 (VFL--85)
II-42
<PAGE>
LOANS (Continued)
We will allocate loans and repayments among the subaccounts and the fixed
account in proportion to the amount in each as of the date of loan or repayment.
Only the investment amount will reflect the investment results of the
subaccounts. Since the amount you borrow is removed from the investment amount
and/or the fixed account, a loan may have a permanent effect on the net cash
value of this contract. The longer the loan is outstanding, the greater this
effect is likely to be.
EXCESS CONTRACT DEBT.--If, on a monthly date, contract debt is ever equal to or
more than the cash value, all the contract's benefits will end 61 days after
that monthly date. We will mail a notice to you and any assignee of whom we
know. Also, we may send a notice to the Insured's last known address. In the
notice we will state the amount that, if paid to us, will reduce the contract
debt enough to keep the contract's benefits from ending for a limited time.
POSTPONEMENT OF LOAN.--We will usually make a loan within 7 days after we
receive your request at our Service Office. But we have the right to defer
making the loan if (1) the New York Stock Exchange is closed; or (2) the SEC
requires that trading be restricted or declares an emergency; or (3) the SEC
lets us defer payments to protect our contract owners.
Page 13 (VFL--85)
II-43
<PAGE>
SETTLEMENT OPTIONS
PAYEE DEFINED.--In these provisions and under the Automatic Mode of Settlement,
the word Payee means a person who has a right to receive a settlement under the
contract. Such a person may be the Insured, the owner, a beneficiary, or a
contingent payee.
CHOOSING AN OPTION--While the Insured is living you may choose or change the
choice of an option for all or part of the proceeds that may arise from the
Insured's death. The requirement are the same as those to designate or change a
beneficiary. We describe them under Beneficiary.
A Payee may choose an option for all or part of any proceeds or residue that
becomes payable to him or her in one sum. We described residue later on this
page.
In some cases, you or another Payee will need our consent to choose an option.
We described these cases under Conditions.
OPTIONS DESCRIBED.--Here are the options we offer. We may also consent to other
arrangements.
OPTION 1 (INSTALMENTS FOR A FIXED PERIOD).--We will make equal payments for up
to 25 years based on the Option 1 Table. The payments will include interest at
an effective rate of 3 1/2% a year. We may credit more interest. If and while we
do so, the payments will be larger.
OPTION 2 (LIFE INCOME, WITH CERTAIN PERIOD).--We will make equal monthly
payments for as the person on whose life the settlement is based lives, with
payments certain for the period chosen. The choices are either ten years
(10-Year Certain) or until the sum of the payments equals the amount put under
this option (Instalment Refund) The amount of each payment will be based on the
Option 2 Table and on the sex and age, on the due date of the first payment, of
the person on whose life the settlement is based. But if a choice is make more
than two years after the Insured's death, we may use the Option 2 payment rates
in individual annuity contracts or life insurance contracts we regularly issue,
based on United States currency, on the due date of the first payment. On
request, we will quote the payment rates in contracts we then issue. We must
have proof of the date of birth of the person on whose life the settlement is
based. If on the due date of the first payment under this option, we have
declared a higher payments rate under the option, we will base the payments on
that higher rate.
OPTION 3 (INTEREST PAYMENT).--We will hold an amount at interest. We will pay
interest at an effective rate of at least 3% a year ($30.00 annually, $14.89
semi-annually $7.42 quarterly or $2.47 monthly per $1.000) We may pay more
interest.
OPTION 4 (INSTALMENTS OF A FIXED AMOUNT).--We will make equal annual,
semi-annual, quarterly or monthly payments if they total at least $90 a year for
each $1.000 put under this option. We will credit the unpaid balance with
interest at an effective rate of at least 3 1/2% a year. We may credit more
interest. If we do so, the balance will be larger. The final payment will be any
balance equal to or less than one payment.
FIRST PAYMENT DUE DATE.--Unless a different date is stated when the option is
chosen: (1) the first payment for Option 3 will be due at the end of the chosen
payment interval; and (2) the first payment for any of the other options will be
due on the date the option takes effect.
RESIDUE DESCRIBED.--For Options 1 and 2, residue on any date means the then
present value of any unpaid payments certain. We will compute it at an effective
interest rate of 3 1/2% a year. But we will use the interest rate we used to
compute the actual Option 2 payments if they were not based on the table in this
contract.
For Options 3 and 4, residue on any date means any unpaid balance with interest
to that date.
For Option 2, residue does not include the value of any payments that may become
due after the certain period.
(Continued on Next Page)
Page 14 (VFL--85)
II-44
<PAGE>
SETTLEMENT OPTIONS (Continued)
<TABLE>
<CAPTION>
OPTION 2 TABLE
-----------------------------------------------------------------------------------------------
OPTION 1 TABLE MINIMUM AMOUNT OF MONTHLY PAYMENT FOR EACH $1,000, THE FIRST
- ------------------------- PAYABLE IMMEDIATELY
MINIMUM AMOUNT OF -----------------------------------------------------------------------------------------------
MONTHLY PAYMENT FOR KIND OF LIFE INCOME KIND OF LIFE INCOME
EACH $1,000, THE FIRST ------------------------------ --------------------------------
PAYABLE IMMEDIATELY 10-Year Instalment 10-Year Instalment
- ------------------------- AGE Certain Refund AGE Certain Refund
Number Monthly LAST ------------------------------ LAST --------------------------------
of Years Payment BIRTHDAY Male Female Male Female BIRTHDAY Male Female Male Female
- ------------------------- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.65 10 $3.18 $3.11 $3.17 $3.10 45 $4.06 $3.82 $3.99 $3.78
2 43.05 and 46 4.12 3.86 4.03 3.81
3 29.19 under 47 4.17 3.90 4.08 3.85
4 22.27 11 3.19 3.12 3.18 3.11 48 4.23 3.94 4.13 3.90
5 18.12 12 3.20 3.13 3.19 3.12 49 4.28 3.99 4.18 3.94
13 3.21 3.14 3.20 3.13
6 15.35 14 3.22 3.15 3.21 3.14 50 4.35 4.04 4.24 3.98
7 13.38 51 4.41 4.09 4.29 4.03
8 11.90 15 3.24 3.16 3.23 3.15 52 4.48 4.15 4.35 4.08
9 10.75 16 3.25 3.17 3.24 3.16 53 4.55 4.21 4.41 4.13
10 9.83 17 3.27 3.19 3.25 3.18 54 4.62 4.27 4.48 4.19
18 3.28 3.20 3.27 3.19
11 9.09 19 3.30 3.21 3.28 3.20 55 4.70 4.33 4.55 4.24
12 8.46 56 4.78 4.40 4.62 4.30
13 7.94 20 3.31 3.22 3.30 3.21 57 4.86 4.47 4.69 4.37
14 7.49 21 3.33 3.24 3.32 3.23 58 4.95 4.54 4.77 4.43
15 7.10 22 3.35 3.25 3.33 3.24 59 5.05 4.62 4.86 4.50
23 3.36 3.26 3.35 3.25
16 6.76 24 3.38 3.28 3.37 3.27 60 5.15 4.71 4.94 4.58
17 6.47 61 5.25 4.79 5.03 4.66
18 6.20 25 3.40 3.30 3.39 3.29 62 5.36 4.89 5.13 4.74
19 5.97 26 3.42 3.31 3.41 3.30 63 5.48 4.98 5.23 4.82
20 5.75 27 3.45 3.33 3.43 3.32 64 5.60 5.09 5.34 4.92
28 3.47 3.35 3.45 3.34
21 5.56 29 3.49 3.37 3.47 3.35 65 5.73 5.20 5 45 5.01
22 5.39 66 5.87 5.31 5.57 5.11
23 5.24 30 3.52 3.39 3.49 3.37 67 6.01 5.43 5.70 5.22
24 5.09 31 3.54 3.41 3.52 3.39 68 6.15 5.56 5.83 5.34
25 4.96 32 3.57 3.43 3.54 3.41 69 6.30 5.70 5.97 5.46
- ------------------------- 33 3.60 3.45 3.57 3.44
34 3.63 3.47 3.60 3.46 70 6.46 5.84 6.11 5.58
Multiply the monthly amount 71 6.62 5.99 6.27 5.72
by 2.989 for quarterly, 35 3.66 3.50 3.63 3.48 72 6.79 6.15 6.43 5.86
5.952 for semi-annual or 36 3.69 3.52 3.66 3.50 73 6.96 6.31 6.60 6.01
11.804 for annual. 37 3.72 3.55 3.69 3.53 74 7.13 6.49 6.78 6.18
- ------------------------- 38 3.76 3.58 3.72 3.56
39 3.80 3.61 3.75 3.58 75 7.30 6.67 6.97 6.35
76 7.48 6.85 7.17 6.53
40 3.84 3.64 3.79 3.61 77 7.66 7.04 7.38 6.72
41 3.88 3.67 3.82 3.64 78 7.83 7.24 7.60 6.93
42 3.92 3.70 3.86 3.67 79 8.00 7.44 7.83 7.15
43 3.97 3.74 3.90 3.71
44 4.01 3.78 3.94 3.74 80 8.17 7.64 8.07 7.38
and over
----------------------------------------------------------------------------------------------
</TABLE>
Page 15 (VFL--85)
II-45
<PAGE>
SETTLEMENT OPTIONS (Continued)
WITHDRAWAL OF RESIDUE.--Unless otherwise stated when the option is chosen: (1)
under Options 1 and 2 the residue may be withdrawn; and (2) under Options 3 and
4 all, or any part not less than $100, of the residue may be withdrawn. If an
Option 3 residue is reduced to less than $1,000, we have the right to pay it in
one sum. Under Option 2, withdrawal of the residue will not affect any payments
that may become due after the certain period; the value of those payments cannot
be withdrawn. Instead, the payments will start again if they were based on the
life of a person who lives past the certain period.
DESIGNATING CONTINGENT PAYEE(S).--A Payee under an option has the right, unless
otherwise stated, to name or change a contingent payee to receive any residue at
that Payee's death. This may be done only if (1) the Payee has the full right to
withdraw the residue; or (2) the residue would otherwise have been payable to
that Payee's estate at death.
A Payee who has this right may choose, or change the choice of, an option for
all or part of the residue. In some cases, the Payee will need our consent to
choose or change an option. We describe these cases under Conditions.
Any request to exercise any of these rights must be in writing and in a form
that meets our needs. It will take effect only when we file it at our Service
Office. Then the interest of anyone who is being removed will end as of the date
of the request, even if the Payee who made the request is not living when we
file it.
CHANGING OPTIONS.--A Payee under Option 1, 3 or 4 may choose another option for
any sum that the Payee could withdraw on the date the chosen option is to start.
That date may be before the date the Payee makes the choice only if we consent.
In some cases, the Payee will need our consent to choose or change an option. We
describe these cases next.
CONDITIONS.--Under any of these conditions, our consent is needed for an option
to be used for any person:
1. The person is not a natural person who will be paid in his or her own right.
2. The person will be paid as assignee.
3. The amount to be held for the person under Option 3 is less than $1,000. But
we will hold any amount for at least one year in accord with the Automatic Mode
of Settlement.
4. Each payment to the person under the option would be less than $20.
5. The option is for residue arising other than at (a) the Insured's death, or
(b) the death of the beneficiary who was entitled to be paid as of the date of
the Insured's death.
6. The option is for proceeds that arise other than from the Insured's death,
and we are settling with an owner or any other person who is not the Insured.
DEATH OF PAYEE.--If a Payee under an option dies and if no other distribution is
shown, we will pay any residue under that option in one sum to the Payee's
estate.
ENDORSEMENTS
(Only we can endorse this contract.)
Page 16 (VFL--85)
II-46
<PAGE>
AUTOMATIC MODE OF SETTLEMENT
APPLICABILITY.--These provisions apply to proceeds arising from the Insured's
death and payable in one sum to a Payee who is a beneficiary. They do not apply
to any periodic payment.
INTEREST ON PROCEEDS.--We will hold the proceeds at interest under Option 3 of
the Settlement Options provision. The Payee may withdraw the residue. We will
pay it promptly on request. We will pay interest annually unless we agree to pay
it more often. We have the right to pay the residue in one sum after one year if
(1) the Payee is not a natural person who will be paid in his or her own right;
(2) the Payee will be paid as assignee; or (3) the original amount we hold under
Option 3 for the Payee is less than $1,000.
SETTLEMENT AT PAYEE'S DEATH.--If the Payee dies and leaves an Option 3 residue,
we will honor any contingent payee provision then in effect. If there is none,
here is what we will do. We will look to the beneficiary designation of the
contract; we will see what other beneficiary(ies), if any, would have been
entitled to the portion of the proceeds that produced the Option 3 residue if
the Insured had not died until immediately after the Payee died. Then we will
pay the residue in one sum to such other beneficiary(ies), in accord with that
designation. But if, as stated in that designation, payment would be due the
estate of someone else, we will instead pay the estate of the Payee.
Example: Suppose the class 1 beneficiary is Jane and the class 2 beneficiaries
are Paul and John. Jane was living when the Insured died. Jane later died
without having chosen an option or naming someone other than Paul and John as
contingent payee. If Paul and John are living at Jane's death we owe them the
residue. If only one of them is living then, and if the contract called for
payment to the survivor of them, we owe him the residue. If neither of them is
living then, we owe Jane's estate.
SPENDTHRIFT AND CREDITOR.--A beneficiary or contingent payee may not, at or
after the Insured's death, assign, transfer, or encumber any benefit payable. To
the extent allowed by law, the benefits will not be subject to the claims of any
creditor of any beneficiary or contingent payee.
ENDORSEMENTS
(Only we can endorse this contract.)
BASIS OF COMPUTATION
MORTALITY TABLE DESCRIBED.--We base premiums and values to which we refer in
this contract on the Insured's issue age and sex and on the length of time since
the contract date. We use (1) the Commissioners 1980 Standard Ordinary Mortality
Table; and (2) continuous functions based on age last birthday.
MINIMUM LEGAL VALUES.-The cash, loan and other values in this contract are at
least as large as those set by law where it is delivered. Where required, we
have given the insurance regulator a detailed statement of how we compute values
and benefits.
- -----------
PLI 172--85
- -----------
Pruco Life Insurance Company of New Jersey,
By /s/ ISABELLE L. KIRCHNER
----------------------------------------
Secretary
Page 17 (VFL--85)
II-47
<PAGE>
- --------------------------------------------------------------------------------
ATTAINED AGE FACTORS
- --------------------------------------------------------------------------------
The Insurance Amount at any time is the greater of (1) the Face Amount (see page
3), and (2) the Contract Fund times the Attained Age Factor for the Insured's
sex and attained age.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
ATTAINED FACTORS ATTAINED FACTORS ATTAINED FACTORS
AGE MALE/FEMALE AGE MALE/FEMALE AGE MALE/FEMALE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15 or less 4.80 7.50 43 2.49 2.88 71 1.14 1.24
16 4.78 7.49 44 2.38 2.75 72 1.12 1.22
17 4.74 7.22 45 2.27 2.64 73 1.11 1.19
18 4.70 7.01 46 2.18 2.53 74 1.10 1.17
19 4.68 6.80 47 2.09 2.44 75 1.09 1.15
20 4.66 6.67 48 2.01 2.34 76 1.09 1.14
21 4.64 6.56 49 1.93 2.26 77 1.08 1.12
22 4.62 6.46 50 1.86 2.17 78 1.07 1.11
23 4.60 6.34 51 1.79 2.10 79 1.07 1.10
24 4.58 6.22 52 1.72 2.02 80 1.06 1.09
25 4.56 6.11 53 1.66 1.95 81 1.06 1.08
26 4.54 5.98 54 1.60 1.88 82 1.05 1.07
27 4.52 5.84 55 1.55 1.82 83 1.05 1.07
28 4.52 5.69 56 1.51 1.77 84 1.05 1.06
29 4.49 5.53 57 1.47 1.73 85 1.05 1.05
30 4.42 5.37 58 1.43 1.69 86 1.05 1.05
31 4.33 5.22 59 1.39 1.66 87 1.05 1.05
32 4.21 5.07 60 1.36 1.62 88 1.05 1.05
33 4.07 4.90 61 1.33 1.57 89 1.05 1.05
34 3.92 4.72 62 1.30 1.53 90 1.05 1.05
35 3.76 4.52 63 1.28 1.48 91 1.04 1.04
36 3.59 4.29 64 1.25 1.44 92 1.03 1.03
37 3.41 4.06 65 1.23 1.40 93 1.03 1.03
38 3.24 3.82 66 1.21 1.36 94 1.02 1.03
39 3.07 3.59 67 1.19 1.34 95 1.02 1.02
40 2.91 3.38 68 1.18 1.31 96 1.02 1.02
41 2.76 3.18 69 1.16 1.29 97 1.02 1.02
42 2.62 3.02 70 1.15 1.26 98 or more 1.01 1.01
- ------------------------------------------------------------------------------------------
</TABLE>
Page 18 (VFL--85)
II-48
<PAGE>
GUIDE TO CONTENTS
Page
Contract Data ........................................................... 3
Rating Class; Schedule of Premiums;
Interest Rates; List of Subaccounts and Portfolios;
Service Office
Contract Summary ........................................................ 5
Table of Basic Amounts .................................................. 5
General Provisions ...................................................... 6
Definitions; The Contract; Contract
Modifications; Non-participating; Service Office;
Ownership and Control; Suicide Exclusion;
Currency; Misstatement of Age or Sex;
Incontestability; Assignment; Annual Report;
Payment of Death Claim
Beneficiary ............................................................. 3 & 7
Premiums ................................................................ 3 & 8
Initial Premium; Additional Premiums; Premium Taxes;
Default; Grace Period; Reinstatement
Separate Account ........................................................ 9
The Account; Subaccounts; Transfers
Among Subaccounts and the Fixed Account,
The Fund; Account Investments; Change in
Investment Policy; Change of Fund
Fixed Account ........................................................... 9
Insurance Amount and Contract Fund ...................................... 10
Insurance Amount; Contract
Fund; Investmented Premium Amount; Investment
Amount; Interest Credit; Guaranteed Interest;
Excess Interest; Mortality Charge
Cash Value Option ....................................................... 11
Cash Value Option; Surrender Charge
Loans ................................................................... 12
Loan Requirements; Contract Debt;
Loan Value; Interest Charge; Repayment;
Effect of a Loan; Excess Contract Debt;
Postponement of Loan
Settlement Options ...................................................... 14
Payee Defined; Choosing an Option; Options
Described; First Payment Due Date; Residue
Described; Income Tables; Withdrawal of
Residue; Designating Contingent Payee(s);
Changing Options; Conditions; Death of Payee
Automatic Mode of Settlement ............................................ 17
Applicability; Interest on Proceeds; Settlement
at Payee's Death; Spendthrift and Creditor
Basis of Computation .................................................... 17
Mortality Table Described; Minimum Legal Values
Attained Age Factors .................................................... 18
A copy of the application follows Page 20
Page 19 (VFL--85)
II-49
<PAGE>
Page 20 (VFL--85)
II-50
<PAGE>
Page 21 (VFL--85)
II-51
<PAGE>
Page 22
VARIABLE LIFE INSURANCE POLICY WITH PREMIUM FLEXIBILITY. INITIAL PREMIUM, WITH
ADDITIONAL PREMIUMS PAYABLE DURING INSURED'S LIFETIME AS STATED IN THE CONTRACT.
BENEFITS REFLECT PREMIUM PAYMENTS, INVESTMENT RESULTS AND MORTALITY CHARGES.
INSURANCE PAYABLE ONLY UPON DEATH. NON-PARTICIPATING.
VFL--85
II-52
[LOGO]
IKWAHN OH, FSA, MAAA
Vice President & Actuary
Pruco Life Insurance Company
71 Hanover Road
Florham Park, NJ 07932-1597
Tel (973) 966-3243
EXHIBIT 6
April 27, 1998
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 single premium variable life insurance contracts
("Contracts") under the Securities Act of 1933. The prospectus included in
Post-Effective Amendment No. 22 to Registration Statement No. 2-99260 on form
S-6 describes the Contract. I have reviewed the Contract form and I have
participated in the preparation and review of the Registration Statement and
Exhibits thereto. In my opinion:
(1) The illustrations of face amounts of insurance included in the section
entitled "Some typical face amounts" ("Amount of Life Insurance"),
based on the assumptions stated in the illustrations, are consistent
with the provisions of the Contract.
(2) The illustrations of death benefits included in the section entitled
"Increase in death benefit due to favorable investment experience"
("Amount of Life Insurance"), based on the assumptions stated in the
illustrations, are consistent with the provisions of the contract.
(3) the illustrations of cash surrender values and death benefits included
in the section entitled "Illustrations", based on the assumptions
stated in the illustrations, are consistent with the provisions of the
Contract. The rate structure of the Contract has not been designed so
as to make the relationship between the premium and benefits, as shown
in the illustrations, appear more favorable to a prospective purchaser
of a Contract for male age 35 or female age 55, than to prospective
purchasers of Contracts on insureds of other ages.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
Ikwahn OH, FSA, MAAA
Vice President & Actuary
Pruco Life Insurance Company
II-53
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 22 to Registration
Statement No. 2-99260 on Form S-6 of Pruco Life Single Premium Variable Life
Account of Pruco Life Insurance Company (1) of our report dated February 15,
1996, relating to the financial statements of Pruco Life Single Premium Variable
Life Account, and (2) 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 (3) to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
April 24, 1998
II-54
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 22 to the registration statement on Form S-6 (the
"Registration Statement") of our report dated March 20, 1998, relating to the
financial statements of the 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 23, 1998, 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
New York, New York
April 24, 1998
II-55
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 258,318
<INVESTMENTS-AT-VALUE> 298,377
<RECEIVABLES> 147
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 298,524
<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> 17,597
<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> 298,524
<DIVIDEND-INCOME> 10,736
<INTEREST-INCOME> 0
<OTHER-INCOME> 26,860
<EXPENSES-NET> 3,315
<NET-INVESTMENT-INCOME> 7,422
<REALIZED-GAINS-CURRENT> 8,820
<APPREC-INCREASE-CURRENT> 693
<NET-CHANGE-FROM-OPS> 43,794
<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> 13,109
<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>
