AS FILED WITH THE SEC ON ________________. REGISTRATION NO. 2-81243
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-6
----------
POST-EFFECTIVE AMENDMENT NO. 25
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
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PRUCO LIFE OF NEW JERSEY
VARIABLE INSURANCE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 437-4016
(Address and telephone number of principal executive offices)
----------
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
Copy to:
JEFFREY C. MARTIN
SHEA & GARDNER
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 2003
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It is proposed that this filing will become effective (check appropriate space):
o immediately upon filing pursuant to paragraph (b) of Rule 48
o on May 1, 1998 pursuant to paragraph (b) of Rule 485
--------------
(date)
o 60 days after filing pursuant to paragraph (a) of Rule 485
o on pursuant to paragraph (a) of Rule 485
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<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY FORM N-8B-2)
N-8B-2 ITEM NUMBER LOCATION
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract and Sales Commissions
5. Pruco Life of New Jersey Variable Insurance
Account
6. Pruco Life of New Jersey Variable Insurance
Account
7. Not Applicable
8. Not Applicable
9. Litigation
10. Brief Description of Contract; Short-Term
Cancellation Right, or "Free Look"; Premiums;
Premium Adjustment; Allocation of Premiums;
Transfers; Charges and Expenses; How a
Contract's Death Benefit Will Vary; How a
Contract's Cash Value Will Vary; Withdrawal
of a Portion of a Contract's Net Cash Value;
Surrender of a Contract for its Net Cash
Value; When Proceeds are Paid; Right to
Exchange a Contract for a Fixed-Benefit
Whole-Life Policy; Lapse and Reinstatement;
Options on Lapse; Riders; Other General
Contract Provisions; Voting Rights;
Substitution of Series Fund Shares
11. Brief Description of the Contract; Pruco Life
of New Jersey Variable Insurance Account
12. Cover Page; Brief Description of the
Contract; The Prudential Series Fund, Inc.;
Sale of the Contract and Sales Commissions
13. Brief Description of the Contract; The
Prudential Series Fund, Inc.; Charges and
Expenses; Sale of the Contract and Sales
Commissions
14. Brief Description of the Contract;
Requirements for Issuance of a Contract
15. Brief Description of the Contract; Allocation
of Premiums; Transfers
16. Brief Description of the Contract; Detailed
Information for Prospective Contract Owners
17. When Proceeds are Paid
18. Pruco Life of New Jersey Variable Insurance
Account
19. Reports to Contract Owners
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
25. Pruco Life Insurance Company of New Jersey
26. Brief Description of the Contract; The
Prudential Series Fund, Inc.; Charges and
Expenses
27. Pruco Life Insurance Company of New Jersey;
The Prudential Series Fund, Inc.
28. Pruco Life Insurance Company of New Jersey;
Directors and Officers
29. Pruco Life Insurance Company of New Jersey
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Pruco Life Insurance Company of New Jersey
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.; How a
Contract's Death Benefit Will Vary; How a
Contract's Cash Value Will Vary
45. Not Applicable
46. Brief Description of the Contract; Pruco Life
of New Jersey Variable Insurance Account; The
Prudential Series Fund, Inc.
47. Pruco Life of New Jersey Variable
Insurance Account; The Prudential
Series Fund, Inc.
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Series Fund Shares
53. Tax Treatment of Contract Benefits
54. Not Applicable
55. Not Applicable
56. Not Applicable
<PAGE>
N-8B-2 ITEM NUMBER LOCATION
57. Not Applicable
58. Not Applicable
59. Financial Statements; Financial Statements
of Pruco Life of New Jersey Variable
Insurance Account; Financial Statements of
Pruco Life Insurance Company of New Jersey
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
Variable Life Insurance
PROSPECTUS
The Pruco Life of New Jersey
Variable Insurance Account
May 1, 1998
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
<PAGE>
PROSPECTUS
MAY 1, 1998
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
VARIABLE INSURANCE ACCOUNT
VARIABLE
LIFE INSURANCE
CONTRACTS
This prospectus describes a variable life insurance contract (the "Contract")
issued by Pruco Life Insurance Company of New Jersey ("Pruco Life of New
Jersey"), a stock life insurance company that is an indirect wholly-owned
subsidiary of The Prudential Insurance Company of America ("Prudential"). As of
January 1, 1992, these Contracts are no longer available for sale. These
Contracts provide whole-life insurance protection. That is, they provide
lifetime insurance coverage, as long as premiums are paid. They also provide a
cash value for the owner if the Contract is terminated during the insured's
lifetime. A Contract's death benefit varies monthly with the investment
performance of the subaccounts of the Pruco Life of New Jersey Variable
Insurance Account (the "Account") to which the owner allocates the net premiums.
Whatever the investment performance, however, it will not cause the death
benefit to be less than a guaranteed minimum amount (generally the face amount
specified in the Contract). The cash value of a Contract generally increases
with the payment of each premium, but it also varies daily with investment
performance. There is no guaranteed minimum cash value.
A Contract's net premiums and earnings on those premiums will be held in one or
more of the investment subaccounts of the Account or, pursuant to a real estate
investment option, in the Pruco Life of New Jersey Variable Contract Real
Property Account (the "Real Property Account"). 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 its
statement of additional information describe the investment objectives of the
thirteen portfolios of the Series Fund in which net premiums under the Contracts
may currently be invested--the MONEY MARKET PORTFOLIO, the DIVERSIFIED BOND
PORTFOLIO, the GOVERNMENT INCOME PORTFOLIO, 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. Other subaccounts and portfolios
may be added in the future. The REAL PROPERTY ACCOUNT, 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 of New Jersey Variable
Insurance Account.
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 PRUDENTIAL SERIES FUND, INC. AND A CURRENT
PROSPECTUS FOR THE PRUCO LIFE OF NEW JERSEY 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 OF NEW JERSEY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 437-4016
<PAGE>
PROSPECTUS CONTENTS
Page
BRIEF DESCRIPTION OF THE CONTRACT..............................................1
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, PRUCO
LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT, AND THE VARIABLE INVESTMENT
OPTIONS AVAILABLE UNDER THE CONTRACT........................................2
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY..................................2
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT.........................3
THE PRUDENTIAL SERIES FUND, INC.............................................3
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT............4
WHICH INVESTMENT OPTION SHOULD BE SELECTED..................................4
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS...........................5
REQUIREMENTS FOR ISSUANCE OF A CONTRACT.....................................5
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"................................5
PREMIUMS....................................................................5
PREMIUM ADJUSTMENT..........................................................6
ALLOCATION OF PREMIUMS......................................................6
CHARGES AND EXPENSES........................................................6
TRANSFERS...................................................................8
HOW A CONTRACT'S DEATH BENEFIT WILL VARY....................................8
HOW A CONTRACT'S CASH VALUE WILL VARY......................................11
SURRENDER OF A CONTRACT FOR ITS NET CASH VALUE.............................12
WITHDRAWAL OF A PORTION OF A CONTRACT'S NET CASH VALUE.....................13
WHEN PROCEEDS ARE PAID.....................................................13
LIVING NEEDS BENEFIT.......................................................13
ILLUSTRATIONS OF CASH VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS.....14
CONTRACT LOANS.............................................................16
RIGHT TO EXCHANGE A CONTRACT FOR A FIXED-BENEFIT WHOLE-LIFE POLICY.........17
SALE OF THE CONTRACT AND SALES COMMISSIONS.................................17
TAX TREATMENT OF CONTRACT BENEFITS.........................................17
LAPSE AND REINSTATEMENT....................................................19
OPTIONS ON LAPSE...........................................................19
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS........20
OTHER GENERAL CONTRACT PROVISIONS..........................................21
RIDERS.....................................................................21
VOTING RIGHTS..............................................................21
SUBSTITUTION OF SERIES FUND SHARES.........................................22
REPORTS TO CONTRACT OWNERS.................................................22
STATE REGULATION...........................................................22
EXPERTS....................................................................22
LITIGATION.................................................................23
YEAR 2000 COMPLIANCE.......................................................23
ADDITIONAL INFORMATION.....................................................23
FINANCIAL STATEMENTS.......................................................23
DIRECTORS AND OFFICERS........................................................24
FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT...A1
FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY............B1
ADDITIONAL ILLUSTRATIONS OF CASH VALUES, DEATH BENEFITS, AND ACCUMULATED
PREMIUMS...................................................................C1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE 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>
BRIEF DESCRIPTION OF THE CONTRACT
This variable life insurance contract (the "Contract") being offered by Pruco
Life Insurance Company of New Jersey ("Pruco Life of New Jersey") is in many
respects similar to traditional "fixed-benefit" whole-life insurance. In other
respects it is quite different. As with fixed-benefit whole-life insurance, the
owner pays level premiums for a Contract that provides lifetime insurance
coverage on the named insured. Like fixed-benefit whole-life insurance, a
Contract has a cash value that the owner may obtain by terminating the Contract.
Also like fixed-benefit whole-life insurance, a variety of optional benefits and
riders may be added and may require an additional premium. Finally, like
fixed-benefit whole-life insurance, the cash value of a Contract during the
early years will be substantially lower than the sum of the premiums paid. Under
a fixed-benefit contract, there are a fixed guaranteed death benefit and a cash
value that increases at a guaranteed rate as additional premiums are paid; in
some such contracts, the insurer may refund some of the premium as a dividend if
its experience is better than the assumptions upon which it made its guarantees.
The variable life insurance Contract described here also has a schedule of cash
values and a guaranteed minimum death benefit. The distinctive feature of this
Contract is that the premiums, after certain deductions are made, are placed in
one or more separate investment subaccounts of Pruco Life of New Jersey's
Variable Insurance Account, and the death benefit and cash value may increase or
decrease, depending on the investment performance of the selected subaccount[s].
There is no minimum cash value. But, as long as no premium is in default and
there is no loan on the Contract, the death benefit will not be less than a
guaranteed minimum amount (the face amount specified in the Contract, unless the
Contract owner has withdrawn part of the Contract's cash value). See WITHDRAWAL
OF A PORTION OF A CONTRACT'S NET CASH VALUE, page 13. The smallest Contract has
a face amount of $25,000. As of January 1, 1992, these Contracts are no longer
available for sale.
The owner of a Contract chooses the subaccount[s] of the Pruco Life Variable
Insurance Account (the "Account") into which the net premiums will be placed. At
present there are thirteen subaccounts, each of which is invested in a
corresponding portfolio of The Prudential Series Fund, Inc. (the "Series Fund"),
a series mutual fund to which The Prudential Insurance Company of America
("Prudential") acts as investment advisor. The MONEY MARKET PORTFOLIO is
invested in short-term debt obligations similar to those purchased by money
market funds; the DIVERSIFIED BOND PORTFOLIO is invested primarily in high
quality medium-term corporate and government debt securities; the GOVERNMENT
INCOME PORTFOLIO is invested primarily in US Government securities including
intermediate and long-term US Treasury securities and debt obligations issued by
agencies of or instrumentalities established, sponsored or guaranteed by the
U.S. Government; the CONSERVATIVE BALANCED PORTFOLIO is invested in a mix of
money market instruments, fixed income securities and common stock in
proportions believed by the investment manager to be appropriate for an investor
who desires diversification of investment who prefers a relatively lower risk of
loss and 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 desiring diversification of investment who is
willing to accept a relatively high level of loss in an effort to achieve
greater appreciation; the HIGH YIELD BOND PORTFOLIO is invested primarily in
high yield fixed-income securities of medium to lower quality, also known as
high risk bonds; the STOCK INDEX PORTFOLIO is invested in common stocks selected
to duplicate the price and yield performance of the Standard & Poor's 500
Composite Stock Price Index; the EQUITY INCOME PORTFOLIO is invested primarily
in common stocks and convertible securities that provide favorable prospects for
investment income returns above those of the Standard & Poor's 500 Stock Index
or the NYSE Composite Index; the EQUITY PORTFOLIO is invested primarily in
common stocks; the PRUDENTIAL JENNISON PORTFOLIO is invested primarily in equity
securities of established companies with above-average growth prospects; the
SMALL CAPITALIZATION STOCK PORTFOLIO is invested in equity securities of
publicly-traded companies with small market capitalization; the GLOBAL PORTFOLIO
is invested primarily in common stocks and common stock equivalents (such as
convertible debt securities) of foreign and domestic issuers; 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 3.
The Contract owner may also invest a portion of his or her net premiums in the
Pruco Life of New Jersey 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 a portion
of his or her net premiums in the Real Property Account, 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 the various
Contract charges are made. The investment objectives of the Real Property
Account and the partnership are described briefly under PRUCO LIFE OF NEW JERSEY
VARIABLE CONTRACT REAL PROPERTY ACCOUNT on page 4.
Because the assets that relate to the Contract may be invested in these various
investment options, the Contract offers an opportunity for the cash value to
appreciate more rapidly than it would under comparable fixed-benefit
1
<PAGE>
whole-life insurance. But the owner must accept the risk that if investment
performance is unfavorable the cash value may not appreciate as rapidly and,
indeed, may decrease in value.
Pruco Life of New Jersey deducts certain charges from each premium payment and
from the amounts held in the designated investment options. 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 AND EXPENSES on
page 6. In brief, and subject to that fuller description, the following charges
may be made: (1) an annual administrative charge of $30 if premiums are paid
annually, $32 if paid semi-annually, $36 if paid quarterly, and $48 if paid
monthly; (2) a one-time first-year administrative charge upon each premium of up
to $5 for each $1,000 of face amount if premiums are paid annually, $2.52 if
paid semi-annually, $1.27 if paid quarterly, and $0.43 if paid monthly; (3)
sales load charges of not more than 30% of the basic premium in the first
Contract year, not more than 10% of the basic premium in the second year, and
not more than 9% of the sum of the basic premiums to be paid in the first 20
years; (4) a premium tax charge of 2% is deducted from each basic premium; (5) a
guaranteed minimum death benefit risk charge of not more than 1.2% of each basic
premium; (6) each month, a charge for anticipated mortality based on the 1980
CSO Tables is deducted; (7) a daily charge equivalent to an annual rate of 0.35%
is deducted from the assets of the subaccounts for mortality and expense risks;
(8) if the Contract includes riders, a deduction from each premium payment will
be made for charges applicable to those riders; and (9) certain fees and
expenses are deducted from the assets of the Series Fund and Real Property
Account. Because of these charges, prospective purchasers should purchase a
Contract only if they intend and have the financial capability to keep it in
force for a substantial period. The death benefit increases or decreases monthly
(but not below the guaranteed minimum amount) depending on the investment
results of the subaccount[s] and/or the Real Property Account in which the
Contract participates. It does not change simply because a premium is paid. The
cash value also changes at a rate that depends on the investment results, but
these changes take place daily rather than monthly. Each premium payment has the
effect of adding to the cash value. For more detailed information about how the
death benefit and cash value change, see HOW A CONTRACT'S DEATH BENEFIT WILL
VARY, page 8 and HOW A CONTRACT'S CASH VALUE WILL VARY, page 11.
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 5.
Each owner should retain a copy of the Contract document. That document,
together with the attached application, constitutes the entire agreement between
the owner and Pruco Life of New Jersey.
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE
COMPANY OF NEW JERSEY, PRUCO LIFE OF NEW JERSEY
VARIABLE INSURANCE ACCOUNT, AND THE VARIABLE
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey") is a
stock life insurance company, organized in 1982 under the laws of the State of
New Jersey. It is licensed to sell life insurance and annuities only in the
States of New Jersey and New York.
Pruco Life of New Jersey is a wholly-owned subsidiary of Pruco Life Insurance
Company, which in turn 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 the Company'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 Company policyholders and
appropriate state insurance regulators. Throughout the process, there will be a
continuing evaluation by the Board of Directors and management of the Company 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 the Pruco Life insurance companies.
As of December 31, 1997, Prudential has invested $127 million in Pruco Life of
New Jersey through its subsidiary Pruco Life Insurance Company in connection
with Pruco Life of New Jersey's organization and operation.
2
<PAGE>
Prudential may from time to time make additional capital contributions to Pruco
Life of New Jersey as needed to enable it to meet its reserve requirements and
expenses in connection with its business. However, Prudential is under no
obligation to make such contributions and its assets do not back the benefits
payable under the Contract. Pruco Life of New Jersey's financial statements
begin on page B1 and should be considered only as bearing upon Pruco Life of New
Jersey's ability to meet its obligations under the Contracts.
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
The Pruco Life of New Jersey Variable Insurance Account (the "Account") was
established on December 29, 1982 under New Jersey 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 of New Jersey's other assets.
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Pruco Life of New Jersey. Pruco Life of New
Jersey is also the legal owner of the assets in the Account. Pruco Life of New
Jersey 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 of New Jersey conducts. In
addition to these assets, the Account's assets may include funds contributed by
Pruco Life of New Jersey to commence operation of the Account and may include
accumulations of the charges Pruco Life of New Jersey makes against the Account.
From time to time these additional assets will be transferred to Pruco Life of
New Jersey's general account. Before making any such transfer, Pruco Life of New
Jersey 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 of New Jersey. There are currently thirteen subaccounts
within the Account, each of which invests in a single corresponding portfolio of
the Series Fund. Additional subaccounts may be added in the future. The
Account's financial statements begin on page A1.
THE PRUDENTIAL SERIES FUND, INC.
The Prudential Series Fund, Inc. (the "Series Fund") is registered under the
1940 Act as an open-end diversified management investment company. Its shares
are currently sold only to separate accounts of 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-ended, diversified
management investment company which sold its shares only to separate accounts of
Pruco Life of New Jersey and Pruco Life Insurance Company, 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 of New Jersey 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 The 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 ("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 CHARGES AND EXPENSES, page 6.
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
3
<PAGE>
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 OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
The Pruco Life of New Jersey Variable Contract Real Property Account (the "Real
Property Account") is a separate account of Pruco Life of New Jersey 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 ESTATE
INVESTMENT OPTION. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE
MET.
WHICH INVESTMENT OPTION SHOULD BE SELECTED?
A broad objective of the Contract is to provide benefits that will increase in
value if favorable investment results are achieved. Contract owners have a large
number of options as to how the amounts credited to their Contracts will be
invested. Historically, for investments held over relatively long periods, the
investment performance of common stocks has generally been superior to that of
short or long-term debt securities, even though common stocks have been subject
to much more dramatic changes in value over short periods of time. Accordingly,
the Stock Index, Equity Income, Prudential Jennison, Small Capitalization Stock,
Equity, Global, or Natural Resources Portfolios may be desirable options for
Contract owners who are willing to accept such volatility in their Contract
values. Each of these equity portfolios involves somewhat different investment
risks, policies, and programs.
Some Contract owners may prefer the somewhat greater protection against loss of
principal (and reduced chance of high total return) provided by the Government
Income or Diversified Bond Portfolios, while others, who desire even greater
safety of principal, may prefer the Money Market Portfolio, recognizing that the
level of short-term rates may change rather rapidly. Contract owners not
interested in common stocks but willing to take risks and seeking the
possibility of a high total return may prefer the High Yield Bond Portfolio,
recognizing that with higher yielding, lower quality bonds the risks are
greater. Some Contract owners may wish to divide their funds among two or more
of the portfolios. Some may wish to obtain diversification by relying on
Prudential's judgment for an appropriate asset mix by choosing one of the
Balanced Portfolios. The Real Property Account permits a Contract owner to
diversify his or her investment under the Contract to include an interest in a
pool of income-producing real property, and real estate is often considered to
be a hedge against inflation.
Each Contract owner must make his or her own choice that takes into account how
willing he or she is to accept investment risks, the manner in which his or her
other assets are invested, and his or her own predictions about what investment
results are likely to be in the future. Prudential recommends against frequent
transfers among the several options as experience generally indicates that
"market timing" investing, particularly by non-professional investors, is likely
to prove unsuccessful. See TRANSFERS, page 8.
4
<PAGE>
DETAILED INFORMATION FOR PROSPECTIVE
CONTRACT OWNERS
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
As of January 1, 1992, these Contracts are no longer available for sale. The
minimum initial guaranteed death benefit that can be applied for is $25,000. The
Contract generally is issued on insureds below the age of 76. Before issuing any
Contract, Pruco Life of New Jersey requires evidence of insurability which may
include a medical examination. Non-smokers who meet preferred underwriting
requirements are offered the most favorable premium rate. A higher premium is
charged if an extra mortality risk is involved. These are the current
underwriting requirements. The Company reserves the right to change them 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 of New Jersey 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.
PREMIUMS
Premiums on the Contract are level, fixed, and payable in advance during the
insured's lifetime on an annual, semi-annual, quarterly or monthly basis. If
paid more often than annually, an extra fee will be charged to compensate Pruco
Life of New Jersey for the additional processing costs (see CHARGES AND
EXPENSES, page 6) and for the loss of interest (computed generally at an annual
rate of 8%) incurred because premiums are paid throughout rather than at the
beginning of each Contract year. The premium amount depends on the Contract's
face amount, the insured's sex (except where unisex rates apply) and age at
issue, and the insured's risk classification. Contract owners who pay premiums
other than on a monthly basis will receive notice that a premium is due about 3
weeks before each due date. Contract owners who pay premiums monthly will
receive each year a book with twelve coupons that will serve as a reminder. With
Pruco Life of New Jersey's consent, an owner may change the frequency of premium
payments.
A Contract owner may elect to have monthly premiums paid automatically under the
"Pru-Matic Premium Plan" by pre-authorized transfers from a bank checking
account. Some Contract owners may also be eligible to have monthly premiums paid
by pre-authorized deductions from an employer's payroll.
The following table shows representative standard and preferred annual premium
amounts for various face amounts:
- --------------------------------------------------------------------------------
$25,000 FACE $100,000 FACE
AMOUNT AMOUNT
- --------------------------------------------------------------------------------
PREFERRED STANDARD PREFERRED STANDARD
- --------------------------------------------------------------------------------
Male, age 25 $270.00 $283.25 $ 990.00 $1,043.00
at issue
- --------------------------------------------------------------------------------
Female, age 35 $333.75 $342.75 $1,245.00 $1,281.00
at issue
- --------------------------------------------------------------------------------
Male, age 40 $449.00 $484.50 $1,706.00 $1,848.00
at issue
- --------------------------------------------------------------------------------
The following table compares annual and monthly premiums for insureds who are
standard risks. Note that in these examples the sum of 12 monthly premiums for a
particular Contract is approximately 105% to 110% of the annual premium for that
Contract.
5
<PAGE>
- --------------------------------------------------------------------------------
$25,000 FACE $100,000 FACE
AMOUNT AMOUNT
- --------------------------------------------------------------------------------
MONTHLY ANNUAL MONTHLY ANNUAL
- --------------------------------------------------------------------------------
Male, age 25 $26.00 $283.25 $ 92.00 $1,043.00
at issue
Female, age 35 $31.00 $342.75 $112.00 $1,281.00
at issue
male, age 40 $43.25 $484.50 $161.00 $1,848.00
at issue
- --------------------------------------------------------------------------------
There is a grace period of 31 days for each premium except the first one. During
the grace period, the contract will continue in effect. A contract will lapse if
a premium has not been paid by the end of the grace period. Upon lapse, the
contract owner will have several options. These may include continuing the
amount of insurance coverage in effect on the due date of the unpaid premium,
less any contract debt, for a fixed period, continuing a lesser amount of
insurance for the lifetime of the insured, or surrender of the contract for its
net cash value. SEE OPTIONS ON LAPSE, page 19.
PREMIUM ADJUSTMENT
If the insured dies during the grace period before the premium is paid, the
portion of the unpaid premium that covers the period from the due date to the
date of death will be deducted from the death benefit. If the insured dies while
no premium is in default, Pruco Life of New Jersey will increase the death
benefit by the portion of the last premium that covers the period subsequent to
the date of death.
ALLOCATION OF PREMIUMS
Net premium payments--that is, the amount of the premiums less the deductions
described below in items 1 through 5 under CHARGES AND EXPENSES--will be placed
as of the end of the valuation period when due (not when received) in one or
more subaccounts of the Account and/or the Real Property Account, as directed by
the Contract owner. Any premium payments received prior to the due date will be
held in Pruco Life of New Jersey's general account, and the net premium will not
be credited to the subaccounts selected by a Contract owner until the due date.
Provided the Contract is not in default, the Contract owner may change the way
in which subsequent premiums are allocated by giving written notice to a Home
Office or by telephoning that Home Office, provided the Contract owner is
enrolled to use the Telephone Transfer System. There is no charge for
reallocating future net premiums. If any portion of a net premium is allocated
to a particular investment option, that portion must be at least 10% on the date
the allocation takes effect. All percentage allocations must be in whole
numbers. For example, 33% can be selected but 33 1/3% cannot.
CHARGES AND EXPENSES
The deductions and charges made by Pruco Life of New Jersey that are described
below, excluding those fees and expenses relating to the Series Fund portfolios,
will not be increased with respect to any Contract in effect, regardless of any
changes in longevity or increases in expenses; Series Fund portfolio charges
will vary from year to year.
1. If premiums are paid annually, there is an annual administrative charge of
$30 for administrative expenses incurred, among other things, for billing,
collecting premiums, processing claims, paying cash values, making Contract
changes, keeping records, and communicating with Contract owners. If
premiums are paid more frequently, the annual administrative charge will be
higher to reflect the additional expense incurred in collecting and
processing more frequent premiums. The charge will be $32 if premiums are
paid semi-annually, $36 if premiums are paid quarterly, and $48 if premiums
are paid monthly. During 1997, 1996, and 1995, Pruco Life of New Jersey
received a total of approximately $1,413,936, $1,499,381, and $1,579,409,
respectively, in annual administrative charges.
2. There is a charge to compensate Pruco Life of New Jersey for the cost of
selling the Contract. This cost includes sales commissions, advertising,
and the printing of prospectuses and sales literature. This charge is
generally called the "sales load." It is not more than 30% of the basic
premium (defined below) in the first Contract year, not more than 10% of
the basic premium in the second year, and not more than 9% of the sum of
the basic premiums to be paid in the first 20 years. Also, in any year it
is never more than in a prior year. The basic premium is what the gross
annual premium for the Contract, less the annual administrative
6
<PAGE>
charge, would be if the insured were in the standard rating class and if
the Contract had no optional insurance benefits. During 1997, 1996, and
1995, Pruco Life of New Jersey received a total of approximately
$1,319,547, $1,430,362, and $1,530,590, respectively, in sales load
charges.
3. There is a charge of 2% of each basic premium for state and local
premium-based taxes. Pruco Life of New Jersey may collect more for this
charge than it actually pays for premium taxes. During 1997, 1996, and
1995, Pruco Life of New Jersey received a total of approximately $264,046,
$286,525, and $307,278, respectively, in charges for payment of such taxes.
4. There is a charge of not more than 1.2% of each basic premium to compensate
Pruco Life of New Jersey for the risk that an insured may die at a time
when the death benefit exceeds the benefit that would have been payable in
the absence of a minimum guarantee. During 1997, 1996, and 1995, Pruco Life
of New Jersey received a total of approximately $158,428, $171,915, and
$184,367, respectively, for this risk charge. When premiums are paid more
frequently than annually, these charges will be deducted proportionately
from each premium payment. If there is an extra premium for optional
insurance benefits or for an extra mortality risk, or if there is a premium
discount because the insured is in the preferred rating class, the amount
allocated to the separate account will be equal to the amount that would
have been allocated if the insured had been in the standard rating class
and there were no optional insurance benefits.
5. Apart from the deductions from gross premiums just described, the amounts
held in the Account and/or the Real Property Account attributable to each
Contract are subject to a mortality charge and are reduced once a month to
compensate Pruco Life of New Jersey for the anticipated cost of paying
death benefits to the beneficiaries of those persons who die during that
period. The amount of this reduction is based on the 1980 Commissioner's
Standard Ordinary Mortality Table (the "1980 CSO Table").
6. There is also a daily charge to the Account and/or the Real Property
Account for the mortality and expense risks that Pruco Life of New Jersey
assumes. This charge is made daily at an effective annual rate of 0.35% of
the value of the Account's and/or the Real Property Account's assets. The
mortality risk assumed is that insureds may live for a shorter period of
time than that predicted by the 1980 CSO Table. The expense risk assumed is
that expenses incurred in issuing and administering the Contracts will be
greater than Pruco Life of New Jersey estimated. During 1997, 1996, and
1995, Pruco Life of New Jersey received a total of approximately $539,708,
$470,315, and $406,290, respectively, in mortality and expense risk
charges.
7. If the Contract includes riders, a deduction from each premium payment will
be made for charges applicable to those riders.
8. An investment advisory fee is deducted daily from each portfolio at a rate,
on an annualized basis, from 0.35% for the Stock Index Portfolio to 0.75%
for the Global Portfolio. The expenses incurred in conducting the
investment operations of the portfolios (such as custodian fees and
preparation and distribution of annual reports) are paid out of the
portfolio's income. These expenses also vary from portfolio to portfolio.
The total expenses of each portfolio for the year 1997 expressed as a
percentage of the average assets during the year are shown below:
- --------------------------------------------------------------------------------
OTHER TOTAL
INVESTMENT EXPENSES EXPENSES
PORTFOLIO ADVISORY (AFTER EXPENSE (AFTER EXPENSE
FEE REIMBURSEMENT)* REIMBURSEMENT)*
- --------------------------------------------------------------------------------
MONEY MARKET 0.40% 0.00%* 0.40%*
DIVERSIFIED BOND 0.40% 0.00%* 0.40%*
GOVERNMENT INCOME 0.40% 0.04% 0.44%
CONSERVATIVE BALANCED 0.55% 0.00%* 0.40%*
FLEXIBLE MANAGED 0.60% 0.00%* 0.40%*
HIGH YIELD BOND 0.55% 0.02% 0.57%
STOCK INDEX 0.35% 0.02% 0.37%
EQUITY INCOME 0.40% 0.01% 0.41%
EQUITY 0.45% 0.00%* 0.40%*
PRUDENTIAL JENNISON 0.60% 0.04% 0.64%
SMALL CAPITALIZATION STOCK 0.40% 0.10% 0.50%
GLOBAL 0.75% 0.10% 0.85%
NATURAL RESOURCES 0.45% 0.09% 0.54%
- --------------------------------------------------------------------------------
Some investment management fees and expenses charged to the Series Fund may
be higher than those that were previously charged to the Pruco Life Series
Fund, Inc. (0.4%), in which the Account previously
7
<PAGE>
invested. For the Money Market, Diversified Bond, Conservative Balanced,
Flexible Managed, and Equity Portfolios, Pruco Life of New Jersey 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. 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, 0.56% for the Conservative Balanced
Portfolio, 0.62% for the Flexible Managed Portfolio and 0.46% for the
Equity Portfolio. No such offset will be made with respect to the remaining
portfolios, which had no counterparts in the Pruco Life Series Fund, Inc.
The earnings of the Account are taxed as part of the operations of Pruco Life of
New Jersey. No charge is being made currently to the Account for Company federal
income taxes. Pruco Life of New Jersey will review the question of a charge to
the Account for Company federal income taxes periodically. Such a charge may be
made in future years for any federal income taxes that would be attributable to
the Contracts.
Under current laws Pruco Life of New Jersey 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 Contracts or the Account. If
there is a material change in applicable state or local tax laws, the imposition
of any such taxes upon Pruco Life of New Jersey that are attributable to the
Account may result in a corresponding charge against the Account.
More detailed information is contained in the attached prospectus for the Series
Fund and its statement of additional information.
TRANSFERS
Provided no premium is overdue or if the Contract is in force as variable
reduced paid-up insurance (see OPTIONS ON LAPSE, page 19), the owner may, up to
four times in each Contract year, transfer amounts from one subaccount to
another subaccount or to the Real Property Account. Currently, Contract owners
may make additional transfers with our consent. There is no charge. All or a
portion of the amount credited to a subaccount may be transferred. Transfers to
and from the Real Property Account are subject to restrictions described in the
prospectus for that investment option.
Transfers among subaccounts or to the Real Property Account will take effect as
of the end of the valuation period in which a proper transfer request is
received at a Home Office. The "valuation period" means 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. The request
may be in terms of dollars, such as a request to transfer $10,000 from one
subaccount to another, or may be in terms of a percentage reallocation among
subaccounts. In the latter case, as with premium reallocations, the percentages
must be in whole numbers. The Contract owner may transfer amounts by proper
written notice to a Home Office or by telephone, provided the Contract owner is
enrolled to use the Telephone Transfer System. Contract owners 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 may not be available on policies that are
assigned, see ASSIGNMENT, page 21, depending on the terms of the assignment.
Pruco Life of New Jersey has adopted procedures designed to ensure that requests
by telephone are genuine. The Company will not be held liable for following
telephone instructions that it reasonably believes to be genuine. Pruco Life of
New Jersey cannot guarantee that owners will be able to get through to complete
a telephone transfer during peak periods such as periods of drastic economic or
market change.
The Contract was not designed for professional market timing organizations,
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 subaccounts and will be discouraged. If such a pattern
were to be found, we may be required to modify the transfer procedures,
including but not limited to, not accepting transfer requests of an agent under
a power of attorney on behalf of more than one Contract owner.
HOW A CONTRACT'S DEATH BENEFIT WILL VARY
Although a Contract's death benefit can never be less than the Contract's
guaranteed minimum amount (assuming no outstanding Contract debt or premium in
default), it will change on the first day of each Contract month after the first
month by an amount that depends on the investment performance of the subaccounts
and/or the Real Property Account in which the Contract participates. The first
Contract month starts on the Contract date. When the first premium is paid with
the application, the Contract date is ordinarily the later of the date of the
application or the date of any medical examination. If the first premium is not
paid with the application, the Contract date is ordinarily 2 or 3 days after the
application is approved by Pruco Life of New Jersey so that it either coincides
with or is prior to the date on which the first premium is paid. For the purpose
of calculating benefits, the initial net
<PAGE>
premium is deemed to be placed in the Account on the Contract date. Each
succeeding Contract month starts on the same date in the month as the Contract
date. The first day of each Contract month is called the "Monthly date."
To simplify the following discussion, it is assumed that all of the net premiums
under a Contract have been allocated to a single subaccount. If the value of the
assets relating to the Contract held in the subaccount has increased due to
investment performance during the Contract month at greater than a 4% annual
rate, the Contract's death benefit will increase on the first day of the next
Contract month; if the value of these assets decreases or increases at less than
a 4% annual rate, the death benefit will decrease (but not below the guaranteed
minimum amount). The reason the assets of the subaccount relating to a Contract
must increase from one Monthly date to the next at a rate of more than 4% a year
in order for the death benefit to increase is that Pruco Life of New Jersey, in
determining the premiums for the Contract, has assumed that the value of the
assets will increase due to investment performance at a rate of 4% a year.
The exact amount by which the death benefit changes is determined by an
actuarial computation that is based, among other things, upon the age and sex
(except where unisex rates apply) of the insured, the size of the Contract, and
the number of years it has been in effect, as well as by the investment results
of the subaccount in which the Contract participates. In general, a change in
the dollar value of a subaccount's assets due to investment results will produce
a larger change in the death benefit for a younger insured than for an older
insured and a slightly larger change for a female insured than for a male.
Because the assets relating to a Contract tend to grow as net premiums are paid,
the dollar change in the death benefit will tend to be greater for a Contract
that has been in effect for a long time than for one that has been in effect for
a short time, despite the fact that the insured is older.
Illustrations of how the death benefit for representative Contracts will vary
over extended periods, assuming several different uniform investment results,
are included in tables on pages T1 and T2 and on pages C1 and C2 of this
prospectus. The examples set forth below illustrate death benefits. These
examples set forth below also assume a total Series Fund expense ratio of 0.49%
(taking into account the offsets described under CHARGES AND EXPENSES on page
6).
The following two examples show, for the same Contracts, how the death benefit
will vary over a selected year for two hypothetical investment results that are
different from those shown in the tables and thus provide additional
comparisons.
Example No. 1. Contract with $50,000 guaranteed death benefit and annual
premiums in effect for 18 years, during which the value of the assets in the
subaccount increased due to investment performance at a uniform rate of 7.16%
per year. In the 19th year the value of the assets increases at a uniform rate
of 8.16%. (These percentages correspond to gross annual investment returns in
the corresponding Series Fund portfolio of 8% and 9% per year, respectively.)
--------------------------------------------------
DEATH BENEFIT DEATH BENEFIT
INSURED END OF YEAR 18 END OF YEAR 19
--------------------------------------------------
Male, age 25 $59,477 $60,958
at issue
--------------------------------------------------
Male, age 40 $60,613 $62,239
at issue
--------------------------------------------------
Example No. 2. Same assumptions as in Example No. 1 except that the value of the
assets increases by 1.14% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
9
<PAGE>
-------------------------------------------------
DEATH BENEFIT DEATH BENEFIT
INSURED END OF YEAR 18 END OF YEAR 19
-------------------------------------------------
Male, age 25 $59,477 $58,466
at issue
-------------------------------------------------
Male, age 40 $60,613 $59,503
at issue
-------------------------------------------------
In these examples the changes are slightly greater for the Contract issued on
the older insured because the premiums for a $50,000 Contract issued at age 40
are greater than those for one issued at age 25, and the dollar amount of the
increase resulting from a 7.16% compounded return upon the assets in the Account
relating to the Contract on the older insured is therefore larger. The changes
in the death benefit are greater even though the increase or decrease in the
death benefit resulting from a $1 change in the assets relating to the Contract
is greater for a younger insured.
Example No. 3. This example and the one following provide information for a
Contract with an $800 annual premium, in effect for 18 years, during which the
value of the assets in the subaccount increased due to investment performance at
a uniform rate of 7.16% per year. In the 19th year the value of the assets
increases at a uniform rate of 8.16%. (These percentages correspond to gross
annual investment returns in the corresponding Series Fund portfolio of 8% and
9% per year, respectively.)
---------------------------------------------------------------
GUARANTEED Death Benefit Death Benefit
INSURED DEATH BENEFIT End of Year 18 End of Year 19
---------------------------------------------------------------
Male, age 25 $76,012 $90,420 $92,671
at issue
---------------------------------------------------------------
Male, age 40 $42,354 $51,344 $52,722
at issue
---------------------------------------------------------------
Example No. 4. Same assumptions as Example No. 3 except that the value of the
assets increases by 1.16% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
--------------------------------------------------------------
GUARANTEED Death Benefit Death Benefit
INSURED DEATH BENEFIT End of Year 18 End of Year 19
--------------------------------------------------------------
Male, age 25 $76,012 $90,420 $88,883
at issue
--------------------------------------------------------------
Male, age 40 $42,354 $51,344 $50,404
at issue
--------------------------------------------------------------
These examples show how the same investment results affect the death benefit
more significantly for a younger insured.
If the assets in the subaccount in which the Contract participates have earned
less than 4%, and the death benefit accordingly equals the guaranteed minimum
amount, Pruco Life of New Jersey will keep a record of what the death benefit
would have been had there not been a guaranteed minimum. If later investment
results are favorable, that is if the value of the assets in the subaccount
later increases at a rate greater than 4% a year, the death benefit will not
become more than the guaranteed minimum amount until the earlier unfavorable
investment results have been offset. For example, suppose for the first 3 years
the value of the assets in the subaccount increases due to investment
performance at only a rate of 2% per year. The death benefit will nevertheless
remain at the guaranteed minimum amount. If the value of the assets increases at
a rate of 8% in the fourth year, this might not be enough to offset the earlier
unfavorable investment results. If so, the death benefit will not increase.
For further information, see the tables on pages T1 and T2. They show for
various insureds how a Contract's death benefit and cash value will change if
the gross investment return in the selected Series Fund portfolio[s] is 0%, 4%
or 8%. In addition, the tables on pages C1 and C2 show, for various insureds,
how a Contract's death
10
<PAGE>
benefit and cash value will change if the gross investment return is 0%, 6% or
12%. The registration statement of the Account on file with the SEC contains a
full and precise description of how the death benefit and cash value of a
Contract are determined.
HOW A CONTRACT'S CASH VALUE WILL VARY
A variable life insurance Contract has a net cash value which the owner may get
by surrender of the Contract while the insured is living. Unlike traditional
fixed-benefit whole-life insurance, however, a Contract's cash value is not
known in advance even if it is assumed that premiums are paid when due, because
it varies daily with the investment performance of the subaccount[s] and/or the
Real Property Account in which the Contract participates.
A Contract's value upon surrender is its "net cash value," which is the cash
value less any outstanding Contract debt. See CONTRACT LOANS, page 16. The
following discussion of cash values assumes that there is no Contract debt, that
no premium is in default, and that the net premiums have all been allocated to a
single subaccount.
During the early months of the first Contract year, the cash value will be very
small or zero because of the charges made in connection with issuance of the
Contract. On the Contract date the cash value is equal to the first net premium,
unless, as may be the case throughout the first Contract year, there are unpaid
issue charge installments which reduce the cash value. Thereafter, the cash
value on every Monthly date will be equal to the cash value on the preceding
Monthly date increased or decreased by the change in the value of the assets
relating to the Contract, less the amount Pruco Life of New Jersey needs to
provide for the death benefit for the period between the two dates. If a premium
is due and paid on a Monthly date, the cash value on that date is further
increased by the amount of the net premium. The cash value between Monthly dates
is computed in a similar way.
While the death benefit increases if the value of the assets in the subaccount
increases at a rate of more than 4% a year, the investment performance needed to
produce an increase in the cash value cannot be stated in advance. It is
different for insureds of different age and sex (except where unisex rates
apply) at issue. It is also different for Contracts on comparable insureds if
those Contracts have been in effect for different lengths of time. Moreover, the
crediting of the net premium on the due date (even if it has not yet been paid)
does not result in any change in the death benefit, while the cash value is
assumed to increase by exactly the amount of the net premium. But if the net
premium is not paid before the end of the grace period, or if the Contract is
surrendered before then, the cash value is adjusted downward to take into
account the failure to pay the premium on the due date.
The tables on pages T1 and T2 and on pages C1 and C2 of this prospectus
illustrate what the cash values would be for representative Contracts over
extended periods, assuming uniform investment results, together with information
about the aggregate premiums paid under these Contracts. The examples set forth
below assume a total Series Fund expense ratio of 0.49% (taking into account the
offsets described under CHARGES AND EXPENSES on page 6).
The following two examples show, for the same Contracts, how the cash values
will vary over a selected year for two hypothetical investment results that are
different from those shown in the tables.
Example No. 1. Contract with $50,000 guaranteed death benefit and annual
premiums in effect for 18 years, during which the value of the assets in the
subaccount increased due to investment performance at a uniform rate of 7.16%
per year. In the 19th year the value of the assets increases at a uniform rate
of 8.16%. (These percentages correspond to gross annual investment returns in
the corresponding Series Fund portfolio of 8% and 9% per year, respectively.)
---------------------------------------------
CASH VALUE CASH VALUE
INSURED END OF YEAR 18 END OF YEAR 19
---------------------------------------------
Male, age 25 $11,860 $13,117
at issue
---------------------------------------------
Male, age 40 $20,110 $22,094
at issue
---------------------------------------------
Example No. 2. Same assumptions as in Example No. 1 except that the value of the
assets increases by 1.16% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
11
<PAGE>
---------------------------------------------
CASH VALUE CASH VALUE
INSURED END OF YEAR 18 END OF YEAR 19
---------------------------------------------
Male, age 25 $11,860 $12,264
at issue
---------------------------------------------
Male, age 40 $20,110 $20,652
at issue
---------------------------------------------
The changes are greater for the older insured because the premiums (and hence
the assets in the Account relating to the Contract on that insured) are greater
and the same rate of increase therefore produces a greater dollar amount.
Example No. 3. This example and the one following provide information for a
Contract with an $800 annual premium, in effect for 18 years, during which time
the value of the assets in the subaccount increased due to investment
performance at a uniform rate of 7.16% per year. In the 19th year the value of
the assets increases at a uniform rate of 8.16%. (These percentages correspond
to gross annual investment returns in the corresponding Series Fund portfolio of
8% and 9% per year, respectively.)
---------------------------------------------
CASH VALUE CASH VALUE
INSURED END OF YEAR 18 END OF YEAR 19
---------------------------------------------
Male, age 25 $18,030 $19,941
at issue
---------------------------------------------
Male, age 40 $17,035 $18,716
at issue
---------------------------------------------
Example No. 4. Same assumptions as in Example No. 3 except that the value of the
assets increases by 1.16% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
--------------------------------------------
CASH VALUE CASH VALUE
INSURED END OF YEAR 18 END OF YEAR 19
--------------------------------------------
Male, age 25 $18,030 $18,644
at issue
--------------------------------------------
Male, age 40 $17,035 $17,494
at issue
--------------------------------------------
The last two examples might be compared with Examples No. 3 and 4 above. Note
that while the same premium results in a larger death benefit for the younger
insured, the cash values for the younger and older insureds are quite similar.
Note also that while the death benefit decreases if the investment return is
1.16% per year, the cash value increases.
Because a substantial part of each premium is used to provide life insurance
protection, the cash values cannot meaningfully be compared with the amounts
that would have been available had the gross premiums been invested without
obtaining life insurance protection.
SURRENDER OF A CONTRACT FOR ITS NET CASH VALUE
A Contract may be surrendered in whole or in part for its net cash value while
the insured is living. Surrendering a Contract in part involves splitting the
Contract into two Contracts. One is surrendered for its net cash value; the
other is continued in force on the same terms as the original Contract except
that premiums and values will be appropriately reduced. The Contract continued
must have a face amount of at least $25,000, and its premium will be based on
the new face amount. Surrender of all or part of a Contract may have tax
consequences. See TAX TREATMENT OF CONTRACT BENEFITS, page 17.
12
<PAGE>
To surrender a Contract in whole or in part, the owner must deliver or mail it,
together with a written request in a form that meets Pruco Life of New Jersey's
needs, to a Home Office. The net cash value of a surrendered Contract will be
determined as of the valuation period such notice is received in a Home Office.
WITHDRAWAL OF A PORTION OF A CONTRACT'S NET CASH VALUE
Pruco Life of New Jersey will permit a Contract owner to withdraw a portion of
the Contract's net cash value (generally that resulting from investment
performance in excess of 4% a year) without surrendering the Contract, provided
that the death benefit is reduced by the amount of paid-up whole life insurance
that the cash value withdrawn would have purchased for that Contract owner, and
that the guaranteed minimum death benefit is reduced so that the difference
between the death benefit and the guaranteed minimum death benefit is the same
percentage of cash value after the withdrawal as before. The right to withdraw
such excess net cash value may be usefully compared with a partial surrender. As
noted above, a partial surrender essentially involves splitting an existing
Contract into two Contracts and surrendering one for its net cash value; the
death benefit, the guaranteed minimum death benefit, and the cash value of the
continuing Contract will all be proportionately reduced and a new lower
scheduled premium will henceforth be payable. If a Contract owner elects to
withdraw excess cash value, the scheduled premium is not reduced. The cash value
is, of course, reduced by exactly the amount of the withdrawal. Both the death
benefit and the guaranteed minimum death benefit are also reduced but by a
lesser amount than they would be under a partial surrender. It is important to
note, however, that if the face amount is decreased at any time during the first
7 Contract years, the Contract might be classified as a Modified Endowment
Contract. For a brief discussion of the potential tax consequences of a Contract
owner's withdrawal of the excess cash value, see TAX TREATMENT OF CONTRACT
BENEFITS, page 17.
Upon request, Pruco Life of New Jersey will tell a Contract owner the amount of
the net cash value that may be withdrawn in this manner and the amount of the
corresponding reductions in the death benefit and guaranteed minimum death
benefit for that or any lesser amount of cash value withdrawn. A Contract owner
is able to exercise the right to withdraw a portion of the Contract's cash value
either on an isolated or occasional basis or automatically every year, to the
extent investment performance warrants, for the purpose of applying partial cash
value withdrawals toward the payment of premiums on the Contract. To exercise
this right, a Contract owner must deliver or mail a written request in a form
that meets Pruco Life of New Jersey's needs to a Home Office.
WHEN PROCEEDS ARE PAID
Pruco Life of New Jersey will generally pay any death benefit, cash value or
loan proceeds within 7 days after receipt at a 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 at a Home Office.
However, Pruco Life of New Jersey may delay payment of proceeds from the
subaccount[s] and the variable portion of the death benefit due under the
Contract 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 a Contract in force as extended term or fixed reduced paid-up
insurance, Pruco Life of New Jersey expects to pay any cash value promptly upon
request. However, Pruco Life of New Jersey has the right to delay payment of
such cash value for up to 6 months (or a shorter period if required by
applicable law). Pruco Life of New Jersey 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).
LIVING NEEDS BENEFIT
Contract applicants may elect to add the LIVING NEEDS BENEFIT(sm) to their
Contracts at issue. The benefit may vary state-by-state. It can generally be
added only to Contracts of $50,000 or more or when the aggregate face amounts of
the insured's eligible contracts equal $50,000 or more.
Subject to state regulatory approval, 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. One or both of the following options may be available. A Pruco
Life of New Jersey 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 of New Jersey 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
13
<PAGE>
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 of New
Jersey 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 benefits 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 of New Jersey
reserves the right to determine the minimum amount that may be accelerated.
The LIVING NEEDS BENEFIT is available only in jurisdictions where and 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 of New Jersey 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 by the
tax law (although the exclusion in the latter case may be limited). Contract
owners should consult 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 VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS
The following tables have been prepared to help show how values under the
Contract change with investment performance of the Account. The tables assume
that no portion of the Contract's cash value is allocated to the Real Property
Account. The tables illustrate how cash values and death benefits of Contracts
with a given premium and face amount issued on an insured of a given age would
vary over time if the return on the assets held in the selected Series Fund
portfolios were a uniform, gross, after-tax, annual rate of 0%, 4% or 8%. The
death benefits and cash values would be different from those shown if the
returns averaged 0%, 4%, and 8% but fluctuated over and under those averages
throughout the years.
The amounts shown for the death benefit and cash value as of each Contract year
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 the tables assume a total Series Fund expense ratio of 0.49% (taking
into account the offsets described under CHARGES AND EXPENSES on page 6), and
also reflect a daily mortality and expense risk charge to the Account equal to
an effective annual charge of 0.35%. The actual fees and expenses of the
portfolios associated with a particular Contract may be more or less than 0.49%
and will depend on which subaccounts are selected. Based on the above
assumptions, gross annual rates of return of 0%, 4%, and 8% correspond to
approximate net annual rates of return of -0.84%, 3.16%,and 7.16%.
The tables 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 to produce after-tax returns of 0%,
4% or 8% than it does now.
The second column of each table shows what results would be achieved if an
amount equal to the total annual premium were invested to earn 4% interest
compounded annually.
Upon request, Pruco Life of New Jersey will furnish a comparable illustration
based on the proposed insured's age and sex (except where unisex rates apply)
and on the face amount or premium amount requested. Such an illustration will
assume that the insured is a standard (or, on request, a preferred) risk and
that the premium will be paid on an annual basis.
14
<PAGE>
Additional illustrations that assume the gross annual investment return is 0%,
6%, and 12% can be found on pages C1 and C2. These percentages correspond to
approximate net annual rates of return of -0.84%, 5.16%, and 11.16%,
respectively.
15
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATIONS
-------------
VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 25
$50,000 GUARANTEED DEATH BENEFIT
$536.50 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
DEATH BENEFIT (2) CASH VALUE (2)
-------------------------------------------- -----------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUMS ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED -------------------------------------------- -----------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 0% GROSS 4% GROSS 8% GROSS
YEAR PER YEAR (-0.84% NET) (3.16% NET) (7.16% NET) (-0.84% NET) (3.16% NET) (7.16% NET)
------ -------------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 558 $50,000 $50,000 $ 50,012 $ 22 $ 25 $ 28
2 $ 1,138 $50,000 $50,000 $ 50,081 $ 376 $ 396 $ 416
3 $ 1,742 $50,000 $50,000 $ 50,208 $ 729 $ 781 $ 834
4 $ 2,369 $50,000 $50,000 $ 50,394 $1,080 $ 1,178 $ 1,282
5 $ 3,022 $50,000 $50,000 $ 50,641 $1,438 $ 1,598 $ 1,772
6 $ 3,701 $50,000 $50,000 $ 50,948 $1,791 $ 2,029 $ 2,295
7 $ 4,407 $50,000 $50,000 $ 51,316 $2,141 $ 2,473 $ 2,854
8 $ 5,141 $50,000 $50,000 $ 51,746 $2,486 $ 2,929 $ 3,449
9 $ 5,905 $50,000 $50,000 $ 52,237 $2,827 $ 3,396 $ 4,083
10 $ 6,699 $50,000 $50,000 $ 52,790 $3,162 $ 3,874 $ 4,759
15 $11,172 $50,000 $50,000 $ 56,492 $4,734 $ 6,419 $ 8,811
20 $16,615 $50,000 $50,000 $ 61,794 $6,094 $ 9,173 $14,195
25 $23,237 $50,000 $50,000 $ 68,772 $7,231 $12,113 $21,291
30 $31,293 $50,000 $50,000 $ 77,552 $8,121 $15,179 $30,528
40 (Age 65) $53,020 $50,000 $50,000 $101,225 $9,039 $21,248 $57,143
</TABLE>
(1) If premiums are paid more frequently than annually, the payments would be
$274.50 semi-annually, $139.50 quarterly or $48 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been 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 VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, AND 8% 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 OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T1
<PAGE>
<TABLE>
<CAPTION>
VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 40
$50,000 GUARANTEED DEATH BENEFIT
$939 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
DEATH BENEFIT (2) CASH VALUE (2)
-------------------------------------------- -----------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUMS ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED -------------------------------------------- -----------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 0% GROSS 4% GROSS 8% GROSS
YEAR PER YEAR (-0.84% NET) (3.16% NET) (7.16% NET) (-0.84% NET) (3.16% NET) (7.16% NET)
------ -------------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 977 $50,000 $50,000 $50,029 $ 197 $ 208 $ 219
2 $ 1,992 $50,000 $50,000 $50,121 $ 815 $ 863 $ 912
3 $ 3,048 $50,000 $50,000 $50,275 $ 1,417 $ 1,527 $ 1,642
4 $ 4,147 $50,000 $50,000 $50,491 $ 2,002 $ 2,199 $ 2,411
5 $ 5,289 $50,000 $50,000 $50,776 $ 2,642 $ 2,955 $ 3,298
6 $ 6,477 $50,000 $50,000 $51,127 $ 3,265 $ 3,721 $ 4,234
7 $ 7,713 $50,000 $50,000 $51,546 $ 3,871 $ 4,498 $ 5,221
8 $ 8,998 $50,000 $50,000 $52,032 $ 4,459 $ 5,284 $ 6,262
9 $10,335 $50,000 $50,000 $52,586 $ 5,031 $ 6,881 $ 7,360
10 $11,725 $50,000 $50,000 $53,207 $ 5,584 $ 6,888 $ 8,517
15 $19,554 $50,000 $50,000 $57,324 $ 8,051 $11,012 $15,247
20 $29,080 $50,000 $50,000 $63,155 $ 9,969 $15,178 $23,749
25 (Age 65) $40,670 $50,000 $50,000 $70,776 $11,330 $19,268 $34,348
</TABLE>
(1) If premiums are paid more frequently than annually, the payments would be
$479.50 semi-annually, $243 quarterly or $82.50 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been 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 VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, AND 8% 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 OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T2
<PAGE>
CONTRACT LOANS
After the first Contract year, the owner may borrow from Pruco Life of New
Jersey using the Contract as the only security for the loan. During the first
Contract year, no loans are permitted. Except as provided in the following
paragraph, after the first Contract year a Contract owner may borrow up to 75%
of the Contract's cash value. The minimum amount that may be borrowed at any one
time is $500, unless the loan is used to pay premiums on the Contract. The owner
who is paying premiums other than monthly may elect in advance to have Pruco
Life of New Jersey automatically make a loan against the Contract, if the net
cash value is large enough, in order to pay a premium that has not been paid at
the end of a grace period.
Under one of the loan provisions available under this Contract, interest on a
loan accrues daily at a fixed effective annual rate of 5.5%. However, if a
Contract owner so desires, and if Pruco Life of New Jersey has received any
required approvals from the regulatory officials in the state or other
jurisdiction in which the Contract is to be issued, the Contract owner may elect
at the time of issuance of the Contract to have a different loan provision in
the Contract under which the interest rate will vary from time to time. Under
this variable loan interest rate provision, a Contract owner may borrow up to
90% of the Contract's cash value after the first Contract year.
If an owner elects the variable loan interest rate provision, interest on any
loan will accrue daily at an effective annual rate Pruco Life of New Jersey
determines at the start of each Contract year (instead of at the fixed 5.5%
rate). This interest rate will not exceed the greatest of: (1) the "Published
Monthly Average" for the calendar month ending 2 months before the calendar
month of the Contract anniversary; (2) 5%, which is the assumed rate of return
for the Contract plus 1%; and (3) any rate required by law in the state of issue
of the Contract. The "Published Monthly Average" means Moody's Corporate Bond
Yield Average-Monthly Average Corporates, as published by Moody's Investors
Service, Inc. or any successor to that service, or if that average is no longer
published, a substantially similar average established by the insurance
regulator where the Contract is issued. For example, the Published Monthly
Average in 1997 ranged from 7.03% to 7.99%.
Interest payments on any loan are due at the end of each Contract year. If
interest is not paid when due, it is added to the amount of the loan. If the sum
of all outstanding loans plus accrued interest exceeds what the net cash value
would be if there were no Contract debt, Pruco Life of New Jersey will notify
the Contract owner of its intent to terminate the Contract in 31 days, within
which time the owner may repay all or enough of the loan to obtain a positive
net cash value and thus keep the Contract in force.
When a loan is made, an amount equal to the loan proceeds will be transferred
out of the Account and the Real Property Account, as applicable. The reduction
will generally be made in the same proportions as the value in each subaccount
and Real Property Account bears to the total value of the Contract. While a
fixed-rate loan is outstanding, the amount that was so transferred will be
credited with the assumed investment return of 4% rather than with the actual
rate of return of the subaccount[s] and/or the Real Property Account. While a
loan made pursuant to the variable loan interest rate provision is outstanding,
the amount that was so transferred will be credited with a rate which is 1% less
than the loan interest rate for the Contract year (instead of 4%), rather than
with the actual rate of return of the subaccount[s] and/or the Real Property
Account.
A loan will not affect the amount of the premiums due. Should the death benefit
become payable while a loan is outstanding, or should the Contract be
surrendered, the amount of the Contract debt will be deducted from the death
benefit or the cash value otherwise payable.
A loan will have a permanent effect on a Contract's death benefit and cash value
because the investment results of the subaccount[s] and/or the Real Property
Account will apply only to the amount remaining in the subaccount[s] and/or the
Real Property Account. The longer the loan is outstanding, the greater the
effect is likely to be. The effect could be favorable or unfavorable. If
investment results are favorable while the loan is outstanding, the death
benefit and cash value will not increase as rapidly as they would have if no
loan had been made. If investment results are unfavorable, the death benefit and
the cash value will not be as adversely affected as they would have been had no
loan been made. Of course, a loan that is repaid will not have any effect upon
the guaranteed minimum death benefit. If the Contract is not kept in force, the
amount of unpaid Contract debt will be treated as a distribution which may be
taxable. See Tax Treatment of Contract Benefits -- Pre-Death Distributions, page
18, and Lapse and Reinstatement, page 19.
The tax treatment of Contract loans depends upon whether the Contract is
classified as a Modified Endowment Contract for federal tax purposes. See Tax
Treatment of Contract Benefits, page 17.
Consider the Contract issued on a 25 year old insured illustrated in the table
on page T1 with an 8% gross investment return. Assume a $2,500 (5.5%) fixed-rate
loan was made at the end of Contract year 8 and repaid at the end of Contract
year 9. Upon repayment, the death benefit would be $51,924.31 and the cash value
$4,006.00. These amounts are lower than the death benefit and cash value shown
on that page for the end of Contract year 9 because the loan amount was credited
with the 4% assumed investment return rather than the 8% gross rate of return
for the selected subaccounts.
16
<PAGE>
RIGHT TO EXCHANGE A CONTRACT FOR A FIXED-BENEFIT WHOLE-LIFE POLICY
At any time during the first 24 months after a Contract is issued, so long as no
premium due remains unpaid, the owner may exchange it for a fixed benefit
whole-life policy on the insured's life. No evidence of insurability will be
required to make an exchange. The new policy's death benefit will be the same as
the guaranteed minimum amount of the Contract. The new policy will also have the
same issue date and risk classification for the insured as the Contract, but it
will be issued by Prudential and will be a participating (potentially dividend
paying) policy. Premiums for the new policy will be based on Prudential's rates
in effect on the original issue date for the same class of risk which are
currently higher than premiums under the Contract. The new policy's cash value
will be the same as it would have been had the new policy been purchased at the
outset. There will be an equitable cash adjustment on the exchange equal to the
difference between the premiums on the new policy and the premiums on the
Contract for the period between the Contract date and the date of the exchange,
reduced by the amount, if any, by which the cash value of the Contract on the
date of the exchange exceeds what the cash value would have been had the
subaccounts and/or the Real Property Account in which the Contract participated
uniformly earned the assumed investment return of 4%. A further adjustment will
be made for any differences in premiums for any optional benefits carried over
to the new policy.
The exchange will be effective when Pruco Life of New Jersey receives a written
request in a form that meets its needs, and receives the Contract and payment of
any adjustment due on the exchange. Any outstanding Contract debt must be repaid
on or before the effective date of the exchange.
The Contract owner may also exchange the Contract for a fixed-benefit life
insurance policy according to procedures meeting applicable state insurance law
requirements if the Series Fund or one of its portfolios has a material change
in its investment policy. Pruco Life of New Jersey, in conjunction with the New
Jersey Insurance Commissioner, will determine if a change in investment policy
is material. The Contract owner will be able to exchange within 60 days of
receipt of notice of such a material change or of the effective date of the
change, whichever is later. Upon such an exchange, there will be a cash
adjustment based on any difference in net cash value between the Contract and
the new policy.
SALE OF THE CONTRACT AND SALES COMMISSIONS
Pruco Securities Corporation ("Prusec"), an indirect wholly-owned subsidiary of
Prudential, acts as the principal underwriter of the Contract. Prusec, organized
in 1971 under New Jersey law, is registered as a broker and dealer under the
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. Prusec's principal business address is 751 Broad
Street, Newark, New Jersey 07102-3777. The Contract is sold by registered
representatives of Prusec who are also authorized by state insurance departments
to do so. The Contract may also be sold through other broker-dealers authorized
by Prusec and applicable law to do so. Registered representatives of such other
broker-dealers may be paid on a different basis than described below. Where the
insured is less than 58 years of age, the representative will generally receive
a commission of no more than 50% of the premiums for the first year, no more
than 11% of the premiums for the second, third, and fourth years, no more than
3% of the premiums for the fifth through tenth years, and no more than 2% of the
premiums thereafter. For insureds over 58 years of age, the commission will be
lower. The representative may be required to return all or part of the first
year commission if the Contract is not continued through the second year.
Representatives with less than 3 years of service may be paid on a different
basis. Representatives who meet certain productivity, profitability, and
persistency standards with regard to the sale of the Contract will be eligible
for additional compensation.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life of New Jersey 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 of New Jersey's surplus, which may include the amounts
derived from the risk charge and the mortality and expense risk charge,
described in items 5 and 7 under CHARGES AND EXPENSES, page 6.
TAX TREATMENT OF CONTRACT BENEFITS
Each prospective purchaser is urged to consult a qualified tax advisor. The
following discussion is not intended as tax advice, and it is not a complete
statement of what the effect of federal income taxes will be under all
circumstances. Rather, it provides information about how Pruco Life of New
Jersey 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 section 7702 of
The Internal Revenue Code (the "Code") and as long as the underlying investment
for the Contract satisfies diversification requirements under section 817(h) of
the Code. (For further
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detail on diversification requirements, see DIVIDENDS, DISTRIBUTIONS, AND TAXES
in the attached prospectus for the Series Fund).
Pruco Life of New Jersey 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) the death benefit should be excludible
from the gross income of the beneficiary under section 101(a) of the Code; and
(2) 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 from the Contract.
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 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 of New Jersey intends to comply with final regulations issued under
sections 7702 and 817. Therefore, it reserves the right to make such changes as
it deems necessary to assure that the Contract continues to qualify as life
insurance for tax purposes. Any such changes will apply uniformly to affected
Contract owners and will be made only after advance written notice to affected
Contract owners.
Pre-Death Distributions. The taxation of pre-death distributions depends on
whether the Contract is classified as a Modified Endowment Contract. The
following discussion first deals with distributions under Contracts not so
classified, and then with Modified Endowment Contracts.
1. A surrender (or lapse) of the Contract may have tax consequences. Upon
surrender, the owner may not be taxed on the net cash value except for the
amount, if any, that exceeds the gross premiums paid less the untaxed
portion of any prior withdrawals. The amount of any unpaid Contract debt
will, upon surrender or lapse, be added to the net cash value and treated,
for this purpose, as if it had been received. Any loss incurred upon
surrender is generally not deductible. The tax consequences of a surrender
may differ if the proceeds are received under an income payment settlement
option.
A withdrawal or partial surrender generally is not taxable unless it
exceeds total premiums paid to the date of withdrawal less the untaxed
portion of any prior withdrawals. However, under certain limited
circumstances, in the first 15 Contract years all or a portion of a
withdrawal or partial surrender may be taxable if the cash value exceeds
the total premiums paid less the untaxed portion of any prior withdrawals,
even if total withdrawals do not exceed total premiums paid to date.
Extra premiums for optional benefits and riders generally do not count in
computing gross premiums paid, which in turn determines the extent to which
a withdrawal might be taxed.
Loans received under the Contract will ordinarily be treated as
indebtedness of the owner and will not be considered to be distributions
subject to tax.
2. Some of the above rules are changed if the Contract is classified as a
Modified Endowment Contract under Section 7702A of the Code. In general,
this Contract should not become a Modified Endowment Contract. However,
certain actions may cause the Contract to become a Modified Endowment
Contract. These actions may include partial surrenders or withdrawals, the
deletion of certain riders or the selection of certain options upon the
lapse of the Contract. Contract owners contemplating any of these steps
should consult a qualified tax advisor and their Pruco Life of New Jersey
representative.
If the Contract is classified as a Modified Endowment Contract then
pre-death distributions, including loans, withdrawals and partial
surrenders are includible in income to the extent that the Contract's cash
value prior to surrender charges 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. These rules may also apply
to pre-death distributions, including loans, made during the 2 year period
prior to the Contract becoming a Modified Endowment Contract.
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.
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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.
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, a 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.
In certain circumstances, deductions for interest paid or accrued on Contract
debt or on other loans incurred or continued to purchase or carry the Contract
may be denied under Section 163 of the Code as personal interest or under
Section 264 of the Code. Contract owners should consult a tax advisor regarding
the application of these provisions to their circumstances.
Business-owned life insurance is subject to additional rules. Section 264(a)(1)
of the Code generally precludes business Contract owners from deducting premium
payments. The Health Insurance Portability and Accountability Act of 1996
generally disallows tax deductions for interest on Contract debt on a
business-owned insurance policy effective (with certain transitional rules) for
interest paid or accrued after October 13, 1995. An exception permits the
deduction of interest on policy loans on Contracts for up to 20 key persons. The
interest deduction for Contract debt on such loans is limited to a prescribed
interest rate and a maximum aggregate loan amount of $50,000 per key insured
person. 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 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.
LAPSE AND REINSTATEMENT
This Contract ensures that as long as premiums are paid, insurance protection
remains in effect. However, if a premium is not paid on or before each due date
or within the 31 day grace period after each due date, 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 17.
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 value. To
reinstate a lapsed Contract, Pruco Life of New Jersey requires renewed evidence
of insurability, and submission of certain payments due under the Contract.
If a Contract does lapse, it may still provide some benefits. Those benefits are
described below under OPTIONS ON LAPSE.
OPTIONS ON LAPSE
If a Contract lapses because the premium has not been paid before the end of the
grace period, some life insurance coverage may continue in effect or the owner
may choose to surrender the Contract for its net cash value. A lapse of a
Contract with a Contract loan may have tax consequences. See TAX TREATMENT OF
CONTRACT BENEFITS, page 17.
1. Extended Term Insurance. With one exception explained below, if the owner
does not communicate at all with Pruco Life of New Jersey, life insurance
coverage will continue for a length of time that depends on the net cash value
on the due date of the first unpaid premium, the amount of insurance, and the
age and sex (except where unisex rates apply) of the insured. The insurance
amount will be what it would have been on the due date of the unpaid premium,
taking into account any Contract debt on that date. The amount will not change
while the insurance stays in force. This benefit is known as extended term
insurance. The owner will be told in writing how long the insurance will be in
effect. Extended term insurance has a cash value but no loan value.
Contracts issued on the lives of certain insureds in high risk rating classes
will include a statement that extended term insurance will not be provided. In
that case, variable reduced paid-up insurance (as described in item 3 below)
will be the automatic benefit provided on lapse.
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2. Fixed Reduced Paid-Up Insurance. The owner may choose to have insurance
coverage provided for the lifetime of the insured. The amount will be lower than
what extended term insurance would provide. This is known as fixed reduced
paid-up insurance. The insurance amount will depend on the net cash value on the
due date of the first premium in default, and the age and sex (except where
unisex rates apply) of the insured. The amount will not change thereafter unless
a loan is taken against the fixed reduced paid-up insurance. Pruco Life of New
Jersey will, if asked, tell the owner what the amount will be. Apart from the
case described above in which fixed reduced paid-up insurance is the automatic
benefit provided on lapse, the owner who wants fixed reduced paid-up insurance
must ask for it in writing, in a form that meets Pruco Life of New Jersey's
needs, within 3 months of the due date of the first unpaid premium. Fixed
reduced paid-up insurance has a cash value and a loan value. It is possible for
this Contract to be classified as a Modified Endowment Contract if this option
is exercised. See TAX TREATMENT OF CONTRACT BENEFITS, page 17.
3. Variable Reduced Paid-Up Insurance. Variable reduced paid-up insurance
provides insurance coverage for the lifetime of the insured. The initial
insurance amount will depend upon the net cash value on the due date of the
first premium in default, and the age and sex (except where unisex rates apply)
of the insured. This will be a new guaranteed minimum death benefit. Aside from
this guarantee, the cash value and the amount of insurance will vary with
investment performance in the same manner as a Contract in force on a premium
paying basis (see HOW A CONTRACT'S DEATH BENEFIT WILL VARY, page 8 and HOW A
CONTRACT'S CASH VALUE WILL VARY, page 11). Variable reduced paid-up insurance
has a loan privilege identical to that available on premium paying Contracts
(see CONTRACT LOANS, page 16). It is possible for this Contract to be classified
as a Modified Endowment Contract if this option is exercised. See TAX TREATMENT
OF CONTRACT BENEFITS, page 17.
As explained in item 1 above, variable reduced paid-up insurance is the
automatic benefit on lapse for Contracts issued on certain insureds. Owners of
other Contracts who want variable reduced paid-up insurance must ask for it in
writing, in a form that meets Pruco Life of New Jersey's needs, within 3 months
of the date of default; it will be available to such owners only if the initial
amount of variable reduced paid-up insurance would be at least $5,000. This
minimum is not applicable to Contracts for which variable reduced paid-up
insurance is the automatic benefit upon lapse.
4. Payment of Net Cash Value. The owner can receive the net cash value by
surrendering the Contract and making a written request in a form that meets
Pruco Life of New Jersey's needs. If Pruco Life of New Jersey receives the
request within the days of grace of a premium in default, the net cash value
will be the net cash value as of the due date of that premium, adjusted for any
loan made or repaid during the days of grace, plus or minus an amount that
depends upon the investment performance between the due date and the date Pruco
Life of New Jersey receives the request. Whether the net cash value as of the
due date of the unpaid premium is increased or decreased by subsequent
investment performance depends upon whether or not the assets relating to the
Contract have increased at more than 4% a year. If Pruco Life of New Jersey
receives the request after the grace period expires, the net cash value will be
the net value of any extended term insurance then in force, or the net value of
any reduced paid-up insurance then in force (either fixed or variable), less any
Contract debt. Surrender of the Contract may have tax consequences. See TAX
TREATMENT OF CONTRACT BENEFITs, page 17.
The following table shows the cash value, extended term insurance, and both
fixed and variable reduced paid-up insurance for two representative Contracts,
each with a guaranteed death benefit of $50,000, which lapse at the end of 8
years after a uniform gross annual investment return of 8%. The tables assume a
total Series Fund expense ratio of 0.49% (taking into account the offsets
described under CHARGES AND EXPENSES on page 6).
-----------------------------------------------------------------
Extended Reduced
Insured Cash Value Term Insurance Paid-Up Insurance
-----------------------------------------------------------------
Male, age 25 $3,449 $51,746 $14,399
at issue for 19.84 years for life
-----------------------------------------------------------------
Male, age 40 $6,262 $52,032 $16,194
at issue for 12.72 years for life
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LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS
The Contract generally employs mortality tables that distinguish between males
and females. Thus, premiums 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, premiums and
cost of insurance charges 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
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1964 or other applicable law. Pruco Life of New Jersey 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 of New Jersey 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 of New
Jersey 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 of New Jersey 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. Pruco Life of New Jersey 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 of New Jersey representative authorized to sell this
Contract can explain these options upon request.
RIDERS
The Contract owner may be able to obtain extra fixed benefits, which may require
an additional premium. These benefits will be described in what is known as a
"rider" to the Contract. For example, one benefit pays an additional amount if
the insured dies in an accident. Others waive certain premiums if the insured is
disabled within the meaning of the provision (or, in the case of a Contract
issued on an insured under the age of 15, if the applicant dies or becomes
disabled within the meaning of the provision). Others pay an additional amount
if the insured dies within a stated number of years after issue; similar
benefits may be available if the insured's spouse or child should die. The
amounts of these benefits are fully guaranteed at issue; they do not depend on
the performance of the Account. Certain restrictions may apply; they are clearly
described in the applicable rider. Any Pruco Life of New Jersey representative
authorized to sell the Contract can explain these extra benefits further.
Samples of the provisions are available from Pruco Life of New Jersey upon
written request.
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 of New Jersey 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 of New Jersey 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 of New Jersey 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
of New Jersey 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
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share in the corresponding portfolio of the Series Fund. The number of votes for
which each Contract owner may give Pruco Life of New Jersey instructions will be
determined as of the record date chosen by the Board of Directors of the Series
Fund. Pruco Life of New Jersey will furnish Contract owners with proper forms
and proxies to enable them to give these instructions. Pruco Life of New Jersey
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 of New Jersey 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 of New
Jersey 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 of New Jersey reasonably disapproves such
changes in accordance with applicable federal regulations. If Pruco Life of New
Jersey 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.
SUBSTITUTION OF SERIES FUND SHARES
Although Pruco Life of New Jersey 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 of New Jersey 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.
REPORTS TO CONTRACT OWNERS
Once each Contract year (except where the Contract is in force as fixed extended
term insurance or fixed reduced paid-up insurance), 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 of New Jersey may limit the number of such
requests or impose a reasonable charge if such requests are made too frequently.
Contract owners will also be sent annual and semi-annual reports of the Series
Fund showing the financial condition of the portfolios and the investments held
in each.
STATE REGULATION
Pruco Life of New Jersey is subject to regulation and supervision by the
Department of Insurance of the State of New Jersey, which periodically examines
its operations and financial condition. It is also subject to the insurance laws
and regulations of all jurisdictions in which it is authorized to do business.
Pruco Life of New Jersey 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 of New Jersey
is required to file with New Jersey 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.
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 of New Jersey. There have been no disagreements with
Deloitte & Touche LLP on any matter of accounting principles or
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practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to the satisfaction of the accountant, would have caused them to
make reference to the matter in their reports.
Actuarial matters included in this prospectus have been examined by Nancy D.
Davis, FSA, MAAA, Vice President and Actuary of Prudential whose opinion is
filed as an exhibit to the registration statement.
LITIGATION
Several actions have been brought against Pruco Life of New Jersey alleging that
Pruco Life of New Jersey and its agents engaged in improper life insurance sales
practices. Prudential has agreed to indemnify Pruco Life of New Jersey for
losses, if any, resulting from such litigation. No other significant litigation
is being brought against Pruco Life of New Jersey that would have a material
effect on its financial position.
YEAR 2000 COMPLIANCE
The services provided to the Contract owners by Pruco Life of New Jersey and
Prusec 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, Pruco Life of New Jersey and Prusec'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.
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 of New
Jersey's abilities to meet its contractual 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.
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 of New Jersey's office.
The address and telephone number are set forth on the cover of this prospectus.
FINANCIAL STATEMENTS
The financial statements of Pruco Life of New Jersey 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 of New Jersey to meet
its obligations under the Contracts.
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DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life of New Jersey, listed with their
principal occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE OF NEW JERSEY
JAMES J. AVERY, JR., Chairman and Director. -- Senior Vice President and Chief
Actuary, Prudential Individual Insurance Group since 1997; 1995 to 1997:
President of Prudential Select; Prior to 1995: Chief Operating Officer of
Prudential Select.
WILLIAM M. BETHKE, Director. -- Chief Investment Officer since 1997; Prior to
1997: President, Prudential Capital Markets Group.
IRA J. KLEINMAN, Director. -- Executive Vice President, Prudential International
Insurance Group since 1997; 1995 to 1997: Chief Marketing and Product
Development Officer, Prudential Individual Insurance Group; Prior to 1995:
President, Prudential Select.
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; Prior to 1995: Senior Vice
President and Chief Financial Officer of Prudential Preferred Financial
Services.
ESTHER H. MILNES, President and Director. -- Vice President and Actuary,
Prudential Individual Insurance Group since 1996; Prior to 1996: Senior Vice
President and Chief Actuary, Prudential Insurance and Financial Services.
I. EDWARD PRICE, Vice Chairman and Director. -- Senior Vice President and
Actuary, Prudential Individual Insurance Group since 1995; Prior to 1995: Chief
Executive Officer, Prudential International Insurance.
OFFICERS WHO ARE NOT DIRECTORS
SUSAN L. BLOUNT, Secretary.--Vice President and Secretary of Prudential since
1995; Prior to 1995: Assistant General Counsel for Prudential Residential
Services Company.
C. EDWARD CHAPLIN, Treasurer. -- Vice President and Treasurer of Prudential
since 1995; Prior to 1995: Managing Director and Assistant Treasurer of
Prudential.
JAMES C. DROZANOWSKI, Senior Vice President. -- Vice President and Operations
Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996:
President and Chief Executive Officer of Chase Manhattan Bank; Prior to 1995:
Vice President, North America Customer Services, Chase Manhattan Bank.
CLIFFORD E. KIRSCH, Chief Legal Officer. -- Chief Counsel, Variable Products,
Law Department of Prudential since 1995; Prior to 1995: Associate General
Counsel with Paine Webber.
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.
EDWARD A. MINOGUE, Senior Vice President. -- Vice President, Annuity Services,
Prudential Investments since 1997; Prior to 1997: Director, Merrill Lynch.
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.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary. -- Vice President and
Associate Actuary, Prudential.
JAMES A. TIGNANELLI, Senior Vice President. --Vice President, Compliance,
Prudential Individual Insurance since 1996; Prior to 1996: Vice President Field
Operations.
The business address of all directors and officers of Pruco Life of New Jersey
is 213 Washington Street, Newark, New Jersey 07102-2992.
Pruco Life of New Jersey directors and officers are elected annually.
24
<PAGE>
(This page intentionally left blank.)
25
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1997
<TABLE>
<CAPTION>
----------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential
Series Fund, Inc.
Portfolios at net asset value [Note 3] $7,534,203 $9,256,308 $71,186,773 $51,442,940 $15,420,826
Receivable from Pruco Life Insurance
Company of New Jersey [Note 2].......... 0 0 0 0 8,231
---------- ---------- ----------- ----------- -----------
Net Assets.......................... $7,534,203 $9,256,308 $71,186,773 $51,442,940 $15,429,057
========== ========== =========== =========== ===========
NET ASSETS, representing:
Equity of Contract owners............... $7,527,565 $9,249,507 $71,108,748 $51,420,138 $15,429,057
Equity of Pruco Life Insurance Company
of New Jersey......................... 6,638 6,801 78,025 22,802 0
---------- ---------- ----------- ----------- -----------
$7,534,203 $9,256,308 $71,186,773 $51,442,940 $15,429,057
========== ========== =========== =========== ===========
</TABLE>
STATEMENTS OF OPERATIONS
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>
INVESTMENT INCOME
Dividend distributions received........ $395,859 $670,755 $1,547,755 $1,489,267 $693,049
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk
[Note 5A]............................ 26,160 31,965 235,462 172,500 52,340
Reimbursement for excess expenses
[Note 5B]............................ (1,637) (2,222) (52,324) (111,717) (24,531)
--------- --------- ---------- ---------- ---------
NET EXPENSES............................. 24,523 29,743 183,138 60,783 27,809
--------- --------- ---------- ---------- ---------
NET INVESTMENT INCOME (LOSS)............. 371,336 641,012 1,364,617 1,428,484 665,240
--------- --------- ---------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received... 0 107,085 3,835,699 7,709,982 1,660,730
Realized gain on shares redeemed
[average cost basis]................. 0 31,192 1,973,839 642,952 145,076
Net change in unrealized gain (loss) on
investments.......................... 0 (61,534) 7,305,038 (1,736,264) (620,598)
--------- --------- ---------- ---------- ---------
NET GAIN (LOSS) ON INVESTMENTS........... 0 76,743 13,114,576 6,616,670 1,185,208
--------- --------- ---------- ---------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. 371,336 717,755 14,479,193 8,045,154 1,850,448
========= ========= ========== ========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A1
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------
HIGH SMALL
YIELD STOCK EQUITY NATURAL GOVERNMENT PRUDENTIAL CAPITALIZATION
BOND INDEX INCOME RESOURCES GLOBAL INCOME JENNISON STOCK
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 853,056 $1,973,306 $1,420,262 $ 536,076 $ 449,200 $ 229,407 $ 356,284 $ 274,869
0 0 8,503 0 0 2,158 0 0
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 853,056 $1,973,306 $1,428,765 $ 536,076 $ 449,200 $ 231,565 $ 356,284 $ 274,869
========== ========== ========== ========== ========== ========== ========== ==========
$ 852,617 $1,969,407 $1,428,765 $ 524,924 $ 444,070 $ 231,565 $ 355,412 $ 270,592
439 3,899 0 11,152 5,130 0 872 4,277
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 853,056 $1,973,306 $1,428,765 $ 536,076 $ 449,200 $ 231,565 $ 356,284 $ 274,869
========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- --------------------------------------------------------------------------------------------------------
HIGH SMALL
YIELD STOCK EQUITY NATURAL GOVERNMENT PRUDENTIAL CAPITALIZATION
BOND INDEX INCOME RESOURCES GLOBAL INCOME JENNISON STOCK
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 78,208 $ 24,485 $ 30,966 $ 3,243 $ 5,170 $ 15,463 $ 597 $ 1,097
2,871 5,529 4,095 2,285 1,392 783 863 531
0 0 0 0 0 0 0 0
- --------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
2,871 5,529 4,095 2,285 1,392 783 863 531
- --------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
75,337 18,956 26,871 958 3,778 14,680 (266) 566
- --------- ---------- ---------- ---------- ---------- ---------- ----------- -----------
0 54,559 127,080 68,387 20,851 0 20,173 17,900
1,843 33,392 9,068 20,414 7,185 1,148 1,091 0
26,710 311,884 193,110 (158,871) (15,824) (5,720) 37,821 12,183
- --------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
28,553 399,835 329,258 (70,070) 12,212 6,868 59,085 30,083
- --------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
$ 103,890 $ 418,791 $ 356,129 $ (69,112) $ 15,990 $ 21,548 $ 58,819 $ 30,649
========= ========== ========== ========== ========== ========== ========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A2
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND
-------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
--------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............ $ 371,336 $ 354,010 $ 385,602 $ 641,012 $ 545,970 $ 547,476
Capital gains distributions received.... 0 0 0 107,085 0 19,747
Realized gain on shares redeemed
[average cost basis].................. 0 0 0 31,192 18,879 11,479
Net change in unrealized gain (loss) on
investments............................ 0 0 0 (61,534) (202,485) 961,936
---------- ---------- ---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... 371,336 354,010 385,602 717,755 362,364 1,540,638
---------- ---------- ---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 7]................................ (245,323) (273,457) (61,093) (558,307) (266,782) (121,579)
---------- ---------- ---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 8]................................ 2,846 (15,890) 9,308 3,051 (13,611) 6,715
---------- ---------- ---------- ---------- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS... 128,859 64,663 333,817 162,499 81,971 1,425,774
NET ASSETS:
Beginning of year....................... 7,405,344 7,340,681 7,006,864 9,093,809 9,011,838 7,586,064
---------- ---------- ---------- ---------- ---------- -----------
End of year............................. $7,534,203 $7,405,344 $7,340,681 $9,256,308 $9,093,809 $9,011,838
========== ========== ========== ========== ========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A3
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------
FLEXIBLE CONSERVATIVE
EQUITY MANAGED BALANCED
- ------------------------------------- --------------------------------- -----------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
- ----------- ----------- ------------ ---------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,364,617 $1,257,239 $ 903,333 $1,428,484 $1,303,686 $1,190,976 $ 665,240 $ 539,667 $ 486,462
3,835,699 5,412,079 1,871,861 7,709,982 4,325,923 1,736,662 1,660,730 875,158 437,152
1,973,839 739,386 386,726 642,952 354,578 134,824 145,076 58,696 18,242
7,305,038 2,147,359 9,550,433 (1,736,264) (414,332) 5,079,159 (620,598) 135,494 935,354
- ----------- ----------- ------------ ---------- ----------- ----------- ----------- ---------- ----------
14,479,193 9,556,063 12,712,353 8,045,154 5,569,855 8,141,621 1,850,448 1,609,015 1,877,210
- ----------- ----------- ------------ ---------- ----------- ----------- ----------- ---------- ----------
(4,430,652) (1,767,989) (602,249) (2,634,698) (1,212,218) (490,699) (730,443) (173,029) 87,711
- ----------- ----------- ------------ ---------- ----------- ----------- ----------- ---------- ----------
(18,211) 35,491 (30,219) (20,520) (63,212) 8,173 (23,517) (6,813) (22,015)
- ----------- ----------- ------------ ---------- ----------- ----------- ----------- ---------- ----------
10,030,330 7,823,565 12,079,885 5,389,936 4,294,425 7,659,095 1,096,488 1,429,173 1,942,906
61,156,443 53,332,878 41,252,993 46,053,004 41,758,579 34,099,484 14,332,569 12,903,396 10,960,490
- ----------- ----------- ------------ ---------- ----------- ----------- ----------- ---------- ----------
$71,186,773 $61,156,443 $ 53,332,878 $51,442,940 $46,053,004 $41,758,579 $15,429,057 $14,332,569 $12,903,396
=========== =========== ============ =========== =========== =========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A4
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------
HIGH
YIELD STOCK
BOND INDEX
------------------------------ --------------------------------
1997 1996 1995 1997 1996 1995
-------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............ $75,337 $72,664 $73,425 $18,956 $15,682 $13,423
Capital gains distributions received.... 0 0 0 54,559 13,471 6,171
Realized gain on shares redeemed
[average cost basis].................. 1,843 2,155 (535) 33,392 11,266 1,256
Net change in unrealized gain (loss)
on investments......................... 26,710 7,745 39,668 311,884 164,641 192,144
-------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... 103,890 82,564 112,558 418,791 205,060 212,994
-------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 7]................................ (34,729) (61,336) (790) 338,313 149,521 98,492
-------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 8]................................ (2,400) (916) (8,260) 216 6,642 (11,659)
-------- --------- --------- --------- --------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS... 66,761 20,312 103,508 757,320 361,223 299,827
NET ASSETS:
Beginning of year....................... 786,295 765,983 662,475 1,215,986 854,763 554,936
-------- --------- --------- --------- --------- ---------
End of year............................. $853,056 $786,295 $765,983 $1,973,306 $1,215,986 $854,763
======== ========= ========= ========== ========== =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A5
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -------------------------------------------------------------------------------------------------------------
EQUITY NATURAL
INCOME RESOURCES GLOBAL
- ------------------------------------ ----------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
- ----------- --------- --------- --------- ---------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 26,871 $ 26,807 $ 24,231 $ 958 $ 1,990 $ 3,612 $ 3,778 $ 5,621 $ 2,484
127,080 29,626 31,977 68,387 77,762 19,671 20,851 4,714 3,923
9,068 4,920 2,925 20,414 4,345 3,237 7,185 4,074 1,883
193,110 104,296 64,528 (158,871) 56,286 60,792 (15,824) 31,135 18,037
- ----------- --------- --------- --------- ---------- --------- ---------- --------- ---------
356,129 165,649 123,661 (69,112) 140,383 87,312 15,990 45,544 26,327
- ----------- --------- --------- --------- ---------- --------- ---------- --------- ---------
119,419 24,565 115,142 (78,306) 100,563 38,282 123,691 53,788 62,108
- ----------- --------- --------- --------- ---------- --------- ---------- --------- ---------
(4,821) 2,376 (8,841) 11,590 (7,604) (4,996) (299) 92 (7,501)
- ----------- --------- --------- --------- ---------- --------- ---------- --------- ---------
470,727 192,590 229,962 (135,828) 233,342 120,598 139,382 99,424 80,934
958,038 765,448 535,486 671,904 438,562 317,964 309,818 210,394 129,460
- ----------- --------- --------- --------- ---------- --------- ---------- --------- ---------
$1,428,765 $958,038 $765,448 $536,076 $ 671,904 $ 438,562 $ 449,200 $ 309,818 $ 210,394
=========== ========= ========= ========= ========== ========= ========== ========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A6
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------
GOVERNMENT PRUDENTIAL
INCOME JENNISON*
----------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
------- --------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............ $14,680 $12,318 $11,942 $ (266) $ (59) $ (18)
Capital gains distributions received.... 0 0 0 20,173 0 0
Realized gain on shares redeemed
[average cost basis].................. 1,148 278 548 1,091 254 632
Net change in unrealized gain (loss) on
investments............................ 5,720 (8,709) 20,382 37,821 12,809 653
------- --------- -------- --------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... 21,548 3,887 32,872 58,819 13,004 1,267
------- --------- -------- --------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 7]................................ (6,210) 2,777 17,297 147,505 104,802 30,835
------- --------- -------- --------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 8]................................ (2,849) 1,959 (6,659) 358 (9,491) 9,185
------- --------- -------- --------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS... 12,489 8,623 43,510 206,682 108,315 41,287
NET ASSETS:
Beginning of year....................... 219,076 210,453 166,943 149,602 41,287 0
------- --------- -------- --------- -------- --------
End of year............................. 231,565 219,076 $210,453 356,284 149,602 $41,287
======= ========= ======== ========= ======== ========
</TABLE>
* Commenced business on 5/1/95.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A9 THROUGH A14
A7
<PAGE>
SUBACCOUNTS (CONTINUED)
-------------------------------
SMALL
CAPITALIZATION
STOCK*
-------------------------------
1997 1996 1995
-------- ---------- --------
$ 566 $ 222 $ 40
17,900 1,130 141
0 89 360
12,183 5,484 1,089
-------- -------- --------
30,649 6,925 1,630
-------- -------- --------
177,357 47,113 8,464
-------- -------- --------
5,174 (11,989) 9,546
-------- -------- --------
213,180 42,049 19,640
61,689 19,640 0
-------- -------- --------
$274,869 $ 61,689 $ 19,640
======== ======== ========
* 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 OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 1997
NOTE 1: GENERAL
Pruco Life of New Jersey Variable Insurance Account ("the Account") was
established on November 10, 1982 under New Jersey law as a separate
investment account of Pruco Life Insurance Company of New Jersey
("Pruco Life of New Jersey") which is a wholly-owned subsidiary of
Pruco Life Insurance Company (an Arizona domiciled company) and is
indirectly wholly-owned by The Prudential Insurance Company of America
("Prudential"). The assets of the Account are segregated from Pruco
Life of New Jersey's other assets.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. There are thirteen 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.
New sales of the Pruco Life of New Jersey Variable Life product which
invested in the Account were discontinued as of January 1, 1992.
However, premium payments made by Contract owners existing at that date
will continue to be received by the Account.
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 of New Jersey--Pruco Life of New
----------------------------------------------------
Jersey maintains a position in the Account for liquidity purposes
including unit purchases and redemptions, fund share transactions, and
expense processing. Pruco Life of New Jersey monitors the balance daily
and transfers funds based upon anticipated activity. At times, Pruco
Life of New Jersey may owe an amount to the Account, which is reflected
in the Account's Statements of Net Assets as a receivable from Pruco
Life of New Jersey. The receivable does not have an effect on the
Contract owner's account or the 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: 753,420 839,814 2,291,241 2,976,972 1,030,100
Net asset value per share: $ 10.00000 $ 11.02185 $ 31.06909 $ 17.28029 $ 14.97022
Cost: $ 7,534,203 $ 8,966,365 $44,089,712 $46,509,835 $14,553,563
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
------------------------------------------------------------------
HIGH
YIELD STOCK EQUITY NATURAL
BOND INDEX INCOME RESOURCES GLOBAL
------------ ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Number of Shares: 104,740 65,299 63,440 35,166 25,062
Net asset value per share: $ 8.14453 $ 30.21956 $ 22.38737 $ 15.24426 $ 17.92348
Cost: $ 832,145 $ 1,237,055 $ 1,067,886 $ 563,601 $ 421,592
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
-----------------------------------------
SMALL
GOVERNMENT PRUDENTIAL CAPITALIZATION
INCOME JENNISON STOCK
------------ ----------- --------------
<S> <C> <C> <C>
Number of Shares: 19,909 20,093 17,254
Net asset value per share: $ 11.52286 $ 17.73151 $ 15.93104
Cost: $ 226,290 $ 305,001 $ 256,112
</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>
----------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
------------ ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units outstanding 3,120,480.031 2,483,062.474 8,755,304.923 9,299,995.140 3,551,146.575
Unit Value..................... $ 2.41231 $ 3.72504 $ 8.12179 $ 5.52905 $ 4.34481
------------- ------------- ------------- ------------- -------------
TOTAL CONTRACT OWNER EQUITY.... $ 7,527,565 $ 9,249,507 $ 71,108,748 $ 51,420,138 $ 15,429,057
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------
HIGH
YIELD STOCK EQUITY NATURAL
BOND INDEX INCOME RESOURCES GLOBAL
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding 337,308.064 473,456.234 321,374.182 195,055.645 311,494.449
Unit Value..................... $ 2.52771 $ 4.15964 $ 4.44580 $ 2.69115 $ 1.42561
------------ ----------- ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY.... $ 852,617 $ 1,969,407 $ 1,428,765 $ 524,924 $ 444,070
============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------
SMALL
GOVERNMENT PRUDENTIAL CAPITALIZATION
INCOME JENNISON STOCK
------------ ------------ ------------
<S> <C> <C> <C>
Contract Owner Units Outstanding 114,393.468 189,670.513 151,893.476
Unit Value..................... $ 2.02428 $ 1.87384 $ 1.78146
------------ ------------ ------------
TOTAL CONTRACT OWNER EQUITY.... $ 231,565 $ 355,412 $ 270,592
============ ============ ============
</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 0.35% 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 of New Jersey was $536,776.
B. Expense Reimbursement
Pursuant to a prior merger agreement, the Account is reimbursed by
Pruco Life of New Jersey for expenses in excess of 0.40% of the
average daily net assets incurred by the Money Market, Diversified
Bond, Equity, Flexible Managed, and Conservative Balanced Portfolios
of the Series Fund. For 1997, the amount of these reimbursements
totaled $192,431.
C. Cost of Insurance Charges
Contract owner contributions are applied to the Account net of the
following charges: administrative charges, death benefit risk
charges, premium taxes, and sales loads. During 1997, Pruco Life of
New Jersey received from Contract owners $1,404,463, $157,367,
$262,277, and $1,310,706, respectively, for these charges.
NOTE 6: TAXES
Pruco Life of New Jersey is taxed as a "life insurance company" as
defined bythe Internal Revenue Code and the results of operations of
the Account form a part of Pruco Life of New Jersey'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......... $ 700,249 716,991 3,577,509 3,720,861 1,351,138
Policy Loans........................ $(113,588) (160,351) (1,856,989) (988,351) (280,851)
Policy Loan Repayment and Interest.. $ 106,760 140,633 933,614 710,569 165,714
Surrenders, Withdrawals, and Death
Benefits............................ (435,318) (654,376) (5,480,536) (4,256,006) (1,283,004)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Options. (243,617) (323,521) 174,951 (299,982) (137,098)
Administrative and Other Charges.... (259,809) (277,683) (1,779,201) (1,521,789) (546,342)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------
HIGH
YIELD STOCK EQUITY NATURAL
BOND INDEX INCOME RESOURCES GLOBAL
---------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Contract Owner Net Payments......... $69,568 $140,823 $88,734 $63,148 $35,049
Policy Loans........................ (9,759) (35,127) (41,052) (18,825) (12,653)
Policy Loan Repayment and Interest.. 12,569 19,671 14,335 8,366 59,198
Surrenders, Withdrawals, and Death
Benefits............................ (57,221) (128,835) (47,860) (46,965) (30,143)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Options. (22,882) 393,552 140,019 (61,191) 83,688
Administrative and Other Charges.... (27,004) (51,771) (34,757) (22,839) (11,448)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------
SMALL
GOVERNMENT PRUDENTIAL CAPITALIZATION
INCOME JENNISON STOCK
--------- -------------- --------------
<S> <C> <C> <C>
Contract Owner Net Payments......... $ 17,854 $ 20,829 $ 14,283
Policy Loans........................ 220 (7,824) (2,361)
Policy Loan Repayment and Interest.. 1,270 2,194 2,474
Surrenders, Withdrawals, and Death
Benefits............................ (4,944) (16,018) (7,245)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Options. (5,176) 147,432 174,351
Administrative and Other Charges.... (7,390) (7,152) (4,145)
</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 of New
Jersey 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: 396,609.703 469,085.861 259,044.710 297,932.582 752,863.033 925,104.800
Contract Owner
Redemptions: (500,351.896) (591,107.081) (415,661.161) (378,683.297) (1,344,426.677) (1,221,515.937)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------
FLEXIBLE CONSERVATIVE HIGH YIELD
MANAGED BALANCED BOND
-------------------------- ------------------------- ----------------------------
1997 1996 1997 1996 1997 1996
------------- ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 960,270.249 1,170,076.535 398,549.941 492,415.156 47,297.752 58,550.732
Contract Owner
Redemptions: (1,468,517.779) (1,444,852.506 (574,879.893) (539,429.266) (61,560.110) (86,929.485)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------
STOCK EQUITY NATURAL
INDEX INCOME RESOURCES
-------------------------- ------------------------- ----------------------------
1997 1996 1997 1996 1997 1996
------------- ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 163,037.539 125,596.561 70,094.323 56,306.151 42,321.462 64,999.386
Contract Owner
Redemptions: (74,707.844) (72,698.020) (40,382.387) (47,941.070) (67,260.957) (29,066.586)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------
GOVERNMENT PRUDENTIAL
GLOBAL INCOME JENNISON
-------------------------- ------------------------- ----------------------------
1997 1996 1997 1996 1997 1996
------------- ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: (74,707.844) (72,698.020) (40,382.387) (47,941.070) (67,260.957) (29,066.586)
Contract Owner
Redemptions: (68,509.693) (41,936.009) (69,306.704) (16,709.953 (31,209.284) (6,976.575)
</TABLE>
SUBACCOUNTS (CONTINUED)
-----------------------
SMALL
CAPITALIZATION
STOCK
-----------------------
1997 1996
----------- -----------
Contract Owner 119,967.725 42,083.988
Contributions:
Contract Owner (11,823.443) (5,764.632)
Redemptions:
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..................... $ 214,000 $ 55,000 $ 359,000 $ 337,000 $ 208,000
Sales......................... $ (481,000) $ (640,000) $(4,991,000) $(3,053,000) $ (998,000)
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
------------------------------------------------------------------
HIGH YIELD STOCK EQUITY NATURAL
BOND INDEX INCOME RESOURCES GLOBAL
----------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
For the year ended December
31, 1997
Purchases..................... $ 46,000 $ 416,000 $ 144,000 $ 31,000 $ 166,000
Sales......................... $ (86,000) $ (83,000) $ (42,000) $ (100,000) $ (44,000)
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------------
SMALL
GOVERNMENT PRUDENTIAL CAPITALIZATION
INCOME JENNISON STOCK
----------- ----------- --------------
<S> <C> <C> <C>
For the year ended December
31, 1997
Purchases..................... $ 104,000 $ 153,000 $ 182,000
Sales......................... $ (116,000) $ (6,000) $ --
</TABLE>
A14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of the
Pruco Life of New Jersey Variable Insurance Account
and the Board of Directors of
Pruco Life Insurance Company of New Jersey
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, High Yield Bond, Stock Index,
Equity Income, Natural Resources, Global, Government Income, Prudential Jennison
and Small Capitalization Stock Subaccounts of the Pruco Life of New Jersey
Variable Insurance 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 of New Jersey'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 of New Jersey Variable Insurance
Account and the Board of Directors of
Pruco Life Insurance Company of New Jersey
Newark, New Jersey
We have audited the accompanying statements of changes in net assets of Pruco
Life of New Jersey Variable Insurance Account of Pruco Life Insurance Company of
New Jersey (comprising, respectively, the Money Market, Diversified Bond,
Equity, Flexible Managed, Conservative Balanced, High Yield Bond, Stock Index,
Equity Income, Natural Resources, Global, Government Income, 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 of New Jersey Variable Insurance 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 OF NEW JERSEY
<TABLE>
<CAPTION>
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: $585,109;
and 1996: $551,728) $ 592,361 $ 555,898
Policy loans 127,306 113,918
Short-term investments 52,464 17,002
------------------- ------------------
Total investments 772,131 686,818
Cash 3 3,928
Deferred policy acquisition costs 101,625 106,965
Accrued investment income 14,075 12,908
Other assets 4,037 1,736
Separate Account assets 1,110,561 883,261
------------------- ------------------
TOTAL ASSETS $2,002,432 $1,695,616
=================== ==================
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances $ 379,744 $ 375,448
Future policy benefits and other policyholder liabilities 108,077 100,663
Cash collateral for loaned securities 33,663 -
Income taxes payable 12,963 1,970
Deferred income tax liability 22,188 24,175
Payable to affiliates 4,307 6,059
Other liabilities 17,103 11,990
Separate Account liabilities 1,108,994 880,065
------------------- ------------------
TOTAL LIABILITIES 1,687,039 1,400,370
------------------- ------------------
CONTINGENCIES -(SEE NOTE 10)
STOCKHOLDER'S EQUITY
Common stock, $5 par value;
400,000 shares, authorized;
issued and outstanding at
December 31, 1997 and 1996 2,000 2,000
Paid-in-capital 125,000 125,000
Retained earnings 185,437 166,214
Net unrealized investment gains 2,956 2,032
------------------- ------------------
TOTAL STOCKHOLDER'S EQUITY 315,393 295,246
------------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $2,002,432 $1,695,616
=================== ==================
</TABLE>
See Notes to Financial Statements
B-1
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
------------------- ------------------ ------------------
<S> <C> <C> <C>
REVENUES
Premiums $ 1,105 $ 1,345 $ 1,042
Policy charges and fee income 56,382 58,571 59,515
Net investment income 46,324 43,784 43,530
Realized investment gains, net 1,707 1,221 3,592
Other income 5,286 4,047 3,900
------------------- ------------------ ------------------
TOTAL REVENUES 110,804 108,968 111,579
------------------- ------------------ ------------------
BENEFITS AND EXPENSES
Policyholders' benefits 33,999 28,653 26,331
Interest credited to policyholders' account balances 19,372 20,069 21,364
General, administrative and other expenses 27,236 12,848 21,881
------------------- ------------------ ------------------
TOTAL BENEFITS AND EXPENSES 80,607 61,570 69,576
------------------- ------------------ ------------------
Income from operations before income taxes 30,197 47,398 42,003
------------------- ------------------ ------------------
Income taxes
Current 13,279 12,682 15,248
Deferred (2,305) 2,929 (246)
------------------- ------------------ ------------------
Total income taxes 10,974 15,611 15,002
------------------- ------------------ ------------------
NET INCOME $ 19,223 $ 31,787 $ 27,001
=================== ================== ==================
</TABLE>
See Notes to Financial Statements
B-2
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET UNREALIZED TOTAL
RETAINED INVESTMENT STOCKHOLDER'S
COMMON STOCK PAID-IN-CAPITAL EARNINGS GAINS EQUITY
---------------- ---------------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 $2,000 $125,000 $107,426 $(11,189) $223,237
Net income -- -- 27,001 -- 27,001
Change in net
unrealized
investment gains -- -- -- 17,777 17,777
---------------- ---------------- ------------ ------------- --------------
BALANCE, DECEMBER 31, 1995 2,000 125,000 134,427 6,588 268,015
Net income -- -- 31,787 -- 31,787
Change in net
unrealized
investment gains -- -- -- (4,556) (4,556)
---------------- ---------------- ------------ ------------- --------------
BALANCE, DECEMBER 31, 1996 2,000 125,000 166,214 2,032 295,246
Net income -- -- 19,223 19,223
Change in net
unrealized -- -- -- 924 924
investment gains
---------------- ---------------- ------------ ------------- --------------
BALANCE, DECEMBER 31, 1997 $2,000 $125,000 $185,437 $ 2,956 $315,393
================ ================ ============ ============= ==============
</TABLE>
See Notes to Financial Statements
B-3
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,223 $ 31,787 $ 27,001
Adjustments to reconcile net income to net cash provided by
operating activities:
Policy charges and fee income (7,841) (9,963) (11,931)
Interest credited to policyholders' account balances 19,372 20,069 21,364
Net decrease (increase) in Separate Accounts 1,629 (1,335) 260
Realized investment gains, net (1,707) (1,221) (3,592)
Amortization and other non-cash items 521 8,908 (6,839)
Change in:
Future policy benefits and other policyholders' liabilities 7,414 8,618 900
Accrued investment income (1,167) (1,329) (317)
Policy loans (13,388) (15,724) (12,917)
Payable to affiliates (1,752) 4,300 (982)
Deferred policy acquisition costs 5,340 (10,934) 9,074
Income taxes payable 10,993 1,970 8,328
Deferred income tax liability (1,987) 366 3,460
Other, net 2,812 4,669 1,024
--------------- --------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES 39,462 40,181 34,833
--------------- --------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 645,355 901,775 553,681
Payments for the purchase of:
Fixed maturities:
Available for sale (679,709) (956,483) (522,757)
Cash collateral for loaned securities, net 33,663 - -
Short term investments, net (35,461) 28,306 (3,613)
--------------- --------------- --------------
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES (36,152) (26,402) 27,311
--------------- --------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 134,020 16,754 18,348
Withdrawals (141,255) (26,605) (80,509)
--------------- --------------- --------------
CASH FLOWS USED IN FINANCING ACTIVITIES (7,235) (9,851) (62,161)
--------------- --------------- --------------
Net (decrease) increase in Cash (3,925) 3,928 (17)
Cash, beginning of year 3,928 - 17
--------------- --------------- --------------
CASH, END OF YEAR $ 3 $ 3,928 $ -
=============== =============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid $ 1,896 $ 11,673 $ 7,900
=============== =============== ==============
</TABLE>
See Notes to Financial Statements
B-4
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BUSINESS
Pruco Life Insurance Company of New Jersey (the Company) is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
It is licensed to sell individual life insurance and deferred annuities only in
the states of New Jersey and New York.
The Company is a wholly owned subsidiary of Pruco Life Insurance Company (Pruco
Life), a stock life insurance company organized in 1971 under the laws of the
state of Arizona. Pruco Life, in turn, is a wholly owned subsidiary of The
Prudential Insurance Company of America (Prudential), a mutual insurance company
founded in 1875 under the laws of the state of New Jersey. Pruco Life intends to
make additional capital contributions to the Company as it is needed to enable
it to meet its reserve requirements and expenses in connection with its
business. Generally, Pruco Life is under no obligation to make such
contributions and its assets do not back the benefits payable under the
Contracts.
The only reportable industry segment of the Company is "Life Insurance."
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements include the accounts of Pruco Life Insurance Company of
New Jersey, a stock life insurance company. The financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP").
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. 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."
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.
REALIZED INVESTMENT GAINS, NET, are computed using the specific identification
method. Costs of fixed maturity are adjusted for impairments considered to be
other than temporary.
CASH
Cash includes cash on hand.
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 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 $14,176 thousand, $(2,183) thousand,
and $8,918 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
B-5
<PAGE>
PRUCO LIFE INSURANCE OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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
8.75% The mortality assumption is generally the 1983 Individual Annuity
Mortality Table. Reserves for riders and supplemental benefits are calculated
using rates ranging from 2.5% to 7.25% and various mortality and morbidity
tables derived from company or industry experience.
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 4.0% to 7.0%.
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 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 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 of New Jersey Modified
Guaranteed Annuity Account. The Pruco Life of New Jersey 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 of New Jersey 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.
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
B-6
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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 rates. 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 is a member of a group of affiliated companies which join in filing
a consolidated federal income tax return in addition to separate company state
and local tax returns. 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 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 Statements 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 presentations.
B-7
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVESTMENTS
FIXED MATURITIES
The following tables provide additional information relating to fixed maturities
as of December 31:
<TABLE>
<CAPTION>
1997
--------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized 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 $ 42,885 $ 340 $ 3 $ 43,222
Foreign government bonds 38,332 551 -- 38,883
Corporate securities 503,892 6,545 181 510,256
-------------- ----------------- -------------- ------------------
Total fixed maturities available for sale $ 585,109 $ 7,436 $ 184 $ 592,361
============== ================= ============== ==================
</TABLE>
<TABLE>
<CAPTION>
1996
--------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized 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 $ 29,386 $ 1 $ 174 $ 29,213
Foreign government bonds 38,853 420 52 39,221
Corporate securities 483,439 5,108 1,133 487,414
Mortgage-backed securities 50 -- -- 50
-------------- ----------------- -------------- ------------------
Total fixed maturities available for sale $ 551,728 $ 5,529 $ 1,359 $ 555,898
============== ================= ============== ==================
</TABLE>
B-8
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The amortized cost and estimated fair value of fixed maturities, categorized by
contractual maturity at December 31, 1997, are shown below:
AVAILABLE FOR SALE
----------------------------------
ESTIMATED FAIR
AMORTIZED COST VALUE
----------------- -----------------
(IN THOUSANDS)
Due in one year or less $ 28,866 $ 28,987
Due after one year through five years 460,874 465,687
Due after five years through ten years 83,430 85,481
Due after ten years 11,939 12,206
----------------- ----------------
Total $ 585,109 $ 592,361
================= ================
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 $635,355 thousand, $854,758 thousand and $525,672 thousand,
respectively. Gross gains of $2,898 thousand, $3,942 thousand, and $6,349
thousand and gross losses of $1,191 thousand, $3,839 thousand, and $3,018
thousand were realized on those sales during 1997, 1996, and 1995, respectively.
Proceeds from maturities of fixed maturities available for sale during 1997,
1996, and 1995 were $10,000 thousand, $47,017 thousand, and $28,009 thousand,
respectively.
The following table describes the amortized cost and estimated fair value of
fixed maturity securities by agency rating equivalent as of December 31, 1997:
AVAILABLE FOR SALE
----------------------------------
ESTIMATED FAIR
AMORTIZED COST VALUE
----------------- -----------------
(IN THOUSANDS)
AAA/AA/A $ 310,409 $ 313,746
BBB 254,084 257,024
BB 20,616 21,591
----------------- ----------------
Total $ 585,109 $ 592,361
================= ================
SPECIAL DEPOSITS
Fixed maturities of $460 thousand and $459 thousand at December 31, 1997 and
1996, respectively, were on deposit with governmental authorities or trustees as
required by certain insurance laws.
B-9
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO 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 $37,563 $36,193 $36,861
Policy loans 6,596 5,761 5,029
Short-term investments 3,023 2,504 2,290
Other 333 28 51
----------------- ----------------- -----------------
Gross investment income 47,515 44,486 44,231
Less investment expenses (1,191) (702) (701)
----------------- ----------------- -----------------
Net investment income $46,324 $43,784 $43,530
================= ================= =================
</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
Realized investment gains $ 2,898 $ 5,232 $ 6,785
Realized investment losses (1,191) (4,011) (3,193)
----------------------- ---------------------------- -----------------
Realized investment gains, net $ 1,707 $ 1,221 $ 3,592
======================= ============================ =================
</TABLE>
NET UNREALIZED INVESTMENT GAINS are included in the statements 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 $ 2,032 $ 6,588 $ (11,189)
Changes in unrealized investment gains
(losses) attributable to:
Fixed maturities 3,082 (11,222) 32,875
Participating group annuity contracts 332 (1,175) 1,387
Deferred policy acquisition costs (2,170) 5,277 (6,486)
Deferred federal income taxes (320) 2,564 (9,999)
----------------------- ---------------------------- -----------------
Balance, end of year $ 2,956 $ 2,032 $ 6,588
======================= ============================ =================
</TABLE>
B-10
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO 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. $12,880 $13,589 $13,868
State and local 399 (907) 1,380
------------------- -------------------- -----------------
Total 13,279 12,682 15,248
------------------- -------------------- -----------------
Deferred tax expense (benefit):
U.S. (2,305) 2,848 (239)
State and local -- 81 (7)
------------------- -------------------- -----------------
Total (2,305) 2,929 (246)
------------------- -------------------- -----------------
Total income tax expense $10,974 $15,611 $15,002
=================== ==================== =================
</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 $10,569 $16,589 $14,702
State income taxes 259 (826) 1,373
Other 146 (152) (1,073)
------------------- -------------------- -----------------
Total income tax expense $10,974 $15,611 $15,002
=================== ==================== =================
</TABLE>
B-11
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO 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
-------------------- --------------------
Deferred income tax assets (In Thousands)
<S> <C> <C>
Insurance reserves $ 6,260 $ 6,189
Other 615 -
-------------------- --------------------
Total deferred income tax assets 6,875 6,189
-------------------- --------------------
Deferred income tax liabilities
Deferred acquisition costs 25,429 28,424
Net investment gains 3,634 1,940
-------------------- --------------------
Deferred income tax liabilities 29,063 30,364
-------------------- --------------------
Total deferred federal tax
liabilities $22,188 $24,175
==================== ====================
</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. The effect of the
reinsurance for the years ended December 31, is summarized as follows:
1997 1996 1995
---- ------ ------
(In Thousands)
Life insurance premiums
Gross Amount $1,117 $1,345 $1,053
Ceded to other companies (12) -- (11)
------ ------ ------
Net amount $1,105 $1,345 $1,042
====== ====== ======
1997 1996 1995
---- ------ ------
(In Thousands)
Life insurance in force
Gross Amount $8,325,544 $8,599,647 $8,873,763
Ceded to other companies (1,808) (1,831) (1,818)
---------- ---------- ----------
Net amount $8,323,736 $8,597,816 $8,871,945
========== ========== ==========
B-12
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO 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 New Jersey 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 $ 18,306 $ 24,774 $ 25,567
Adjustments to reconcile to net income on a GAAP basis:
Deferred acquisition costs (3,170) 5,656 (2,589)
Deferred premium 198 221 (58)
Insurance liabilities 2,324 4,784 2,286
Deferred taxes 1,708 (2,883) 510
Valuation of investments (143) (765) 1,285
------------------ ------------------ ------------------
GAAP NET INCOME $ 19,223 $ 31,787 $ 27,001
================== ================== ==================
</TABLE>
<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
(In Thousands)
<S> <C> <C>
STATUTORY SURPLUS $ 235,958 $ 216,019
Adjustments to reconcile to equity on a GAAP basis:
Valuation of investments 18,540 17,768
Deferred acquisition costs 101,625 106,965
Deferred premium (2,007) (2,205)
Insurance liabilities (10,726) (21,501)
Deferred taxes (28,238) (21,829)
Other, net 241 29
-------------------- --------------------
GAAP STOCKHOLDER'S EQUITY $ 315,393 $ 295,246
==================== ====================
</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-13
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO 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
Fair values for fixed maturities are based on quoted market prices or estimates
from independent pricing services.
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 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 $ 592,361 $ 592,361 $ 555,898 $ 555,898
Policy loans 127,306 126,262 113,918 110,262
Short-term investments 52,464 52,464 17,002 17,002
Cash 3 3 3,928 3,928
Separate Accounts assets 1,110,561 1,110,561 883,261 883,261
Financial Liabilities:
Policyholders'
account balances $ 379,744 $ 379,744 $ 375,448 $ 375,448
Cash collateral for loaned
securities 33,663 33,663 - -
Separate Accounts liabilities 1,108,994 1,108,994 880,065 880,065
Derivatives 83 83 - -
</TABLE>
B-14
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. DERIVATIVE
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 $83 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, Pruco Life, and Pruco Securities Corporation, an indirect
wholly-owned subsidiary of Prudential, operate under service and lease
agreements whereby services of officers and employees, supplies, use of
equipment and office space are provided. The net cost of these services
allocated to the Company were $16,210 thousand, $12,223 thousand and $15,947
thousand for the years ended December 31, 1997, 1996, and 1995, respectively.
REINSURANCE
The Company currently has a reinsurance agreement in place with Prudential (the
reinsurer). The reinsurance agreement is a yearly renewable term agreement in
which the Company may offer and the reinsurer may accept reinsurance on any life
in excess of the Company's maximum limit of retention. 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 New Jersey 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 prior approval of the New Jersey
Commissioner of Insurance is limited to the greater 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
$23,396 thousand in dividend distributions in 1998, all of which could be paid
in cash, without approval from The State of New Jersey Department of Insurance.
B-15
<PAGE>
Report of Independent Accountants
---------------------------------
To the Board of Directors of
Pruco Life Insurance Company of New Jersey
In our opinion, the accompanying statements of financial position and the
related 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 of New Jersey 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 management; 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 express
above.
PRICE WATERHOUSE LLP
New York, New York
March 23, 1998
B-16
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Pruco Life Insurance Company of New Jersey
Newark, New Jersey
We have audited the accompanying statements of operations, changes in
stockholder's equity and cash flows of Pruco Life Insurance Company of New
Jersey 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 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 of New Jersey for
the year ended December 31, 1995 in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Parsippany, NJ
December 19, 1996
B-17
<PAGE>
<TABLE>
<CAPTION>
ADDITIONAL ILLUSTRATIONS OF
CASH VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS
-----------------------------------------------------
VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 25
$50,000 GUARANTEED DEATH BENEFIT
$536.50 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
DEATH BENEFIT (2) CASH VALUE (2)
-------------------------------------------- -----------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUMS ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED -------------------------------------------- -----------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 6% GROSS 12% GROSS 0% GROSS 4% GROSS 12% GROSS
YEAR PER YEAR (-0.84% NET) (5.16% NET) (11.16% NET) (-0.84% NET) (5.16% NET) (11.16% Net)
------ -------------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 558 $50,000 $50,004 $ 50,026 $ 22 $ 26 $ 31
2 $ 1,138 $50,000 $50,030 $ 50,184 $ 376 $ 406 $ 437
3 $ 1,742 $50,000 $50,076 $ 50,480 $ 729 $ 807 $ 890
4 $ 2,369 $50,000 $50,143 $ 50,921 $1,080 $ 1,229 $ 1,393
5 $ 3,022 $50,000 $50,230 $ 51,516 $1,438 $ 1,683 $ 1,962
6 $ 3,701 $50,000 $50,339 $ 52,272 $1,791 $ 2,158 $ 2,592
7 $ 4,407 $50,000 $50,467 $ 53,198 $2,141 $ 2,657 $ 3,290
8 $ 5,141 $50,000 $50,615 $ 54,301 $2,486 $ 3,178 $ 4,061
9 $ 5,905 $50,000 $50,783 $ 55,589 $2,827 $ 3,723 $ 4,914
10 $ 6,699 $50,000 $50,969 $ 57,073 $3,162 $ 4,293 $ 5,855
15 $11,172 $50,000 $52,176 $ 67,787 $4,734 $ 7,510 $ 12,215
20 $16,615 $50,000 $53,805 $ 85,192 $6,094 $11,376 $ 22,453
25 $23,237 $50,000 $55,816 $111,492 $7,231 $15,974 $ 38,826
30 $31,293 $50,000 $58,179 $149,847 $8,121 $21,355 $ 64,762
40 (Age 65) $53,020 $50,000 $63,871 $282,392 $9,039 $34,363 $167,630
</TABLE>
(1) If premiums are paid more frequently than annually, the payments would be
$274.50 semi-annually, $139.50 quarterly or $48 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been 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 VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 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 OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
C1
<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 40
$50,000 GUARANTEED DEATH BENEFIT
$939 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
DEATH BENEFIT (2) CASH VALUE (2)
-------------------------------------------- -----------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUMS ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED -------------------------------------------- -----------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 6% GROSS 12% GROSS 0% GROSS 4% GROSS 12% GROSS
YEAR PER YEAR (-0.84% NET) (5.16% NET) (11.16% NET) (-0.84% NET) (5.16% NET) (11.16% Net)
------ -------------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 977 $50,000 $50,011 $ 50,066 $ 197 $ 214 $ 231
2 $ 1,992 $50,000 $50,044 $ 50,276 $ 815 $ 888 $ 962
3 $ 3,048 $50,000 $50,100 $ 50,637 $ 1,417 $ 1,584 $ 1,762
4 $ 4,147 $50,000 $50,177 $ 51,152 $ 2,002 $ 2,303 $ 2,637
5 $ 5,289 $50,000 $50,278 $ 51,841 $ 2,642 $ 3,123 $ 3,674
6 $ 6,477 $50,000 $50,402 $ 52,712 $ 3,265 $ 3,970 $ 4,810
7 $ 7,713 $50,000 $50,547 $ 53,770 $ 3,871 $ 4,846 $ 6,056
8 $ 8,998 $50,000 $50,715 $ 55,025 $ 4,459 $ 5,752 $ 7,419
9 $10,335 $50,000 $50,903 $ 56,486 $ 5,031 $ 6,689 $ 8,914
10 $11,725 $50,000 $51,112 $ 58,161 $ 5,584 $ 7,657 $10,550
15 $19,554 $50,000 $52,450 $ 70,153 $ 8,051 $12,940 $21,322
20 $29,080 $50,000 $54,234 $ 89,463 $ 9,969 $18,928 $37,968
25 (Age 65) $40,670 $50,000 $56,418 $118,493 $11,330 $25,592 $63,448
</TABLE>
(1) If premiums are paid more frequently than annually, the payments would be
$479.50 semi-annually, $243 quarterly or $82.50 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been 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 VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 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 OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
C2
<PAGE>
Variable Life
Insurance
[GRAPHIC]
Pruco Life Insurance Company of New Jersey
213 Washington Street, Newark, NJ 07102-2992
Telephone: 800 437-4016
VLI-2 Ed. 5/98 CAT# 646965I
<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 of New Jersey 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 of New Jersey.
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.
New Jersey, being the state or organization of Pruco Life Insurance Company of
New Jersey ("PLNJ"), permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-law, Article
V, which relates to indemnification of officers and directors, is incorporated
by reference to Exhibit 3(ii) to its Form 10-Q, SEC File No. 333-18053, filed
August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
- -------------------------------------------------------------------------
The facing sheet.
The Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 63 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. Deloitte & Touche LLP, independent auditors.
2. Price Waterhouse LLP, independent accountants.
3. Clifford E. Kirsch, Esq.
4. Nancy D. Davis, FSA, MAAA
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
of New Jersey establishing the Pruco Life of New Jersey
Variable Insurance Account. (Note 5)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities
Corporation and Pruco Life Insurance Company of New
Jersey. (Note 5)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the
Sale of the Contracts. (Note 5)
(c) Schedules of Sales Commissions. (Note 5)
(4) Not Applicable.
(5) (a) Variable Life Insurance Contract. (Note 5)
(b) Illustrative Tabular Cash Values. (Note 5)
(c) Copy of New York PLY-5 Endorsement to the Variable Life
Contract. (Note 5)
(d) Copy of New York and New Jersey PLY-6 Endorsement to the
Variable Life Contract. (Note 5)
(e) Copy of New York PLY 39 Endorsement to the Variable Life
Contract. (Note 5)
(f) Copy of New Jersey PLIY 39 Endorsement to the Variable
Life Contract. (Note 5)
(g) Copy of New York jacket to the Variable Life Insurance
Contract. (Note 5)
(h) Copy of page 5 to the Variable Life Insurance
Contract--New York issues. (Note 5)
(i) Copy of page 7 to the Variable Life Insurance
Contract--New York issues. (Note 5)
(j) Copy of New York and New Jersey PLY 50 Endorsement
to the Variable Life Insurance Contract. (Note 5)
(k) Copy of New York PLY 36 Endorsement to the Variable Life
Insurance Contract. (Note 5)
(l) Copy of New Jersey PLIY 38 Endorsement to the Variable
Life Insurance Contract. (Note 5)
(m) Copy of New Jersey PLIY 62-85 Endorsement to the Variable
Life Insurance Contract. (Note 5)
(n) Copy of New York PLY 61-85 Endorsement to the Variable
Life Insurance Contract. (Note 5)
(6) (a) Articles of Incorporation of Pruco Life Insurance
Company of New Jersey, as amended March 11, 1983. (Note
2)
II-2
<PAGE>
(b) By-laws of Pruco Life Insurance Company of New Jersey, as
amended May 5, 1997. (Note 6)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) Application Form for Variable Life Insurance Contract.
(Note 5)
(b) Supplement to the Application for Variable Life Insurance
Contract. (Note 5)
(c) Application Form for Variable Life Insurance
Contract--New York issues. (Note 5)
(d) Application Form for Variable Life Insurance
Contract--New Jersey issues. (Note 5)
(11) Form of Notice of Withdrawal Right. (Note 5)
(12) Memorandum describing Pruco Life of New Jersey's issuance,
transfer, and redemption procedures for the Contracts pursuant
to Rule 6e-2(b) (12)(ii) and method of computing cash adjustment
upon exercise of right to exchange for fixed-benefit insurance
pursuant to Rule 6e-2(b)(13)(v)(B). (Note 5)
(13) Available Contract Riders.
(a) Rider for Insured's Waiver of Premium Benefit. (Note 5)
(b) Rider for Insured's Accidental Death Benefit. (Note 5)
(c) Rider for Term Insurance Benefit on Life of Insured-
Decreasing Amount. (Note 5)
(d) Rider for Option to Purchase Additional Insurance on
Life of Insured. (Note 5)
(e) Rider for Interim Term Insurance Benefit. (Note 5)
(f) Rider for Term Insurance Benefit on Life of Insured
Spouse-Decreasing Amount. (Note 5)
(g) Rider for Level Term Insurance Benefit on Dependent
Children. (Note 5)
(h) Rider Exempting Child from Reinstatement--New York
Issues. (Note 5)
(i) Rider Exempting Child from Reinstatement--New Jersey
Issues. (Note 5)
(j) Rider for Level Term Insurance Benefit on Dependent
Children--New York Issues. (Note 5)
(k) Rider for Level Term Insurance Benefit on Dependent
Children--New Jersey Issues. (Note 5)
(l) Rider for Reduced Paid-Up Insurance--New York Issues.
(Note 5)
(m) Rider for Reduced Paid-Up Insurance--New Jersey Issues.
(Note 5)
(n) Rider for Insured's Waiver of Premium Benefit--New York
Issues. (Note 5)
(o) Rider for Insured's Waiver of Premium Benefit--New
Jersey Issues. (Note 5)
(p) Rider for Insured's Accidental Death Benefit--New York
Issues. (Note 5)
(q) Rider for Insured's Accidental Death Benefit--New Jersey
Issues. (Note 5)
(r) Rider Defining Incontestability Period--New York Issues.
(Note 5)
(s) Rider Defining Incontestability Period--New Jersey
Issues. (Note 5)
(t) Rider Defining Incontestability Period--New York Issues.
(Note 5)
(u) Rider Defining Incontestability Period--New Jersey
Issues. (Note 5)
(v) Rider for Modification of Insured's Waiver of Premium
Benefit Provision--New York Issues. (Note 5)
(w) Rider for Modification of Insured's Waiver of Premium
Benefit Provision--New Jersey Issues. (Note 5)
(x) Rider for Termination of Benefit--New York Issues.
(Note 5)
(y) Rider for Termination of Benefit--New Jersey Issues.
(Note 5)
(z) Rider for Automatic Premium Loan--New York Issues.
(Note 5)
(aa) Rider for Automatic Premium Loan--New Jersey Issues.
(Note 5)
(bb) Rider for Aviation Risk Exclusion--New York Issues.
(Note 5)
(cc) Rider for Aviation Risk Exclusion--New Jersey Issues.
(Note 5)
(dd) Rider for Military Aviation Risk Exclusion--New York
Issues. (Note 5)
(ee) Rider for Military Aviation Risk Exclusion--New Jersey
Issues. (Note 5)
(ff) Rider for War Risk Exclusion--New York Issues. (Note 5)
(gg) Rider for War Risk Exclusion--New Jersey Issues.
(Note 5)
(hh) Rider for Defining Incontestability Period--New York
Issues. (Note 5)
(ii) Rider for Defining Incontestability Period--New Jersey
Issues. (Note 5)
(jj) Rider for Suicide Provision--New York Issues. (Note 5)
II-3
<PAGE>
(kk) Rider for Ownership and Control--New York Issues.
(Note 5)
(ll) Rider for Ownership and Control--New Jersey Issues.
(Note 5)
(mm) Rider for Applicant's Waiver of Premium Benefit--New
York Issues. (Note 5)
(nn) Rider for Applicant's Waiver of Premium Benefit--New
Jersey Issues. (Note 5)
(oo) Rider for Level Term Insurance Benefit on Life of
Insured--New York and New Jersey Issues. (Note 5)
(pp) Rider for Special Premium Remittance Plan--New York
Issues. (Note 5)
(qq) Rider for Variable Loan Interest Rate--New York Issues.
(Note 5)
(rr) Rider for Special Premium Remittance Plan--New Jersey
Issues. (Note 5)
(ss) Rider for Variable Loan Interest Rate--New Jersey Issues.
(Note 5)
(tt) Rider for Decreasing Term Insurance Benefit--New York
and New Jersey Issues. (Note 5)
(uu) Rider for Variable Reduced Paid-Up Insurance--New York
Issues. (Note 5)
(vv) Rider for Variable Reduced Paid-Up Insurance--New Jersey
Issues. (Note 5)
(ww) Rider for Decreasing Term Insurance on Life of Insured
Spouse--New York Issues. (Note 5)
(xx) Rider for Decreasing Term Insurance Benefit on life of
Insured Spouse--New Jersey Issues. (Note 5)
(yy) Rider for Variable Loan Interest Rate--New Jersey Issues.
(Note 5)
(zz) Rider for Variable Loan Interest Rate--New York Issues.
(Note 5)
(aaa) Rider providing Options on Lapse--New Jersey Issues.
(Note 5)
(bbb) Rider providing Options on Lapse--New York Issues.
(Note 5)
(ccc) Living Needs Benefit Rider for use in New Jersey.
(Note 5)
(ddd) Living Needs Benefit Rider for use in New York. (Note 5)
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 Nancy D. Davis, FSA, MAAA, as to actuarial matters
pertaining to the securities being registered. (Note 1)
7. Powers of Attorney.
(a) William M. Bethke, Ira J. Kleinman, Mendel A. Melzer,
Esther H. Milnes, I. Edward Price (Note 3)
(b) James J. Avery, Jr., James M. Schlomann (Note 4)
27. Financial Data Schedule. (Note 1)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post-Effective Amendment No. 26 to
Form S-6, Registration No. 2-89780, filed April 28, 1997 on behalf
of the Pruco Life of New Jersey Variable Appreciable Account.
(Note 3) Incorporated by reference to Form N-4, Registration No. 333-18117,
filed December 18, 1996 on behalf of the Pruco Life of New Jersey
Flexible Premium Variable Annuity Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 10 to
Form S-1, Registration No. 33-20018, filed April 9, 1998 on behalf
of the Pruco Life of New Jersey Variable Contract Real Property
Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 24 to
this Registration Statement, filed April 29, 1997.
(Note 6) Incorporated by reference to Form 10-Q, Registration No. 333-18053,
filed August 15, 1997 on behalf of the Pruco Life Insurance Company
of New Jersey.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, the
Pruco Life of New Jersey Variable Insurance Account, 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 duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized and its seal hereunto affixed and attested, all in the city of
Newark and the State of New Jersey, on this 24th day of April, 1998.
(Seal) PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
(Registrant)
By: PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Depositor)
Attest: /s/ THOMAS C. CASTANO By: /s/ ESTHER H. MILNES
------------------------- -----------------------------
Thomas C. Castano Esther H. Milnes
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 25 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this 24th day of April, 1998.
SIGNATURE AND TITLE
-------------------
/s/ *
- ------------------------------------------
Esther H. Milnes
President and Director
/s/ *
- ------------------------------------------
James M. Schlomann
Chief Accounting Officer and Comptroller
/s/ * *By: /s/ THOMAS C. CASTANO
- ------------------------------------------ -----------------------------
James J. Avery, Jr. Thomas C. Castano
Director (Attorney-in-Fact)
/s/*
- ------------------------------------------
William M. Bethke
Director
/s/ *
- ------------------------------------------
Ira J. Kleinman
Director
/s/ *
- ------------------------------------------
Mendel A. Melzer
Director
- ------------------------------------------
/s/ *
- ------------------------------------------
I. Edward Price
Director
II-5
<PAGE>
EXHIBIT INDEX
Consent of Deloitte & Touche LLP, independent auditors. Page II-7
Consent of Price Waterhouse LLP, independent accountants. Page II-8
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the
legality of the securities being registered. Page II-9
6. Opinion and Consent of Nancy D. Davis, FSA, MAAA, as to
actuarial matters pertaining to the securities being
registered. Page II-10
27. Financial Data Schedule. Page II-11
II-6
Exhibit 99.c1(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 25 to
Registration Statement No. 2-81243 on Form S-6 of Pruco Life of New Jersey
Variable Insurance Account of Pruco Life Insurance Company of New Jersey (1) of
our report dated February 15, 1996, relating to the financial statements of
Pruco Life of New Jersey Variable Insurance Account, and (2) of our report dated
December 19, 1996, relating to the financial statements of Pruco Life Insurance
Company of New Jersey 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-7
Exhibit 99.c1(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 25 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 of New Jersey Variable Insurance 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
financial statements of Pruco Life Insurance Company of New Jersey, which
appears in such Prospectus.
We also consent to the reference to us under the heading "Experts" in the
Prospectus.
/s/ PRICE WATERHOUSE LLP
New York, New York
April 24, 1998
II-8
Exhibit 3
April 24, 1998
Pruco Life Insurance Company
of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
Gentlemen:
In my capacity as Chief Legal Officer and Assistant Secretary of Pruco Life
Insurance Company of New Jersey ("Pruco Life of New Jersey"), I have reviewed
the establishment of Pruco Life of New Jersey Variable Insurance Account (the
"Account") on December 29, 1982 by the Executive Committee of the Board of
Directors of Pruco Life of New Jersey as a separate account for assets
applicable to certain 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 of New Jersey with the
Securities and Exchange Commission (Registration No. 2-81243) under the
Securities Act of 1933 for the registration of certain variable life insurance
contracts issued with respect to the Account.
I am of the following opinion:
(1) Pruco Life of New Jersey was duly organized under the laws of New
Jersey 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 variable life
insurance contracts is not chargeable with liabilities arising out
of any other business Pruco Life of New Jersey may conduct.
(4) The 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,
/s/ CLIFFORD E. KIRSCH
--------------------------
Clifford E. Kirsch
II-9
Exhibit 6
April 24, 1998
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
To Pruco Life Insurance Company of New Jersey:
This opinion is furnished in connection with the registration by Pruco Life
Insurance Company of New Jersey of variable life insurance contracts
("Contracts") under the Securities Act of 1933. The prospectus included in
Post-Effective Amendment No. 25 to Registration Statement No. 2-81243 on Form
S-6 describes the Contracts. 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 death benefits included in the prospectus
section entitled "How a Contract's Death Benefit Will Vary", based
on the assumptions stated in the illustrations, are consistent with
the provisions of the Contract.
(2) The illustrations of cash values included in the prospectus section
entitled "How a Contract's Cash Value Will Vary", based on the
assumptions stated in the illustrations, are consistent with the
provisions of the Contract.
(3) The illustrations of cash values and death benefits included in the
section entitled "Illustrations" and in the Appendix of the
prospectus, 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 premiums and benefits, as shown in the
illustrations, appear more favorable to a prospective purchaser of a
Contract for male age 25 or male age 40, than to prospective
purchasers of Contracts on males of other ages or on females.
(4) The illustration of the effect of a Contract loan on the death
benefit and cash value included in the prospectus section entitled
"Contract Loans", based on the assumptions stated in the
illustration, is consistent with the provisions of the Contract.
(5) The illustrations (with respect to a lapsed Contract) of cash
values, extended term insurance and reduced paid-up insurance which
are included in the prospectus section entitled "Options on Lapse",
based on the assumptions stated in the illustrations, are consistent
with the Contract.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
/s/ NANCY D. DAVIS
------------------------------------
Nancy D. Davis, FSA, MAAA
Vice President and Assistant Actuary
The Prudential Insurance Company of America
II-10
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Exhibit 27
FINANCIAL DATA SCHEDULE
Article 6 of Regulation S-X
Pruco Life of New Jersey Variable Insurance Account
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 126,563
<INVESTMENTS-AT-VALUE> 160,934
<RECEIVABLES> 19
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 160,952
<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> 8,243
<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> 160,952
<DIVIDEND-INCOME> 4,956
<INTEREST-INCOME> 0
<OTHER-INCOME> 13,622
<EXPENSES-NET> 344
<NET-INVESTMENT-INCOME> 4,612
<REALIZED-GAINS-CURRENT> 2,867
<APPREC-INCREASE-CURRENT> 5,299
<NET-CHANGE-FROM-OPS> 26,401
<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> 18,539
<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>
