<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 33-37587
PRUCO LIFE INSURANCE COMPANY
(Exact name of Registrant as specified in its charter)
Arizona 22-1944557
------------------------------------------- ---------------------------------
(State or other (IRS Employer Identification No.)
jurisdiction,incorporation or organization)
213 Washington Street, Newark, New Jersey 07102
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 802-6000
---------------------------------------------------------------------
(Registrant's Telephone Number, including area code)
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: NONE
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of March 31, 1995: Common stock, par value of
$10 per share: 250,000 shares outstanding
<PAGE>
PRUCO LIFE INSURANCE COMPANY
(Registrant)
INDEX
ITEM PAGE
NO. NO.
Cover Page -
Index 2
PART I
1. Business 3
2. Properties 3
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Interests and Related
Security Holder Matters 5
6. Selected Financial Data 5
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
8. Financial Statements and Supplementary Data 10
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
PART III
10. Directors and Executive Officers of Pruco Life 11
11. Executive Compensation 13
12. Security Ownership of Certain Beneficial Owners
and Management 13
13. Certain Relationships and Related Transactions 13
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 14
Exhibit Index 14
Signatures 16
2
<PAGE>
PART I
ITEM 1. BUSINESS
Pruco Life Insurance Company (the Company) is a stock life insurance company,
organized in 1971 under the laws of the state of Arizona. The Company markets
individual life insurance and single pay deferred annuities (the Contracts) in
the District of Columbia, Guam, and in all states except New York. In addition,
the Company markets individual life insurance through its branch office in
Taiwan. The Company has two subsidiaries, Pruco Life Insurance Company of New
Jersey (PLNJ) and The Prudential Life Insurance Company of Arizona (PLICA). PLNJ
is a stock life insurance company organized in 1982 under the laws of the state
of New Jersey. It is licensed to sell individual life insurance and single pay
deferred annuities only in the states of New Jersey and New York. PLICA is a
stock life insurance company organized in 1989 under the laws of the state of
Arizona. PLICA had no new business sales in 1994 and at this time will not be
issuing new business.
The Company is a wholly owned subsidiary of The Prudential Insurance Company of
America (The Prudential), a mutual insurance company founded in 1875 under the
laws of the state of New Jersey. The Prudential had approximately $212 billion
of total consolidated assets at the end of 1994. As of December 31, 1994, it had
invested over $442 million in the Company in connection with the Company's
organization and operation. The Prudential intends from time to time to make
additional capital contributions to the Company as needed to enable it to meet
its reserve requirements and expenses in connection with its business.
Generally, The Prudential is under no obligation to make such contributions and
its assets do not back the benefits payable under the Contracts.
The Company is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
engaged in marketing insurance products. There are approximately 1,900 stock,
mutual and other types of insurers in the life insurance business in the United
States.
In a reorganization of the parent's Individual Insurance Department, effective
January 1, 1993, the corporate staff of the Company was absorbed by the parent.
The costs associated with these employees, which were previously borne by the
Company, are now charged to the Company under service and lease agreements with
the parent.
ITEM 2. PROPERTIES
Not applicable.
3
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Pruco Life is not involved in any litigation that is expected to have a material
effect.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No actions were taken during the fourth quarter of 1994.
4
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S INTERESTS AND RELATED SECURITY HOLDER
MATTERS
Pruco Life is a wholly-owned subsidiary of The Prudential. There is no public
market for Pruco Life's common stock.
ITEM 6. SELECTED FINANCIAL DATA
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
($000'S)
<S> <C> <C> <C> <C> <C>
Revenues
Premiums, annuity fund deposits
and other revenue $ 603,864 $ 591,660 $ 541,248 $ 521,590 $ 577,692
Net investment income 245,977 260,939 274,037 285,565 270,785
------------ ------------ ------------ ------------ ------------
Total revenues 849,841 852,599 815,285 807,155 848,477
------------ ------------ ------------ ------------ ------------
Benefits and expenses
Current and future benefits and
claims 559,658 534,354 478,148 501,454 513,165
Other expenses 149,478 157,557 129,701 126,201 144,642
------------ ------------ ------------ ------------ ------------
Total benefits and expenses 709,136 691,911 607,849 627,655 657,807
------------ ------------ ------------ ------------ ------------
Income before provision in lieu of
federal income tax and cumulative
effect of a change in accounting
principle 140,705 160,688 207,436 179,500 190,670
Provision in lieu of federal
income tax 87,750 83,640 96,578 75,242 62,871
------------ ------------ ------------ ------------ ------------
Net income before cumulative effect of
a change in accounting principle $ 52,955 $ 77,048 $ 110,858 $ 104,258 $ 127,799
------------ ------------ ------------ ------------ ------------
Cumulative effect on prior years
(to December 31, 1990) of change
in reserve basis - - - 140,424 -
------------ ------------ ------------ ------------ ------------
Net income $ 52,955 $ 77,048 $ 110,858 $ 244,682 $ 127,799
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Assets $ 7,090,802 $ 7,172,104 $ 6,709,958 $ 6,369,288 $ 5,570,360
------------ ------------ ------------ ------------ ------------
</TABLE>
5
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pruco Life Insurance Company consists of Pruco Life Insurance Company (Pruco
Life), Pruco Life Insurance Company of New Jersey and The Prudential Life
Insurance Company of Arizona (collectively, the Company).
The Company markets individual life insurance and single pay deferred annuities
primarily through The Prudential's sales force. The Company held $7 billion in
assets at December 31, 1994, $3.5 billion of which were held in Separate
Accounts under variable life insurance policies and variable annuity contracts.
The remaining assets were held in the general account for investment primarily
in bonds, short-term investments and mortgage loans.
Because of the large number of stock and mutual life insurance companies and
other entities engaged in marketing insurance products, the Company is engaged
in a business that is highly competitive. During the past several years, the
insurance industry has suffered setbacks both financially and in public
relations. The Company, however, remains sound.
1. RESULTS OF OPERATIONS
(a) 1994 VERSUS 1993
Net income for 1994 was $53 million, representing a $24 million decrease from
the same period in 1993.
Premiums and annuity considerations increased $48 million in 1994, from $564
million for the year ended December 31, 1993, to $612 million for the same
period in 1994. An increase in unscheduled premium payments on two individual
life insurance products together with an increase in renewal premiums, driven by
these two products, account for this increase.
Net investment income decreased $15 million for the twelve months ended December
31, 1994, from the same period in 1993. Reduced yields on the Company's fixed
rate investment portfolio lead to reduced net investment income. In addition,
net cash outflows to meet policyholder obligations resulted in a decrease in
invested assets which, in turn, contributed to the lower investment income.
The Company had net realized investment losses of $21 million during 1994
compared to investment gains of $9 million during 1993. Sales of Corporate and
Mortgage-Backed Securities during the twelve months of 1994 generated realized
losses attributable to the increase in interest rates during this period.
However, the expectation is that the newly structured portfolio will align more
closely with the company's liability duration and reduce the portfolio's
interest rate risk. Following statutory Interest Maintenance Reserve (IMR)
guidelines, net realized investment losses of $20 million were deferred for the
period ended December 31, 1994. In comparison, $19 million of net realized
investment gains were deferred for the period ended December 31, 1993. Amortized
into net investment income were $5 million and $7 million of IMR for the twelve
month period ended December 31, 1994, and 1993, respectively.
Current and future benefits and claims increased $25 million for the twelve
months ended December 31, 1994, from the same period in 1993. An increase in
benefits paid during 1994 as compared to 1993 combined with high surrender
benefits, which can be attributed to contract maturities of annuity products as
the Company's inforce ages, was more than offset by an increase in reserves
resulting from the 1994 increase in premiums and annuity considerations.
Total expenses for the year ended December 31, 1994 decreased by $8 million from
the same period in 1993. General, administrative, and other expenses for the
year ended December 31, 1994, decreased $9.8 million due to the decrease in
allocation of costs from The Prudential. Allocations are primarily based on
average compensation over a period of recent years and inforce. The average
compensation and inforce amounts used in 1994 decreased from 1993 by 48% and 5%,
respectively. This can be attributable to a decline in the sales of certain
life insurance products between periods of allocation. Offsetting this decrease
is an increase in commission expense of $1.8 million from the same period in
1993, which is consistent with the increase in first year premiums.
Provision in lieu of federal income taxes increased $4 million for the year
ended December 31, 1994, as compared to December 31, 1993. Although operating
income for 1994 was lower than the previous year, provision in lieu of federal
income taxes increased due to federal income taxes applicable to prior years.
6
<PAGE>
(b) 1993 VERSUS 1992
Net income for 1993 was $77 million, representing a $34 million decrease from
the same period in 1992.
Premiums and annuity considerations increased $67 million in 1993, from $497
million for the year ended December 31, 1992, to $564 million for the same
period in 1993. This increase was primarily from sales of two new individual
life insurance products. Offsetting this increase were the continuing decline in
renewal premiums from normal surrender and lapse activity for certain life
insurance contracts and contract maturities. In addition, sales of the Future
Value Annuity contract decreased during the year ended December 31, 1993.
Net investment income decreased $13 million for the twelve months ended December
31, 1993, from the same period in 1992. Reduced yields on the Company's fixed
rate investment portfolio lead to reduced net investment income. A decline in
invested assets also contributed to this decrease.
Net realized investment gains decreased $19 million for the twelve months ended
December 31, 1993, from the same period in 1992. This decrease is primarily due
to the decline in activity in the purchases and sales of fixed maturities. Net
realized investment gains of $19 million and $37 million were deferred in 1993
and 1992, respectively, as dictated by Interest Maintenance Reserve (IMR)
guidelines. Amortized into net investment income were $7 million and $3 million
of IMR for the year ended December 31, 1993 and 1992, respectively.
Current and future benefits and claims increased $56 million for the year ended
December 31, 1993, from the same period in 1992. Surrender benefits, which
increased from $223 million at December 31, 1992, to $462 million at
December 31, 1993, and change in reserves, which decreased from $129 million
at December 31, 1992, to $(49) million at December 31, 1993, were the two
major components of this increase. Surrender activity increased significantly
during the first three months of 1993, as contractholders exercised a
provision included in the contract which allows withdrawal of funds without
surrender charges if the Company's renewal crediting rate is more than 1%
below the initial crediting rate (renewal crediting rates are established at
January 1 each year). A contractholder's ability to exercise this provision is
limited to 30 days following notification of the renewal crediting rate. The
surrender activity has a direct correlation with reserve activity and accounts
for a significant portion of the change in reserves. The effect of the
surrender activity on the change in reserve was somewhat mitigated by new
business sales of the two new individual life insurance products.
Total expenses for the year ended December 31, 1993, increased by $28 million,
from the same period in 1992. The commission expense increase of $10 million is
due to first year sales of two new individual life insurance products.
Commission rates on new business sales are higher than on renewal business.
General, administrative, and other expenses for the year ended December 31,
1993, increased $18 million due to an increase in the allocation of costs from
The Prudential. Under service and lease agreements with The Prudential, services
of officers and employees, supplies, use of equipment and office space are
provided to the Company. The increase in allocated costs is due to a rise in
the inforce caused by increased sales. The allocations were further affected by
the reorganization of The Prudential's Individual Insurance Department.
Effective January 1, 1993, the corporate staff of the Company was absorbed by
the parent as a result of this reorganization. The costs associated with these
employees are now charged to the Company under the service and lease agreements
with the parent.
Provision in lieu of federal income tax decreased $13 million for the year ended
December 31, 1993, as compared to December 31, 1992. This decrease in tax is due
primarily to the effect of the large decrease in capital gains and a lower
equity tax assessment by the consolidated tax sharing group. The effective tax
rates for the years ended December 31, 1993 and 1992, were 52% and 47%,
respectively. This increase is due primarily to the tax effect of the change in
tax reserves as compared to the change in statutory reserves. However, the
decrease in the equity tax assessment and the effect of the IMR offset this
increase. Provision in lieu of federal income tax for the year ended December
31, 1993, reflects the new corporate income tax rate of 35%, an increase of 1%
over the same period in 1992. This rate change did not have a material effect on
net income.
7
<PAGE>
2. LIQUIDITY
For an insurance company, cash needs, for the purpose of paying current
benefits, making policy loans, and paying expenses, are met primarily from
premiums and investment income. Benefit expenses incurred in 1994, 1993 and 1992
were respectively, $547 million, $584 million and $350 million. Cash flows are
anticipated to be ample to meet the Company's liquidity needs for the
foreseeable future.
3. INVESTMENTS
The Company maintains a well diversified portfolio consisting of fixed as well
as equity investments. Of the Company's total assets of $7 billion as of
December 31, 1994, 37.33% was invested in fixed maturities, 0.05% in equity
securities, 2.70% in short-term investments, 1.01% in mortgage loans, 0.10% in
real estate, 49.53% in separate account assets and the remaining 9.28% in other
assets.
Fixed Maturities. As of December 31, 1994 and 1993, the Company's investments
in fixed maturities, which are primarily carried at amortized cost, were $2.6
billion and $2.8 billion, respectively. Included in fixed maturities are
securities classified by the National Association of Insurance Commissioners
(NAIC) as being in the lowest three rating categories. The lowest three NAIC
categories represent, for the most part, high-yield securities. These
approximate 1.5% of the Company's assets at December 31, 1994 and 1.6% at
December 31, 1993.
Mortgage Loans. As of December 31, 1994 and 1993, the Company's investments in
mortgage loans were $72 million and $56 million, respectively. Mortgage loans
are carried at the lower of unpaid principal balance or fair value of the
underlying property. The increase in mortgage loans is due to the acquisition of
7 new loans totaling $35.3 million. During the year ended December 31, 1994, one
loan in the amount of $4.7 million was transferred to real estate through
foreclosure. A net loss of $.6 million was realized in 1994 as a result of this
foreclosure. This loss was reserved for in the Asset Valuation Reserve and
therefore had no impact on surplus. Currently, the Company has one loan in the
amount of $6 million in the process of foreclosure and two loans with
restructured terms in the amount of $7.1 million.
Real Estate. As of December 31, 1994 and 1993, the Company's investment in real
estate was $7 million and $10 million, respectively. Real estate is carried at
the lower of cost or fair value less disposition costs. Pruco Life sold three
properties during the second half of 1994 for $10.8 million and acquired one
property through foreclosure for $4.1 million.
8
<PAGE>
4. EMERGING ACCOUNTING ISSUES
The Financial Accounting Standards Board (the "FASB") issued Financial
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises", which, as amended is
effective for fiscal years beginning after December 15, 1995. Interpretation No.
40 changes the current practice of the Company with respect to utilizing
statutory basis financial statements for general purposes in that it would not
allow such financial statements to be referred to as having been prepared in
accordance with GAAP. Interpretation No. 40 requires GAAP financial statements
to apply all GAAP pronouncements, unless specifically exempted. Implementation
of the Interpretation will require significant effort and judgment as to
determining GAAP for insurance operations. The Company is currently unable to
determine the impact of Interpretation No. 40 on its financial statements.
9
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required with respect to this Item 8 regarding Financial Statements
and Supplementary Data is set forth commencing on page F-1 hereof. See Index to
Financial Statements and Schedules elsewhere in this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
10
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF PRUCO LIFE
NAME POSITION AGE
Robert P. Hill Chairman of the Board 54
and Director
I. Edward Price Vice Chairman of the Board 52
and Director
Esther H. Milnes President and Director 44
Beverly R. Barney Senior Vice President 47
Robert W. W. Earl Senior Vice President 43
John P. Gualtieri, Jr. Senior Vice President and
Assistant Secretary 60
Richard F. Lambert Senior Vice President, Chief Actuary
and Appointed Actuary 38
Michael R. Shapiro Senior Vice President 47
Lawrence J. Sundram Senior Vice President 48
Stephen P. Tooley Vice President and Comptroller 42
E. Michael Caulfield Director 48
Garnett L. Keith, Jr. Director 59
Ira J. Kleinman Director 47
Donald G. Southwell Director 43
-----------------------------------------------------------------------
Robert P. Hill, age 54, has been Executive Vice President of The Prudential
since 1990. Prior to 1990, he was Senior Vice President and Actuary of The
Prudential.
I. Edward Price, age 52, has been Chief Executive Officer of International
Insurance of The Prudential since 1994. From 1990 to 1993, he was Senior Vice
President and Actuary of The Prudential. In 1990, he was Senior Vice President
of The Prudential and President of the International Insurance Department of The
Prudential. Prior to 1990, he was Senior Vice President of Individual Insurance
Systems and Administration of The Prudential.
Esther H. Milnes, age 44, has been President of Pruco Life and Senior Vice
President and Chief Actuary of Prudential Insurance and Financial Services since
1993. Prior to 1993, she was Vice President and Associate Actuary of The
Prudential.
11
<PAGE>
Beverly R. Barney, age 47, has been Senior Vice President of Pruco Life since
1991. She has also been Vice President and Associate Actuary of Prudential
Direct since 1993. From 1990 to 1991, she was Vice President and Actuary of
Pruco Life. Prior to 1990, she was Vice President of Human Resources for the
Eastern Home Office of The Prudential.
Robert W. W. Earl, age 43, has been Vice President of Strategic Initiatives of
Prudential Preferred Financial Services since 1992. Prior to 1992, he was Vice
President of Regional Marketing for The Prudential.
John P. Gualtieri, Jr., age 60, has been Senior Vice President of Pruco Life
since 1987. He has been Vice President and Insurance Counsel of Variable
Products since 1993.
Richard F. Lambert, age 38, has been Senior Vice President and Chief and
Appointed Actuary since 1992. He has also been Vice President and Actuary of
Prudential Preferred Financial Services since 1993. From 1991 to 1993, he was
Vice President and Actuary of The Prudential. Prior to 1991, he was Vice
President of Prudential Select Marketing.
Michael R. Shapiro, age 47, has been Senior Vice President of Prudential Select
Marketing since 1987.
Lawrence J. Sundram, age 48, has been Vice President of Prudential Insurance and
Financial Services since 1993. Prior to 1993, he was Vice President of District
Agencies for The Prudential.
Stephen P. Tooley, age 42, has been Vice President and Comptroller of Prudential
Insurance and Financial Services and Pruco Life since 1993. From 1990 to 1993,
he was Director of Financial Analysis for The Prudential. Prior to 1990, he was
Director of Accounting for The Prudential.
E. Michael Caulfield, age 48, has been President of Prudential Preferred
Financial Services since 1993. From 1992 to 1993, he was President of
Prudential Property and Casualty. Prior to 1992, he was President of Investment
Services for The Prudential.
Garnett L. Keith, Jr., age 59, has been Vice Chairman of The Prudential since
1984.
Ira J. Kleinman, age 47, has been President of Prudential Select Marketing since
1993. From 1992 to 1993, he was Senior Vice President of The Prudential. Prior
to 1992, he was Vice President of The Prudential.
Donald G. Southwell, age 43, has been President of Prudential Insurance and
Financial Services since 1993. Prior to 1993, he was Senior Vice President of
The Prudential.
12
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table shows the portion of compensation, paid by The Prudential,
to each named executive officer for services provided to the Company. The
amounts have been determined based on each individual's time devoted to the
duties as an executive of Pruco Life and its subsidiaries during 1994.
<TABLE>
<CAPTION>
Name & Allocated Cash
Principal Compensation
Position Year ($)
--------- ---- ---------------
<S> <C> <C>
Esther H. Milnes 1994 $ 14,250
President 1993 $ 9,846
1992* $ -
John P. Gualtieri, Jr. 1994 $ 25,285
Senior Vice President 1993 $ 72,608
1992 $ 142,038
Beverly R. Barney 1994 $ -
Senior Vice President 1993 $ 126,142
1992 $ 105,380
Helen M. Galt 1994 $ -
President 1993** $ 13,382
1992 $ 169,626
Robert B. Likins 1994 $ -
Senior Vice President 1993** $ 6,181
1992 $ 138,511
<FN>
* Current position was not held as of reporting date.
** Resigned position as of July, 1993.
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Not applicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Schedules of registrant and its
subsidiaries are listed in the accompanying "Index to Financial Statements and
Schedules" on pages F-1 and F-2 hereof and are filed as part of this Report.
(a)(3) EXHIBITS
REGULATION S-K
3. Documents Incorporated by Reference
The Articles of Incorporation of Pruco Life, as amended October 19,
1993, are incorporated herein by reference to Exhibit 14 (3) of the
Pruco Life Insurance Company Form 10-K for the fiscal year ended
December 31, 1993; (ii) Bylaws of Pruco Life, as amended June 14,
1983, are incorporated herein by reference to Post-Effective Amendment
No. 13 to Form S-6, Registration No. 2-89558, filed March 2, 1989 on
behalf of the Pruco Life Variable Appreciable Account.
4. Exhibits
Modified Guaranteed Annuity Contract, incorporated by reference to
Registrant's Form S-1 Registration Statement, Registration No. 33-
37587, filed November 2, 1990.
9. None.
10. None.
11. Not applicable.
12. Not applicable.
13. Not applicable.
16. Not applicable.
18. None.
19. Not applicable.
21. Pruco Life Insurance Company of New Jersey, a stock life insurance
company organized under the laws of the state of New Jersey, is a
wholly-owned subsidiary of Pruco Life. It is licensed to sell life
insurance and annuities only in the States of New Jersey and New York.
The Prudential Life Insurance Company of Arizona, a stock life
insurance company organized under the laws of the State of Arizona, is
a wholly-owned subsidiary of Pruco Life. It is licensed to sell life
insurance and annuities only in the State of Arizona.
22. None.
14
<PAGE>
23. Not applicable.
24. Powers of Attorney, incorporated by reference to Post Effective
Amendment No. 15 to Form S-6, Registration No. 2-99537, filed March 2,
1993, and Post Effective Amendment No. 17 to Form S-6, Registration
No. 2-99537, filed on March 4, 1994, on behalf of the Pruco Life
Single Premium Variable Life Account.
27. No response required
28. Not applicable.
(b) Reports on 8-K
No report on Form 8-K was filed during the last fiscal year ended
December 31, 1994.
99. None.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
. . . . . . . . . . . . .PRUCO LIFE INSURANCE COMPANY
(Registrant)
Date: March 27,1995 By: /s/ Esther H. Milnes
------------------------- ---------------------------------
Esther H. Milnes
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
*
--------------------------- Chairman of the Board March 29, 1995
Robert P. Hill and Director
*
--------------------------- Vice Chairman of the Board March 29, 1995
I. Edward Price and Director
/s/ Esther H. Milnes President and Director March 27, 1995
----------------------------
Esther H. Milnes
*
--------------------------- Senior Vice President and March 29, 1995
John P. Gualtieri, Jr. Assistant Secretary
/s/ Stephen P. Tooley Vice President and Comptroller March 27, 1995
----------------------------
Stephen P. Tooley
By: * /s/ Thomas C. Castano
--------------------------
Thomas C. Castano
(Attorney-in-Fact)
16
<PAGE>
SIGNATURE TITLE DATE
*
--------------------------- Director March 29, 1995
E. Michael Caulfield
*
--------------------------- Director March 29, 1995
Garnett L. Keith, Jr.
*
--------------------------- Director March 29, 1995
Ira J. Kleiman
*
--------------------------- Director March 29, 1995
Donald G. Southwell
By: * /s/ Thomas C. Castano
-------------------------
Thomas C. Castano
(Attorney-in-Fact)
17
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
For the Years Ended December 31, 1994, 1993, and 1992
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
F-1
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS and FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS AND SCHEDULES PAGE
A. PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
Independent Auditors' Report F-3
Consolidated Financial Statements:
Statements of Financial Position - December 31, 1994 and
December 31, 1993 F-4
Statements of Operations - Years Ended December 31, 1994,
1993 and 1992 F-5
Statements of Stockholder's Equity - Years Ended
December 31, 1994, 1993 and 1992 F-6
Statements of Cash Flows - Years Ended December 31, 1994,
1993 and 1992 F-7
Notes to Consolidated Financial Statements - Years Ended
December 31, 1994, 1993 and 1992 F-8
Schedules:
Schedule I-Summary of Investments - Other Than Investments
in Affiliates - December 31, 1994 F-20
Schedule VI-Schedule of Reinsurance - For the Years Ended
December 31, 1994, 1993, and 1992 F-21
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Pruco Life Insurance Company
Newark, New Jersey
We have audited the accompanying consolidated statements of financial position
of Pruco Life Insurance Company and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of operations, stockholder's
equity, and cash flows for each of the three years in the period ended December
31, 1994. Our audits also included the financial statement schedules listed in
the Index at Item 14. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Pruco Life Insurance Company and
subsidiaries as of December 31, 1994 and 1993 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
Deloitte & Touche LLP
Parsippany, New Jersey
March 6, 1995
F-3
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
------------ ------------
($000's)
<S> <C> <C>
ASSETS
Fixed maturities (market value $2,596,172
and $2,951,602) . . . . . . . . . . . . . . . $2,647,315 $2,835,251
Equity securities (cost $5,434 and $4,405) . . . 3,326 2,788
Mortgage loans . . . . . . . . . . . . . . . . . 71,919 56,184
Investment in real estate. . . . . . . . . . . . 7,189 9,994
Policy loans . . . . . . . . . . . . . . . . . . 493,862 420,271
Other long-term investments. . . . . . . . . . . 4,044 2,753
Short-term investments . . . . . . . . . . . . . 191,455 201,079
------------ ------------
Total Investments . . . . . . . . . . . . . . 3,419,110 3,528,320
Cash . . . . . . . . . . . . . . . . . . . . . . 27,780 671
Notes receivable from affiliates . . . . . . . . - 50,000
Interest receivable from affiliates. . . . . . . - 23
Accrued investment income. . . . . . . . . . . . 59,382 56,785
Premiums due and deferred. . . . . . . . . . . . 16,821 16,569
Receivable from affiliates . . . . . . . . . . . 7,517 6,880
Federal income taxes - from affiliate. . . . . . 23,306 4,151
Other assets . . . . . . . . . . . . . . . . . . 25,102 15,829
Assets held in Separate Accounts . . . . . . . . 3,511,784 3,492,876
------------ ------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $7,090,802 $7,172,104
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy liabilities and insurance reserves:
Future policy benefits and claims.. . . . . . $2,767,552 $2,912,283
Other policy claims and benefits payable. . . 15,184 13,606
Interest Maintenance Reserve (IMR). . . . . . 21,802 46,506
Payable to affiliates. . . . . . . . . . . . . . 30,257 54,286
Other liabilities. . . . . . . . . . . . . . . . 131,695 103,985
Asset Valuation Reserve (AVR). . . . . . . . . . 23,690 22,692
Liabilities related to Separate Accounts . . . . 3,424,535 3,399,953
------------ ------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . 6,414,715 6,553,311
------------ ------------
STOCKHOLDER'S EQUITY:
Common Stock, $10 par value; authorized,
1,000,000 shares; issued and outstanding,
250,000 shares. . . . . . . . . . . . . . . . 2,500 2,500
Paid-in capital. . . . . . . . . . . . . . . . . 439,582 439,582
Unassigned surplus . . . . . . . . . . . . . . . 234,005 176,711
------------ ------------
TOTAL STOCKHOLDER'S EQUITY . . . . . . . . . . . . 676,087 618,793
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY . . . . $7,090,802 $7,172,104
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
----------- ----------- -----------
($000's)
<S> <C> <C> <C>
REVENUE
Premiums and annuity considerations. . . . . . . . . $ 611,820 $ 563,900 $ 497,088
Net investment income. . . . . . . . . . . . . . . . 245,977 260,939 274,037
Net realized investment gains/(losses) . . . . . . . (21,215) 8,878 28,117
Other income . . . . . . . . . . . . . . . . . . . . 13,259 18,882 16,043
----------- ----------- -----------
TOTAL REVENUE. . . . . . . . . . . . . . . . . . . . . 849,841 852,599 815,285
----------- ----------- -----------
BENEFITS AND EXPENSES
Current and future benefits and claims . . . . . . . 559,658 534,354 478,148
Commission expenses. . . . . . . . . . . . . . . . . 30,169 28,386 17,956
General, administrative and other expenses . . . . . 119,309 129,171 111,745
----------- ----------- -----------
TOTAL BENEFITS AND EXPENSES. . . . . . . . . . . . . . 709,136 691,911 607,849
----------- ----------- -----------
Income before provision in lieu of federal
income tax . . . . . . . . . . . . . . . . . . . . 140,705 160,688 207,436
Provision in lieu of federal income tax. . . . . . . (87,750) (83,640) (96,578)
----------- ----------- -----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 52,955 $ 77,048 $ 110,858
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
--------- --------- ---------
($000's)
<S> <C> <C> <C>
COMMON STOCK
Balance, beginning of year . . . . . . . . $ 2,500 $ 2,500 $ 2,500
Issued during year . . . . . . . . . . . . - - -
--------- --------- ---------
Balance, end of year . . . . . . . . . . . 2,500 2,500 2,500
--------- --------- ---------
PAID-IN CAPITAL
Balance, beginning of year . . . . . . . . 439,582 439,582 439,582
Paid-in during year. . . . . . . . . . . . - - -
--------- --------- ---------
Balance, end of year . . . . . . . . . . . 439,582 439,582 439,582
--------- --------- ---------
UNASSIGNED SURPLUS
Balance, beginning of year . . . . . . . . 176,711 162,530 98,966
Net income . . . . . . . . . . . . . . . . 52,955 77,048 110,858
Net unrealized investment gains/(losses) . 5,814 (9,351) 2,750
(Increase) decrease in non-admitted assets (477) 575 130
(Increase) decrease in AVR . . . . . . . . (998) 5,909 3,681
Dividends to stockholder . . . . . . . . . - (60,000) (53,855)
--------- --------- ---------
Balance, end of year . . . . . . . . . . . 234,005 176,711 162,530
--------- --------- ---------
TOTAL STOCKHOLDER'S EQUITY . . . . . . . . . $ 676,087 $ 618,793 $ 604,612
--------- --------- ---------
--------- --------- ---------
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
---------- ----------- ----------
---------- ----------- ----------
($000's)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $ 52,955 $ 77,048 $ 110,858
Adjustments to reconcile net income
to net cash from operations:
Increase (decrease) in policy liabilities and
insurance reserves. . . . . . . . . . . . . . . . . . . (143,153) (124,602) 95,927
Net decrease in Separate Accounts . . . . . . . . . . . . 5,674 12,173 4,531
Net realized investment(gains)/losses . . . . . . . . . . 21,215 (8,878) (28,117)
Depreciation, amortization and
other non-cash items. . . . . . . . . . . . . . . . . . 314 1,907 (1,810)
(Increase) decrease in operating assets:
Policy loans. . . . . . . . . . . . . . . . . . . . . . (73,591) (71,472) (86,306)
Notes receivable from affiliates. . . . . . . . . . . . 50,000 9,000 4,000
Interest receivable from affiliates . . . . . . . . . . 23 420 361
Accrued investment income . . . . . . . . . . . . . . . (2,597) 880 (45)
Premiums due and deferred . . . . . . . . . . . . . . . (252) (880) 47,374
Receivable from affiliates. . . . . . . . . . . . . . . (637) 1,970 10,818
Federal income taxes - from affiliate . . . . . . . . . (19,155) 6,879 (11,030)
Other assets. . . . . . . . . . . . . . . . . . . . . . (9,273) (9,481) (3,476)
Increase (decrease) in operating liabilities:
Payable to affiliates . . . . . . . . . . . . . . . . . (24,029) 13,260 (53,063)
Federal income taxes - to affiliate . . . . . . . . . . - - (497)
Other liabilities . . . . . . . . . . . . . . . . . . . 27,710 34,632 (50,303)
---------- ----------- ----------
CASH FLOW FROM (USED FOR) OPERATING ACTIVITIES . . . . . . . (114,796) (57,144) 39,222
---------- ----------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from the sale/maturity of:
Fixed maturities. . . . . . . . . . . . . . . . . . . . . 2,710,424 1,687,992 3,898,399
Equity securities . . . . . . . . . . . . . . . . . . . . 1,909 4,032 1,791
Mortgage loans. . . . . . . . . . . . . . . . . . . . . . 10,821 21,691 954
Other long-term investments . . . . . . . . . . . . . . . 607 520 -
Investment in real estate . . . . . . . . . . . . . . . . 8,676 - -
Payments for the purchase of:
Fixed maturities. . . . . . . . . . . . . . . . . . . . . (2,561,081) (1,483,234) (3,986,331)
Equity securities . . . . . . . . . . . . . . . . . . . . (2,436) (3,068) (1,170)
Mortgage loans. . . . . . . . . . . . . . . . . . . . . . (35,276) (918) -
Other long-term investments . . . . . . . . . . . . . . . (1,584) (84) (860)
Investment in real estate . . . . . . . . . . . . . . . . - (20) (71)
Net proceeds (payments) of short-term
investments . . . . . . . . . . . . . . . . . . . . . . 9,845 (116,735) 108,858
---------- ----------- ----------
CASH FLOW FROM INVESTING ACTIVITIES. . . . . . . . . . . . . 141,905 110,176 21,570
---------- ----------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid. . . . . . . . . . . . . . . . . . . . . . . - (60,000) (53,855)
---------- ----------- ----------
Net increase (decrease) in Cash . . . . . . . . . . . . . . 27,109 (6,968) 6,937
Cash, beginning of year . . . . . . . . . . . . . . . . . . 671 7,639 702
---------- ----------- ----------
CASH, END OF YEAR. . . . . . . . . . . . . . . . . . . . . . $ 27,780 $ 671 $ 7,639
---------- ----------- ----------
---------- ----------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Non-cash financing:Investment in real estate
from foreclosed mortgage loans. . . . . . . . . . . . . . $ 4,139 $ 7,300 $ 6,338
---------- ----------- ----------
---------- ----------- ----------
Cash paid in lieu of income taxes . . . . . . . . . . . . . $ 73,903 $ 76,760 $ 108,105
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-7
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES
A. PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the consolidated
accounts of Pruco Life Insurance Company (Pruco Life), a stock life
insurance company, and its subsidiaries (collectively, the Company).
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance
Company of America (The Prudential), a mutual life insurance company.
The Company markets individual life insurance and single pay deferred
annuities primarily through The Prudential's sales force. All
significant intercompany balances and transactions have been
eliminated in consolidation.
B. BASIS OF PRESENTATION
The financial statements are presented in conformity with Generally
Accepted Accounting Principles (GAAP), which for mutual life
insurance companies and their life insurance subsidiaries are
statutory accounting practices prescribed or permitted by state
regulatory authorities in the domiciliary states. Certain
reclassifications have been made to the 1992 and 1993 financial
statements and footnotes to conform to the 1994 presentation.
Included in the Statement of Operations are certain items which, under
statutory accounting practices, are charged or credited directly to
surplus.
In 1994, The American Institute of Certified Public Accountants issued
Statement of Position 94-5 "Disclosures of Certain Matters in the
Financial Statements of Insurance Enterprises"("SOP 94-5") which
requires insurance enterprises to disclose in their financial
statements the accounting methods used in their statutory financial
statements that are permitted by the state insurance departments
rather than prescribed statutory accounting practices.
Pruco Life Insurance Company, domiciled in the State of Arizona,
prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the Arizona Department
of Insurance ("the Department"), and its insurance subsidiaries
prepare statutory financial statements in accordance with accounting
practices prescribed or permitted by their domiciliary home state
insurance department. Prescribed statutory accounting practices
include publications of the National Association of Insurance
Commissioners (NAIC), state laws, regulations, and general
administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed.
The Company has established guaranty fund liabilities for the
insolvencies of certain life insurance companies. The liabilities
were established net of premium tax credits and federal income tax.
Prescribed statutory accounting practices do not address the
establishment of liabilities for guaranty fund assessments.
The Company, with permission from the Department, prepares an Annual
Report that differs from the Annual Statement filed with the
Department in that subsidiaries are consolidated and certain financial
statement captions are presented differently.
F-8
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
For the Years Ended December 31, 1994, 1993, 1992
The following is a reconciliation of Pruco Life's statutory net income with net
income per the consolidated financial statements.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
-------- -------- --------
($000's)
<S> <C> <C> <C>
Pruco Life Statutory Net Income including net
gains and losses on sales of investments. . . . . $ 49,374 $ 79,405 $126,507
Adjustments to reconcile to net income
as follows:
Dividends from subsidiary . . . . . . . . . . . . -- (26,000) (27,162)
Change in determination of deferred premiums. . . -- -- (12,495)
Provision for future assessments. . . . . . . . . 349 577 (3,493)
Net gain from operations in Separate
Accounts. . . . . . . . . . . . . . . . . . . . 7,508 5,572 2,563
Income tax applicable to other than
current year. . . . . . . . . . . . . . . . . . (25,467) -- --
Other . . . . . . . . . . . . . . . . . . . . . . 7,684 (2,429) 1,459
Subsidiaries' Net Income. . . . . . . . . . . . . 13,507 19,923 23,479
-------- -------- --------
Net Income . . . . . . . . . . . . . . . . . . . . $ 52,955 $ 77,048 $110,858
-------- -------- --------
-------- -------- --------
</TABLE>
C. FUTURE APPLICATION OF ACCOUNTING STANDARDS
The Financial Accounting Standards Board (the "FASB") issued Financial
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises", which, as
amended is effective for fiscal years beginning after December 15, 1995.
Interpretation No. 40 changes the current practice of the Company with
respect to utilizing statutory basis financial statements for general
purposes in that it would not allow such financial statements to be
referred to as having been prepared in accordance with GAAP.
Interpretation No. 40 requires GAAP financial statements to apply all GAAP
pronouncements, unless specifically exempted. Implementation of the
Interpretation will require significant effort and judgment as to
determining GAAP for insurance operations.
The Company is currently unable to determine the impact of Interpretation
No. 40 on its financial statements.
F-9
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
D. SELECTED FINANCIAL DATA OF PRUCO LIFE
Pruco Life markets the Future Value Annuity Contract, an individual
deferred annuity contract. Only assets of Pruco Life, shown below, are
available to meet the guarantees under this annuity contract. The following
is the selected financial data of Pruco Life:
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
----------- -----------
($000's)
<S> <C> <C>
Assets:
Investments. . . . . . . . . . . . . . $ 2,758,088 $ 2,835,163
Investment in subsidiaries . . . . . . 169,816 156,515
Other assets . . . . . . . . . . . . . 135,778 133,020
Assets held in Separate Accounts . . . 2,869,734 2,846,792
----------- -----------
Total Assets . . . . . . . . . . . . . $ 5,933,416 $ 5,971,490
----------- -----------
----------- -----------
Liabilities:
Policy liabilities and insurance
reserves. . . . . . . . . . . . . . $ 2,296,987 $ 2,417,098
Other liabilities. . . . . . . . . . . 163,322 165,974
Liabilities related to Separate Accounts 2,797,020 2,769,625
----------- -----------
Total Liabilities. . . . . . . . . . . $ 5,257,329 $ 5,352,697
----------- -----------
----------- -----------
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
---------- --------- ----------
($000's)
<S> <C> <C> <C>
Revenues. . . . . . . . . . . . . . . . $ 698,685 $ 716,402 $ 675,863
---------- --------- ----------
Benefits, expenses and taxes. . . . . . 659,237 633,277 561,322
---------- --------- ----------
Net Income. . . . . . . . . . . . . . . $ 39,448 $ 83,125 $ 114,541
---------- --------- ----------
---------- --------- ----------
</TABLE>
E. INVESTMENTS
Fixed maturities, which include long-term bonds and redeemable preferred
stock, are stated primarily at amortized cost. Certain investments in this
category were non-income producing at December 31, 1994 and 1993. These
investments amounted to $13.2 million and $2 million, respectively. Equity
securities, which consist primarily of common stock, are carried at market
value which is based on quoted market prices, where available, or prices
provided by the National Association of Insurance Commissioners' (NAIC)
Securities Valuation Office (SVO).
Mortgage loans are carried at the lower of the fair value of the underlying
property or unpaid principal balance. At December 31, 1994, one loan was in
foreclosure in the amount of $6 million. At December 31, 1993, aside from
one loan in foreclosure, one mortgage, in the amount of $3 million, was in
default.
F-10
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
Policy loans are stated primarily at unpaid principal balances.
All the Company's real estate investments were acquired through foreclosure
during 1994 and 1993. These properties are carried at the lower of cost or
fair value less disposition costs. Fair value is considered to be the
amount that could reasonably be expected in a current transaction between
willing parties, other than in forced or liquidation sale. Depreciation on
these properties for the years ended December 31, 1994 and 1993 was $456
thousand and $289 thousand, respectively.
Other long-term investments, which consist solely of limited partnerships,
are valued at the aggregate net equity in the partnerships. There were no
non-income producing investments in this category at December 31, 1994.
Certain investments in this category were non-income producing at December
31, 1993. These investments amounted to $118 thousand.
Short-term investments are stated at amortized cost, which approximates
fair value.
Realized investment gains and losses are reported based on specific
identification of the investments sold.
F. FUTURE POLICY BENEFITS, LOSSES AND CLAIMS
Reserves for individual life insurance are calculated using various
methods, interest rates and mortality tables which produce reserves that
meet the aggregate requirements of state laws and regulations.
Approximately 7% of individual life insurance reserves are determined using
the net level premium method, or by using the greater of a net level
premium reserve or the policy cash value. About 93% of individual life
insurance reserves are calculated according to the Commissioner's Reserve
Valuation Method ("CRVM"), or methods which compare CRVM reserves to policy
cash values.
Reserves for individual annuity contracts are determined using the
Commissioner's Annuity Reserve Valuation Method.
For life insurance, unpaid claims include estimates of both the death
benefits on reported claims and those which are incurred but not reported.
G. REVENUE RECOGNITION AND RELATED EXPENSES
Premium revenues are recognized as income over the premium paying period of
the related policies. Annuity considerations are recognized as revenue when
received. Expenses, including new business acquisition costs such as
commissions, are charged to operations as incurred.
H. ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve (AVR) and the Interest Maintenance Reserve
(IMR) are required reserves for assets of life insurance companies. AVR is
calculated based on a statutory formula and designed to mitigate the effect
of valuation and credit related losses on unassigned surplus.
F-11
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
The components of AVR at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
($000's)
Fixed Equity Real Estate
Maturities Mortgages Securities & Other Inv. Total
---------- --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Transfer from December 31, 1992 - AVR $ 23,152 $ 5,139 $ 310 $ 0 $ 28,601
Additions 7,197 0 650 2,353 10,200
Deductions (12,055) (1,440) (261) (2,353) (16,109)
---------- --------- ---------- --------- ---------
End of Year 1993 - AVR 18,294 3,699 699 0 22,692
---------- --------- ---------- --------- ---------
---------- --------- ---------- --------- ---------
Beginning of Year 1994 - AVR 18,294 3,699 699 0 22,692
Additions 12,062 2,166 348 2,047 16,623
Deductions (10,454) (4,355) (314) (502) (15,625)
---------- --------- ---------- --------- ---------
End of Year 1994 - AVR $ 19,902 $ 1,510 $ 733 $ 1,545 $ 23,690
---------- --------- ---------- --------- ---------
---------- --------- ---------- --------- ---------
</TABLE>
The IMR is designed to reduce the fluctuations of surplus resulting from
market interest rate movements. Predominantly all interest rate related
realized capital gains and losses are deferred and amortized into
investment income over the remaining life of the investment sold. The IMR
balance was $21.8 million and $46.5 million at December 31, 1994 and 1993,
respectively. "Net realized investment gains/(losses)" of $(19.9) million
and $19.2 million were deferred in 1994 and 1993, respectively. Amortized
into "Net investment income" were $4.8 million and $6.7 million of IMR for
the year ended December 31, 1994 and 1993, respectively.
I. FEDERAL INCOME TAXES
The Company is a member of a group of affiliated companies which join in
filing a consolidated federal tax return. Pursuant to a tax allocation
agreement, current tax liabilities are determined for individual companies
based upon their separate return basis taxable income. Members with taxable
income incur an amount in lieu of the separate return basis federal tax.
Members with a loss for tax purposes recognize a current benefit in
proportion to the amount of their losses utilized in computing consolidated
taxable income. Differences between estimated liabilities and actual
payments are included in the current year's operations as an adjustment to
the provision in lieu of income taxes. For the years 1993 and 1992, the
Company was allocated a portion of the consolidated income tax liability
attributable to Section 809 of the Internal Revenue Code (commonly referred
to as "Equity Tax"). Beginning in 1994, the Company will no longer be
allocated this Equity Tax.
Taxes on the Company are calculated under the Internal Revenue Code of 1986
which provides that life insurance companies be taxed on their gain from
operations after dividends to policyholders. In calculating this tax, the
Code requires the capitalization and amortization of policy acquisition
expenses.
F-12
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
J. SEPARATE ACCOUNTS
Separate accounts represent funds for which investment income and
investment gains and losses accrue directly to, and investment risk is
borne by, the policyholders. Each account has specific investment
objectives. Assets are carried at market value. Deposits to such accounts
are included in revenues with a corresponding liability increase included
in benefits and expenses. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of the Company. Consequently, management believes that it is
appropriate to combine Separate Account policyholder net investment income
and net realized and unrealized capital gains/(losses) along with benefit
payments and change in reserves in "Current and future benefits and
claims". Policyholder net investment income and net realized and unrealized
gains/(losses) for the years ended December 31, 1994, 1993 and 1992 were
($28) million, $443 million and $223 million, respectively.
2. FEDERAL INCOME TAXES
The following is a reconciliation of the Company's federal tax provision as
computed at the federal tax rate with that computed at the Company's
effective tax rate. The below amounts include federal income tax
applicable to prior years, where appropriate.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
-------- -------- --------
($000's)
<S> <C> <C> <C>
Operating income before federal income
taxes . . . . . . . . . . . . . . . . . . . . . $140,705 $160,688 $207,436
Statutory tax rate . . . . . . . . . . . . . . . . 35% 35% 34%
-------- -------- --------
Expected federal income taxes. . . . . . . . . . . 49,247 56,241 70,528
Tax effect of:
Statutory/tax policy reserve
difference . . . . . . . . . . . . . . . . . 19,949 14,577 (16,381)
Timing differences in tax/book income
recognition on investments . . . . . . . . . 11,608 4,055 14,404
Timing differences in tax/book income
recognition-other. . . . . . . . . . . . . . (6,816) (415) 921
Change in determination of
deferred premiums. . . . . . . . . . . . . . -- -- 6,128
Decrease/(Increase) in life insurance
premiums deferred and uncollected. . . . . . (88) (308) 2,650
Capitalization of policy acquisition
expenses . . . . . . . . . . . . . . . . . . 13,850 7,374 8,158
Allocated equity tax . . . . . . . . . . . . . -- 2,116 10,170
-------- -------- --------
Federal income taxes . . . . . . . . . . . . . . . $ 87,750 $ 83,640 $ 96,578
-------- -------- --------
-------- -------- --------
Effective tax rate . . . . . . . . . . . . . . . . 62% 52% 47%
-------- -------- --------
-------- -------- --------
</TABLE>
F-13
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, 1992
3. NET INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
-------- -------- --------
($000's)
<S> <C> <C> <C>
Gross investment income
Fixed maturities . . . . . . . . . $196,909 $216,660 $237,884
Equity securities. . . . . . . . . 14 22 14
Mortgage loans . . . . . . . . . . 4,041 6,359 7,529
Investment in real estate. . . . . 2,146 2,066 1,258
Policy loans . . . . . . . . . . . 25,692 21,741 17,437
Short-term investments . . . . . . 12,676 9,031 11,638
Other. . . . . . . . . . . . . . . 5,075 3,945 2,681
-------- -------- --------
246,553 259,824 278,441
Investment expenses. . . . . . . . . (5,421) (5,570) (7,687)
-------- -------- --------
Net investment income before IMR . . 241,132 254,254 270,754
Amortization of Interest Maintenance
Reserve. . . . . . . . . . . . . . 4,845 6,685 3,283
-------- -------- --------
Net investment income. . . . . . . . $245,977 $260,939 $274,037
-------- -------- --------
-------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
4. INVESTMENTS AND INVESTMENT GAINS (LOSSES) YEARS ENDED
DECEMBER 31,
1994 1993 1992
-------- -------- --------
($000's)
<S> <C> <C> <C>
Realized Gains (Losses)
Fixed maturities . . . . . . . . . . . . $(38,180) $ 32,471 $ 69,559
Equity securities. . . . . . . . . . . . 503 607 967
Mortgage loans . . . . . . . . . . . . . (4,581) (2,592) (3,889)
Investment in real estate. . . . . . . . 1,184 (2,004) (1,757)
Other. . . . . . . . . . . . . . . . . . (1) (411) 517
Tax effected amounts transferred to Interest
Maintenance Reserve . . . . . . . . . . 19,860 (19,193) (37,280)
-------- -------- --------
Net realized investment gains . . . . . . $(21,215) $ 8,878 $ 28,117
-------- -------- --------
-------- -------- --------
Unrealized Gains (Losses)
Fixed maturities . . . . . . . . . . . . 5,430 (9,380) 3,637
Equity securities. . . . . . . . . . . . (490) 260 (1,305)
Other. . . . . . . . . . . . . . . . . . 874 (231) 418
-------- -------- --------
Net unrealized investment gains (losses). 5,814 (9,351) 2,750
Balance beginning of year . . . . . . . . (18,166) (8,815) (11,565)
-------- -------- --------
Balance end of year . . . . . . . . . . . $(12,352) $(18,166) $ (8,815)
-------- -------- --------
-------- -------- --------
</TABLE>
F-14
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<CAPTION>
EQUITY SECURITIES AT DECEMBER 31,
---------------------------------
($000'S)
UNREALIZED
----------
COST GAINS LOSSES
---- ----- ------
<S> <C> <C> <C>
1994 . . . . . . . . . . . $ 5,434 $ 386 $ 2,494
1993 . . . . . . . . . . . 4,405 742 2,359
1992 . . . . . . . . . . . 4,762 1,093 2,969
</TABLE>
<TABLE>
<CAPTION>
FIXED MATURITIES
----------------
($000'S)
AT DECEMBER 31,
INCREASE (DECREASE) IN
AMORTIZED MARKET DIFFERENCE BETWEEN MARKET VALUE
COST VALUE AND AMORTIZED COST DURING THE YEAR
--------- ------ ----------------------------------
<S> <C> <C> <C>
1994. . . . $2,647,315 $2,596,172 $(167,494)
1993. . . . 2,835,251 2,951,602 10,453
1992. . . . 3,025,030 3,130,928 (74,958)
</TABLE>
The amortized cost and estimated market value of fixed maturities at December
31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
1994 Amortized unrealized unrealized market
---- cost gains losses value
($000's) ($000's) ($000's) ($000's)
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of
U.S. government corporations
and agencies . . . . . . . . . . . . $ 409,678 $ 224 $ 20,259 $ 389,643
Obligations of U.S. and
political subdivisions . . . . . . . -- -- -- --
Debt securities issued by
foreign governments and
their agencies . . . . . . . . . . . 86,026 2,075 2,310 85,791
Corporate securities . . . . . . . . 1,960,296 17,005 43,521 1,933,780
Mortgage-backed
securities . . . . . . . . . . . . . 191,315 1,429 5,786 186,958
---------- -------- -------- ----------
Total. . . . . . . . . . . . . . . . $2,647,315 $ 20,733 $ 71,876 $2,596,172
---------- -------- -------- ----------
---------- -------- -------- ----------
</TABLE>
F-15
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<CAPTION>
Gross Gross Estimated
1993 Amortized unrealized unrealized market
---- cost gains losses value
($000's) ($000's) ($000's) ($000's)
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of
U.S. government corporations
and agencies . . . . . . . . . . . . $ 374,797 $ 3,819 $ 638 $ 377,978
Obligations of U.S.
and political subdivisions . . . . . 3,705 1,106 -- 4,811
Debt securities issued by
foreign governments and
their agencies . . . . . . . . . . . 99,524 6,632 3 106,153
Corporate securities . . . . . . . . 2,070,066 107,643 4,514 2,173,195
Mortgage-backed
securities . . . . . . . . . . . . . 287,159 6,223 3,917 289,465
---------- -------- -------- ----------
Total. . . . . . . . . . . . . . . . $2,835,251 $125,423 $ 9,072 $2,951,602
---------- -------- -------- ----------
---------- -------- -------- ----------
</TABLE>
The amortized cost and estimated market value of debt securities at December 31,
1994 by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Amortized market
cost value
($000's) ($000's)
---------- ----------
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . $ 127,296 $ 130,795
Due after one year through five years . . . . . . 1,823,406 1,794,674
Due after five years through ten years. . . . . . 402,232 384,814
Due after ten years . . . . . . . . . . . . . . . 103,066 98,931
---------- ----------
2,456,000 2,409,214
Mortgage-backed securities. . . . . . . . . . . . 191,315 186,958
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . $2,647,315 $2,596,172
---------- ----------
---------- ----------
</TABLE>
Proceeds from the sale/maturity of debt securities during 1994, 1993 and
1992 were $2.7 billion, $1.7 billion and $3.9 billion, respectively. Gross
gains of $16.8 million, $44.5 million and $90.4 million and gross losses of
$49.8 million, $12.0 million and $20.8 million were realized on those sales
during 1994, 1993, and 1992, respectively.
The Company invests in both investment grade and non-investment grade
securities. The SVO of the NAIC rates fixed maturities held by insurers
(SVO rated securities accounted for approximately 93.6% and 93.0% of the
Company's total fixed maturities balances at both December 31, 1994 and
1993) for regulatory purposes and groups investments into six categories
ranging from highest quality bonds to those in or near default. The lowest
three NAIC categories represent, for the most part, high-yield securities
and are defined by the NAIC as including any security with a public agency
rating of B+ or B1 or less.
F-16
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
Included in "fixed maturities" are securities that are classified by the
NAIC as being in the lowest three rating categories. These approximated
1.5% and 1.6% of the Company's assets at December 31, 1994 and 1993,
respectively. The amount by which the market value of these securities
exceeded the carrying value was approximately $(.9) million and 1.0 million
at December 31, 1994 and 1993, respectively.
5. RELATED PARTY TRANSACTIONS
A. SERVICE AGREEMENTS
The Company, The Prudential, Pruco Life of New Jersey and Pruco Securities
Corporation, an indirect wholly-owned subsidiary of The Prudential, operate
under service and lease agreements whereby services of officers and
employees, supplies, use of equipment and office space are provided. The
net cost of these services allocated to the Company were $78 million, $98
million, and $71 million for the years ended December 31, 1994, 1993, and
1992, respectively.
In a reorganization of the parent's Individual Insurance Department,
effective January 1, 1993, the corporate staff of the Company was absorbed
by the parent. The costs associated with these employees, which were
previously borne by the Company, are now charged to the Company under the
service and lease agreements with the parent.
B. EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company is a wholly-owned subsidiary of The Prudential which sponsors a
defined benefit pension plan. The defined benefit pension plan is generally
based on career average earnings and credit length of service. The
Prudential's funding policy is to contribute annually the amount necessary
to satisfy the Internal Revenue Service contribution guidelines.
No pension expense for contributions to the plan was allocated to the
Company in 1994, 1993 or 1992 because the plan was subject to the full
funding limitation under the Internal Revenue Code.
POSTRETIREMENT LIFE AND HEALTH BENEFITS
The Prudential also sponsors postretirement defined benefit plans which
provide certain life insurance and health care benefits. Substantially all
employees may become eligible to receive a benefit if they retire after age
55 with at least 10 years of service. Prior to 1993, The Prudential's
policy was to fund the cost of providing these benefits in the years that
the employees were providing services to the Company. Effective for 1993,
The Prudential has recognized the cost of these benefits in accordance with
the accounting policy issued by the National Association of Insurance
Commissioners (NAIC). The NAIC's policy is similar to SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
except that the NAIC policy excludes non-vested employees and only allows
the transition obligation to be recognized immediately or amortized over
twenty years. The Prudential has elected to amortize its transition
obligation over twenty years. A provision for contributions to the
postretirement fund is included in the net cost of services allocated to
the Company discussed above for the years ended December 31, 1994, 1993 and
1992.
F-17
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
C. REINSURANCE
The Company currently has two reinsurance agreements in place with The
Prudential (the reinsurer). Specifically: reinsurance of a Group Annuity
Contract, whereby the reinsurer, in consideration for a single premium
payment by the Company, provides Reinsurance equal to 100% of all payments
due under the Contract; and, 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 ($2.5 million). These
agreements had no material effect on net income for the years ended
December 1994, 1993, and 1992.
D. OTHER TRANSACTIONS
A certificate of deposit issued by The Prudential Bank and Trust Company of
$50 million as of December 31, 1993 was not renewed in 1994. The Company
also received a $9 million payment settlement of a promissory note from
Pruco Inc. during 1993.
The Company has issued approximately 375 variable universal life contracts
to The Prudential for the purpose of funding non-qualified pension benefits
for certain employees. Included in insurance premiums and annuity
considerations for the years ended December 31, 1994, 1993 and 1992 are
respectively, $12 million, $12 million and $13 million, which are
attributable to these contracts.
6. DIVIDENDS
The Company is subject to Arizona law which limits the amount of dividends
that insurance companies can pay to stockholders. The maximum dividend
which may be paid in any 12 month period without notification or approval
is limited to the lesser of 10% of surplus as of December 31 of the
preceding year or the net gain from operations of the preceding calendar
year. Cash dividends may only be paid out of surplus derived from realized
net profits. Based on these limitations and the Company's surplus position
at December 31, 1994, the Company would be permitted a maximum of $60
million in dividend distributions in 1995, all of which could be paid in
cash, without approval from The State of Arizona Department of Insurance.
7. FAIR VALUE INFORMATION
The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies for only those accounts
for which fair value
F-18
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
disclosures are required. Considerable judgment is necessarily applied in
interpreting data to develop the estimates of fair value. Accordingly, the
estimates presented may not be realized in a current market exchange. The
use of different market assumptions and/or estimation methodologies could
have a material effect on the estimated fair values.
The following methods and assumptions were used in calculating the fair
values. For all other financial instruments presented in the table, the
carrying value is a reasonable estimate of fair value.
FIXED MATURITIES. Fair values for fixed maturities, other than private
placement securities, are based on quoted market prices or estimates from
independent pricing services. Fair values for private placement securities
are estimated using a discounted cash flow model which considers the
current market spreads between the U.S. Treasury yield curve and corporate
bond yield curve adjusted for the type of issue, its current quality and
its remaining average life. The fair value of certain non-performing
private placement securities is based on amounts provided by state
regulatory authorities.
MORTGAGE LOANS. The fair value of the commercial mortgage and agricultural
loan portfolio is primarily based upon the present value of the scheduled
cash flows discounted at the appropriate U.S. Treasury rate, adjusted for
the current market spread for a similar quality mortgage. For certain
non-performing and other loans, fair value is based upon the value of the
underlying collateral.
POLICY LOANS. The estimated fair value is calculated using a discounted
cash flow model based upon current U.S. Treasury rates and historical loan
repayments.
INVESTMENT-TYPE INSURANCE CONTRACT LIABILITIES. Fair values for the
Company's investment-type insurance contract liabilities are estimated
using a discounted cash flow model, based on interest rates currently being
offered for similar contracts.
The following table discloses the carrying amounts and estimated fair
values of the Company's financial instruments at December 31, 1994 and
1993.
<TABLE>
<CAPTION>
($000's) ($000's)
1994 1993
-------------------------- ---------------------------
Carrying Fair Carrying Fair
Value Value Value Value
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities $ 2,647,315 $ 2,596,172 $ 2,835,251 $ 2,951,602
Equity securities 3,326 3,326 2,788 2,788
Mortgage loans 71,919 71,805 56,184 58,738
Policy loans 493,862 448,617 420,271 416,243
Other long-term investments 4,044 4,044 2,753 2,753
Short-term investments 191,455 191,455 201,079 201,079
Financial Liabilities:
Investment-type
insurance contracts $ 794,691 $ 761,324 $ 1,053,025 $ 1,033,692
</TABLE>
8. CONTINGENCIES
Various lawsuits against the Company have arisen in the course of the
Company's business. In certain of these matters, large and/or indeterminate
amounts are sought. In the opinion of the Company, any ultimate liability
which would result from such litigation would not have a material adverse
effect on the Company's financial position.
F-19
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES
DECEMBER 31, 1994
( $000's )
<TABLE>
<CAPTION>
Amount
at which
shown on
Market the Balance
Type of investment Cost Value Sheet
-------------------------- -------------- ------------- ------------
<S> <C> <C> <C>
Fixed Maturities:
Bonds:
United States Government and government
agencies and authorities . . . . . . . $ 600,992 $ 576,601 $ 600,992
Foreign governments . . . . . . . . . . . 86,027 85,791 86,027
Public Utilities. . . . . . . . . . . . . 174,687 174,972 174,687
All other corporate bonds . . . . . . . . 1,783,448 1,756,651 1,783,448
Redeemable preferred stock. . . . . . . . 2,161 2,157 2,161
-------------- ------------- ------------
Total fixed maturities . . . . . . . 2,647,315 2,596,172 2,647,315
-------------- ------------- ------------
Equity Securities:
Common Stock. . . . . . . . . . . . . . . . . 4,531 2,765 2,765
Nonredeemable preferred stock . . . . . . . . 903 561 561
-------------- ------------- ------------
Total equity securities . . . . . . . . 5,434 3,326 3,326
Mortgage loans on real estate. . . . . . . . . . 71,919 XXXXXX 71,919
Real Estate. . . . . . . . . . . . . . . . . . . 7,189 XXXXXX 7,189
Policy Loans . . . . . . . . . . . . . . . . . . 493,862 XXXXXX 493,862
Other long-term investments. . . . . . . . . . . 4,044 XXXXXX 4,044
Short-term investments . . . . . . . . . . . . . 191,455 XXXXXX 191,455
-------------- ------------
Total investments. . . . . . . . . . . $ 3,421,218 $ 3,419,110
============== ============
</TABLE>
F-20
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE VI - SCHEDULE OF REINSURANCE
FOR YEAR ENDED DECEMBER 31, 1994
( $000's )
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed of amount
Gross other from other Net assumed to
Amount companies companies amount net
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Life insurance in force. . . . . . . . $ 48,003,675 $ 531,166 $ 0 $ 47,472,509 N/A
============= ============ ============ ============= ============
Life insurance premiums and . . . . . $ 613,237 $ 1,476 $ 59 $ 611,820 .010%
annuity considerations ============= ============ ============ ============= ============
</TABLE>
F-21
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE VI - SCHEDULE OF REINSURANCE
FOR YEAR ENDED DECEMBER 31, 1993
( $000's )
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed of amount
Gross other from other Net assumed to
Amount companies companies amount net
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Life insurance in force. . . . . . . .$ 48,837,477 $ 290,386 $ 0 $ 48,547,091 N/A
============= ============ ============ ============= ============
Life insurance premiums and. . . . . .$ 564,747 $ 847 $ 0 $ 563,900 N/A
annuity considerations ============= ============ ============ ============= ============
</TABLE>
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE VI - SCHEDULE OF REINSURANCE
FOR YEAR ENDED DECEMBER 31, 1992
( $000's )
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed of amount
Gross other from other Net assumed to
Amount companies companies amount net
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Life insurance in force. . . . . . . .$ 49,317,116 $ 168,915 $ 0 $ 49,148,201 N/A
============= ============ ============ ============= ============
Life insurance premiums and. . . . . .$ 497,610 $ 522 $ 0 $ 497,088 N/A
annuity considerations ============= ============ ============ ============= ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 2,647,315
<DEBT-MARKET-VALUE> 2,596,172
<EQUITIES> 3,326
<MORTGAGE> 71,919
<REAL-ESTATE> 7,189
<TOTAL-INVEST> 3,419,110
<CASH> 27,780
<RECOVER-REINSURE> 38
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 7,090,802
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 15,184
<POLICY-HOLDER-FUNDS> 2,253
<NOTES-PAYABLE> 0
<COMMON> 2,500
0
0
<OTHER-SE> 673,587
<TOTAL-LIABILITY-AND-EQUITY> 7,090,802
611,820
<INVESTMENT-INCOME> 245,977
<INVESTMENT-GAINS> (21,215)
<OTHER-INCOME> 13,259
<BENEFITS> 559,658
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 149,478
<INCOME-PRETAX> 140,705
<INCOME-TAX> 87,750
<INCOME-CONTINUING> 52,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,955
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
