<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 07102-2992
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 802-6149
----------------------------------------------------
(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 May 15, 1995: Common stock, par value of $10 per
share: 250,000 shares outstanding
<PAGE>
PRUCO LIFE INSURANCE COMPANY
(Registrant)
INDEX
Page
No.
Cover Page -
Index 2
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Statements of Financial Position - March 31, 1995
(Unaudited) and December 31, 1994 3
Statements of Operations (Unaudited) -
Periods Ended March 31, 1995 and 1994 4
Statements of Cash Flows (Unaudited) -
Periods Ended March 31, 1995 and 1994 5
Notes to the Consolidated Financial Statements
(Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Change in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of
Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits, Financial Statements and Reports on
Form 8-K 9
Signature Page 11
2
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1995 1994
---------- ----------
($000's)
<S> <C> <C>
ASSETS
Fixed maturities (market value $2,569,116
and $2,596,172). . . . . . . . . . . . . $2,571,814 $2,647,315
Equity securities (cost $5,517 and
$5,434) . . . . . . . . . . . . . . . . 6,049 3,326
Mortgage loans. . . . . . . . . . . . . . . 65,488 71,919
Investment in real estate . . . . . . . . . 4,130 7,189
Policy loans. . . . . . . . . . . . . . . . 507,830 493,862
Other long-term investments . . . . . . . . 4,325 4,044
Short-term investments. . . . . . . . . . . 136,262 191,455
---------- ----------
Total Investments. . . . . . . . . . . . 3,295,898 3,419,110
Cash. . . . . . . . . . . . . . . . . . . . 33,724 27,780
Accrued investment income . . . . . . . . . 56,253 59,382
Premiums due and deferred . . . . . . . . . 17,273 16,821
Receivable from affiliates. . . . . . . . . 7,642 7,517
Federal income taxes-from affiliate . . . . - 23,306
Other assets. . . . . . . . . . . . . . . . 20,601 25,102
Assets held in Separate Accounts. . . . . . 3,696,022 3,511,784
---------- ----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . $7,127,413 $7,090,802
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy liabilities and insurance reserves:
Future policy benefits and claims . . . . $2,593,049 $2,767,552
Other policy claims and benefits payable. 16,199 15,184
Interest Maintenance Reserve (IMR). . . . 19,822 21,802
Payable to affiliates . . . . . . . . . . . 31,484 30,257
Federal income taxes-to affiliate . . . . . 871 -
Other liabilities . . . . . . . . . . . . . 118,642 131,695
Asset Valuation Reserve (AVR) . . . . . . . 28,773 23,690
Liabilities related to Separate Accounts . . 3,605,647 3,424,535
---------- ----------
TOTAL LIABILITIES . . . . . . . . . . . . . . 6,414,487 6,414,715
---------- ----------
STOCKHOLDER'S EQUITY:
Common Stock, $10 par value; authorized,
1,000,000 shares, issued and outstanding,
250,000 shares . . . . . . . . . . . . . . 2,500 2,500
Paid-in capital . . . . . . . . . . . . . . . 439,582 439,582
Unassigned surplus . . . . . . . . . . . . . 270,844 234,005
---------- ----------
TOTAL STOCKHOLDER'S EQUITY. . . . . . . . . . . 712,926 676,087
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY. . . $7,127,413 $7,090,802
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Periods Ended March 31,
-------------------------------
1995 1994
---------- -----------
($000's)
<S> <C> <C>
REVENUE
Premiums and annuity considerations . . . $ 139,974 $ 152,975
Net investment income . . . . . . . . . . 63,604 59,522
Net realized investment(losses) . . . . . (1,210) (909)
Other income. . . . . . . . . . . . . . . 3,660 2,236
---------- -----------
TOTAL REVENUE . . . . . . . . . . . . . . 206,028 213,824
---------- -----------
BENEFITS AND EXPENSES
Current and future benefits and claims . 116,324 133,715
Commission expenses. . . . . . . . . . . 6,206 7,414
General, administrative and other
expenses . . . . . . . . . . . . . . . 27,547 23,447
---------- -----------
TOTAL BENEFITS AND EXPENSES . . . . . . . 150,077 164,576
---------- -----------
Income before provision in lieu of
federal income tax . . . . . . . . . . 55,951 49,248
Provision in lieu of federal
income tax . . . . . . . . . . . . . . (20,470) (17,999)
---------- -----------
NET INCOME . . . . . . . . . . . . . . . $ 35,481 $ 31,249
---------- -----------
---------- -----------
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1995 1994
---------- ----------
($000's)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income. . . . . . . . . . . . . . . $ 35,481 $ 31,249
Adjustments to reconcile net income
to net cash from operations:. . . . . (170,423) (9,307)
---------- ----------
CASH FLOW FROM OPERATING ACTIVITIES . . . (134,942) 21,942
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from the sale/maturity of:
Fixed maturities. . . . . . . . . . . 540,378 639,456
Equity securities . . . . . . . . . . 215 -
Mortgage loans. . . . . . . . . . . . 6,461 92
Other long-term investments . . . . . 55 70
Net proceeds of short-term
investments . . . . . . . . . . . . 55,251 -
Investment in real estate . . . . . . 2,925 -
Payments for the purchase of:
Fixed maturities. . . . . . . . . . . (463,750) (596,510)
Equity securities . . . . . . . . . . (313) -
Other long-term investments . . . . . (336) (307)
Net proceeds (payments) of short-term
investments . . . . . . . . . . . . - (61,227)
---------- ----------
CASH FLOW FROM (USED FOR) INVESTING
ACTIVITIES . . . . . . . . . . . . . . 140,886 (18,426)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Net increase (decrease) in Cash . . . . 5,944 3,516
Cash, beginning of year . . . . . . . . 27,780 671
---------- ----------
CASH, END OF PERIOD . . . . . . . . . . . $ 33,724 $ 4,187
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash received in lieu of income taxes.. $ - $ 3,030
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
FOR THE PERIODS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
1. GENERAL
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles (GAAP), which are considered
statutory accounting practices for a wholly owned stock subsidiary of a mutual
life insurance company. 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 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.
Certain financial information which is normally included in financial
statements, prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes, has been
omitted. The financial statements for the three months ended March 31, 1995 and
1994 include all adjustments (consisting of only normal recurring accruals)
which, in the opinion of management, are necessary for a fair presentation of
results for that interim period. The results for the three months ended March
31, 1995 and 1994, are not necessarily indicative of the results for a full
year. These statements should be read in conjunction with the consolidated
financial statements and notes thereto included on Form 10-K for the fiscal year
ended December 31, 1994.
6
<PAGE>
ITEM 2. 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). 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. The Company held over $7 billion in assets at March
31, 1995, $3.7 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.
1. RESULTS OF OPERATIONS (FOR THE THREE MONTHS ENDED MARCH 31, 1995, COMPARED
WITH THE THREE MONTHS ENDED MARCH 31, 1994)
Net income for the three month period ended March 31, 1995 was $35 million.
This represents a $4 million increase over the same period in 1994.
Premiums and annuity considerations decreased from $153 million for the three
month period ended March 31, 1994 to $140 million for the same period in
1995. This decrease is primarily due to the decline in first year premiums
for certain life insurance contracts.
Net investment income increased from $60 million for the three month period
ended March 31, 1994 to $64 million for the same period ending March 31, 1995.
This growth was due primarily to the increase in income generated by mortgage
and policy loans. The lower invested asset base compared to the same period in
1994 was offset by a higher rate of return for the portfolio.
Current and future benefits and claims decreased $17 million for the three
month period ended March 31, 1995, from the same period in 1994. This was
primarily driven by the change in reserves which decreased from
$(129) million for the three month period ended March 31, 1994 to $(184)
million for the three month period ended March 31, 1995. The lower change in
reserves resulted from less new business, and higher benefit and withdrawal
activity. Withdrawals totaled $233 million for the three month period ended
March 31, 1994 and $267 million for the three month period ended
March 31, 1995. A portion of the withdrawal activity, which is inversely
related to reserve levels, is due to contractholders exercising a provision
included in the contract which allows withdrawal of funds 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).
Total expenses for the three month period ended March 31, 1995 increased by $3
million from the same period in 1994. General, administrative, and other
expenses for the period ended March 31, 1995, increased $4 million when compared
to the same period in 1994, due to the increase in costs being allocated by The
Prudential. Offsetting this increase was an decrease in commission expense of
$1.2 million from the same period in 1994, which is consistent with the decrease
in first year premiums.
Provision in lieu of federal income taxes increased $2 million from the same
period in 1994. This increase is proportional to the increase in income before
taxes.
7
<PAGE>
2. INVESTMENTS
MORTGAGE LOANS. The balance of mortgage loans at March 31, 1995, was $65
million, a $6.4 million decrease from the end of 1994. Mortgage loans are
carried at the lower of unpaid principal balance or fair value of the
underlying property. Currently, the Company has two loans with restructured
terms in the amount of $7.1 million.
REAL ESTATE. As of March 31, 1995, the Company's investment in real estate was
$4 million. Real estate is carried at the lower of cost or fair value less
encumberances. Pruco Life sold one property during the first quarter of 1995 for
$3.1 million, accounting for the decrease in this asset category since the
beginning of the year.
8
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
Pruco Life is not involved in any litigation that is expected to have a material
effect.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No actions were taken during the first quarter of 1995.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements of registrant and subsidiaries are
listed on pages 3-6 hereof and are filed as part of this Report.
(a)(3) EXHIBITS
REGULATION S-K
2. Not applicable.
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.
11. Not applicable.
9
<PAGE>
15. Not applicable.
18. None.
19. Not applicable.
20. Not applicable.
23. None.
24. Not applicable.
25. Not applicable.
28. None.
(b) Reports on 8-K
No reports on Form 8-K were filed during the first quarter of 1995.
10
<PAGE>
SIGNATURES
Pursuant to the requirements 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)
Signature Title Date
- ---------- ------- ------
/s/ Esther H. Milnes President and Director May 15, 1995
- -----------------------
Esther H. Milnes
/s/ Stephen P. Tooley Vice President and Comptroller May 15, 1995
- -----------------------
Stephen P. Tooley
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 2,571,814
<DEBT-MARKET-VALUE> 2,596,116
<EQUITIES> 6,049
<MORTGAGE> 65,488
<REAL-ESTATE> 4,130
<TOTAL-INVEST> 3,295,898
<CASH> 33,724
<RECOVER-REINSURE> 137
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 7,127,413
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 16,199
<POLICY-HOLDER-FUNDS> 2,904
<NOTES-PAYABLE> 0
<COMMON> 2,500
0
0
<OTHER-SE> 710,426
<TOTAL-LIABILITY-AND-EQUITY> 7,127,413
139,974
<INVESTMENT-INCOME> 63,604
<INVESTMENT-GAINS> (1,210)
<OTHER-INCOME> 3,660
<BENEFITS> 116,324
<UNDERWRITING-AMORTIZATION> 6,206
<UNDERWRITING-OTHER> 27,547
<INCOME-PRETAX> 55,951
<INCOME-TAX> 20,470
<INCOME-CONTINUING> 35,481
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,481
<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>
