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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 period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-37587
PRUCO LIFE INSURANCE COMPANY
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
ARIZONA 22-1944557
- ------------------------------ -------------------
(State or other jurisdiction, (IRS Employer
incorporation or organization) Identification No.)
213 WASHINGTON STREET, NEWARK, NEW JERSEY 07102
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(Address of principal executive offices) (Zip Code)
(201) 802-3780
----------------------------------------------------
(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 June 30, 1997. Common stock, par value of
$10 per share: 250,000 shares outstanding.
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<PAGE>
PRUCO LIFE INSURANCE COMPANY
INDEX TO FINANCIAL STATEMENTS
-----------------------------
INDEX
PAGE NO.
--------
COVER PAGE 1
INDEX 2
PART I -- FINANCIAL STATEMENTS
- ------------------------------
ITEM 1. PRUCO LIFE INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS:
STATEMENTS OF FINANCIAL POSITION -- JUNE 30, 1997 (UNAUDITED)
AND DECEMBER 31, 1996 3
STATEMENTS OF OPERATIONS (UNAUDITED) -- THREE AND SIX MONTHS
ENDED JUNE 30, 1997 AND 1996 4
STATEMENTS OF CHANGES IN EQUITY -- SIX MONTHS ENDED
JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996 5
STATEMENTS OF CASH FLOWS (UNAUDITED) -- SIX MONTHS ENDED
JUNE 30, 1997 AND 1996 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 8
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 AND REPORTS ON FORM 8-K 9
SIGNATURE PAGE 11
2
<PAGE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996
JUNE 30, DECEMBER 31,
1997 1996
----------- ----------
(000's)
ASSETS
Fixed maturities
Held to maturity $ 341,798 $ 405,731
Available for sale 2,324,663 2,236,817
Equity securities 4,111 3,748
Mortgage loans 42,755 46,915
Policy loans 667,832 639,782
Other long term investments 2,089 4,528
Short term investments 244,640 169,830
----------- ----------
Total invested assets 3,627,888 3,507,351
----------- ----------
Cash 63,019 73,766
Deferred policy acquisition costs 646,918 633,159
Premiums due 8,928 9,084
Accrued investment income 64,569 62,110
Receivable from affiliates 14,659 1,901
Federal income tax receivable -- 7,191
Reinsurance recoverable on unpaid losses 27,014 27,014
Other assets 65,876 20,000
Separate Account assets 6,446,678 5,336,851
----------- ----------
TOTAL ASSETS $10,965,549 $9,678,427
=========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Future policy benefits and other
policyholders' liabilities $ 583,076 $ 557,351
Policyholders' account balances 2,172,827 2,188,862
Deferred federal income tax payable 159,152 148,960
Federal income tax payable 11,544 --
Payable to affiliate 72,854 51,729
Other liabilities 120,623 55,090
Separate Account liabilities 6,411,412 5,277,454
----------- ----------
TOTAL LIABILITIES 9,531,488 8,279,446
----------- ----------
CONTINGENCIES
STOCKHOLDER'S EQUITY
Common Stock, $10 par value;
1,000,000 shares, authorized;
250,000 shares, issued and outstanding at
June 30, 1997 and December 31, 1996 2,500 2,500
Paid-in-capital 439,582 439,582
Net unrealized investment (losses) gains (1,635) 12,402
Retained earnings 993,614 944,497
----------- ----------
TOTAL STOCKHOLDER'S EQUITY 1,434,061 1,398,981
----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $10,965,549 $9,678,427
=========== ==========
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
<TABLE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
(000's)
<S> <C> <C> <C> <C>
REVENUES
Premiums $ 26,347 $ 24,297 $ 14,104 $ 13,742
Policy charges and fee income 156,641 156,621 80,308 77,816
Net investment income 124,032 122,204 64,811 61,353
Realized investment gains (losses) 6,973 4,923 2,054 (2,252)
Other income 12,832 7,807 6,982 5,068
-------- -------- -------- --------
TOTAL REVENUES 326,825 315,852 168,259 155,727
-------- -------- -------- --------
BENEFITS AND EXPENSES
Policyholders' benefits 98,545 82,615 49,213 42,793
Interest credited to policyholders'
account balances 53,042 55,519 28,338 26,710
Other operating costs and expenses 99,195 74,974 46,890 42,923
-------- -------- -------- --------
TOTAL BENEFITS AND EXPENSES 250,782 213,108 124,441 112,426
-------- -------- -------- --------
INCOME BEFORE INCOME TAX PROVISION 76,043 102,744 43,818 43,301
Income tax provision 26,926 35,961 14,220 15,156
-------- -------- -------- --------
NET INCOME $ 49,117 $ 66,783 $ 29,598 $ 28,145
======== ======== ======== ========
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
4
<PAGE>
<TABLE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996
<CAPTION>
NET
UNREALIZED
INVESTMENT TOTAL
COMMON PAID-IN- (LOSSES) RETAINED STOCKHOLDER'S
STOCK CAPITAL GAINS EARNINGS EQUITY
-------- -------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $ 2,500 $439,582 $30,836 $795,275 $1,268,193
Net income -- -- -- 149,222 149,222
Change in net unrealized
investment (losses)
gains during year -- -- (18,434) -- (18,434)
-------- -------- ------- -------- ----------
BALANCE, DECEMBER 31, 1996 2,500 439,582 12,402 944,497 1,398,981
Net income -- -- -- 49,117 49,117
Change in net unrealized
investment (losses)
gains during period -- -- (14,037) -- (14,037)
-------- -------- ------- -------- ----------
BALANCE, JUNE 30, 1997 $ 2,500 $439,582 $(1,635) $993,614 $1,434,061
======== ======== ======= ======== ==========
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
5
<PAGE>
<TABLE>
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
1997 1996
----------- -----------
(000's)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 49,117 $ 66,783
Adjustments to reconcile net income to net cash from
operating activities:
Increase in future policy benefits and other
policyholders' liabilities 25,725 27,247
General account policy fee income (17,424) (21,364)
Interest credited to policyholders' account balances 53,042 55,519
Net decrease (increase) in Separate Accounts 24,131 (11,281)
Net realized investment gains (6,973) (4,923)
Policy loans (28,050) (32,736)
Amortization and other non-cash items (3,849) 27,611
Change in:
Accrued investment income (2,459) (1,038)
Premiums due 156 (1,341)
Receivable from affiliates (12,758) 1,426
Deferred policy acquisition costs (13,759) (20,273)
Other assets (45,876) 4,361
Payable to affiliate 21,125 (2,274)
Federal income tax payable/receivable 18,735 35,330
Deferred federal income tax payable 10,192 1,791
Other liabilities 65,532 155,309
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES 136,607 280,147
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Held to maturity 66,858 51,018
Available for sale 1,614,135 2,248,642
Equity securities 3,773 866
Mortgage loans 4,080 2,217
Other long term investments 2,501 3
Investment real estate -- (11)
Payments for the purchase of:
Fixed maturities:
Held to maturity (3,150) (51,662)
Available for sale (1,705,135) (2,346,661)
Equity securities (3,884) (873)
Other long term investments (69) (698)
Net payments of short term investments (74,810) (112,228)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES (95,701) (209,387)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 712,561 201,411
Withdrawals (net of transfers to/from separate accounts) (764,214) (258,943)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES (51,653) (57,532)
----------- -----------
Net (decrease) increase in Cash (10,747) 13,228
Cash, beginning of year 73,766 41,435
----------- ===========
CASH, END OF PERIOD $ 63,019 $ 54,663
=========== ===========
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
6
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
JUNE 30, 1997
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES
A. PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements include the
accounts of Pruco Life Insurance Company (Pruco Life), a stock life insurance
company, and its subsidiaries (collectively, the Company). Pruco Life has two
subsidiaries, Pruco Life Insurance Company of New Jersey and The Prudential Life
Insurance Company of Arizona. Pruco Life is a wholly-owned subsidiary of The
Prudential Insurance Company of America (Prudential), a mutual life insurance
company. The Company markets individual life insurance and deferred annuities
primarily through Prudential's sales force in the United States, and in Taiwan.
All significant intercompany balances and transactions have been eliminated in
consolidation.
B. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with the instructions to Form 10-Q and do not
include all of the other information and disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year ended
December 31, 1996 included in the Company's Annual Report on Form 10-K for that
year.
The accompanying consolidated financial statements have not been audited by
independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial statements include
all adjustments, consisting only of normal recurring accruals, necessary to
summarize fairly the Company's financial position and results of operations. The
results of operations for the six months ended June 30, 1997 may not be
indicative of the results that may be expected for the year ending December 31,
1997.
C. RECLASSIFICATIONS
To facilitate comparisons with the current year, certain amounts in the prior
years have been reclassified.
2. CONTINGENCIES
Several actions have been brought against the Company on behalf of those persons
who purchased life insurance policies based on complaints about sales practices
engaged in by Prudential, the Company and agents appointed by Prudential and the
Company. Prudential has agreed to indemnify the Company for any and all losses
resulting from such litigation.
7
<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 and its
subsidiaries (collectively, the Company). Pruco Life Insurance Company is a
wholly owned subsidiary of The Prudential Insurance Company of America
(Prudential). The Company markets individual life insurance and annuities
primarily through Prudential's sales force in the United States and in Taiwan.
The company held $11.0 billion in assets at June 30, 1997, $6.4 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 policy
loans.
The Company's assets were $11.0 billion at June 30, 1997 compared to $9.7
billion at December 31, 1996. For the period ended June 30, 1997, net income
amounted to $49.1 million, a decrease of $17.7 million compared to the $66.8
million earned in the same period in 1996.
1. RESULTS OF OPERATIONS
(a) 1997 versus 1996
Premiums increased by $2.0 million for the period ended June 30, 1997, from
$24.3 million in 1996 to $26.3 million. This change is primarily due to
increased sales related to traditional life insurance products in our Taiwan
branch which continued to expand its business throughout 1997.
Realized investment gains increased to $7.0 million for the six months ended
June 30, 1997 from $4.9 million for the same period in 1996. This increase is a
result of current market conditions.
Other income increased $5.0 million for the period ended June 30, 1997 from the
same period in 1996. This increase is due to increased advisory fees
attributable to growth of Separate Account products and introduction of
Discovery Select.
Policyholders' benefits increased $15.9 million for the period ended June 30,
1997 to $98.5 million, as compared to $82.6 million in 1996. This increase is
attributable to increased mortality costs associated with the aging book of
business.
Other operating expenses increased $24.2 million for the period ended June 30,
1997 compared to the same period for 1996. This is attributable to operational
expenses associated with the sales activity of Discovery Select and Discovery
Preferred annuity products. In addition, to increase competitive positioning in
the market place, technological advancements are being made in the annuity
processing and customer service areas. Along with, enhanced product developments
and marketing strategies to create products to better suit our customer's needs.
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 the six months
ended June 30, 1997, and 1996 were $250.8 million, and $213.1 million,
respectively. Cash flows are anticipated to be sufficient to meet the Company's
liquidity needs for the foreseeable future.
3. CAPITAL RESOURCES
The primary components of the Company's total assets of $11.0 billion at
June 30, 1997 are as follows (as a percentage of total assets): fixed income
securities 24.3%, separate account assets (fixed income and equity securities)
58.8%, policy loans 6.1%, and other assets 10.8%.
8
<PAGE>
PART II
ITEM 1 LEGAL PROCEEDING
- -----------------------
Pruco Life Insurance Company 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 SECURITY HOLDERS
- ----------------------------------------------------------
Not Applicable
ITEM 5 OTHER INFORMATION
- ------------------------
Not Applicable
ITEM 6 EXHIBITS 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
3. Documents Incorporated by Reference
(i) The Articles of Incorporation of Pruco Life, as amended October 19,
1993, are incorporated herein by reference to Form S-6, Registration No.
333-07451, filed July 2, 1996 on behalf of the Pruco Life Variable
Appreciable Account; (ii) Bylaws of Pruco Life, as amended May 6, 1997
are appended to this form in accordance with EDGAR instructions.
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.
Market-Value Adjustment Annuity Contract, incorporated by reference to
Registrant's Form S-1 Registration Statement, Registration No.
33-61143, filed November 17, 1995.
10. None.
11. Not Applicable.
15. Not Applicable.
18. None.
19. Not Applicable.
20. Not Applicable.
9
<PAGE>
22. None.
23. None.
24. Not Applicable.
25. Not Applicable.
27. Exhibit 27, Financial Data Schedule appended to this form in
accordance with EDGAR instructions.
99. None
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 of the
undersigned, thereunto duly authorized.
PRUCO LIFE INSURANCE COMPANY
(Registrant)
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ESTHER H. MILNES President and Director August 14, 1997
- --------------------------
Esther H. Milnes
/s/ LINDA S. DOUGHERTY Vice President and Comptroller August 14, 1997
- -------------------------- and Chief Accounting Officer
Linda S. Dougherty
11
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
3(ii) By Laws of Pruco Life Insurance Company as amended through
May 6, 1997
27 Financial Data Schedule
Exhibit 3(ii)
BY-LAWS
OF
PRUCO LIFE INSURANCE COMPANY
as Amended Through May 6, 1997
ARTICLE I
GENERAL
Section 1.01. Name. The name of this corporation shall be PRUCO LIFE
INSURANCE COMPANY.
Section 1.02. Location. The location of the corporation and its principal
office shall be in Phoenix, Arizona, but it may have other offices at such
places throughout the world as the business of the corporation may require and
as the Board of Directors shall deem to be expedient.
Section 1.03. Seal. The corporate seal of the corporation shall be a
circular disc with the name of the corporation, the year of its organization,
and the word "Arizona" thereon.
Section 1.04. Fiscal Year. The fiscal year shall end on December 31.
ARTICLE II
The Stock
Section 2.01. Sale of Stock. The Board of Directors may sell and issue the
capital stock of the corporation to the full amount or number of shares
authorized by the Articles of Incorporation, in such amounts and upon such terms
of payment as from time to time shall be determined by the Board, and as may be
permitted by law.
Section 2.02. Stock Certificates. Certificates of stock shall, subject to
the provisions of the Articles of Incorporation, be in such form as may from
time to time be prescribed by the Board of Directors, shall be numbered and
entered in the books in the order issued, and shall be signed by the President
or a Vice President and the
<PAGE>
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
and sealed with the corporate seal. To the extent permitted by law, all or any
of such signatures and/or seal may be facsimile.
Section 2.03. Registration of Transfers. Transfers of shares shall be
registered upon the books of the corporation by the registered holder in person
or by attorney, duly authorized, and on surrender of the certificate or
certificates for such shares, properly assigned for transfer.
Section 2.04. Lost, Stolen or Destroyed Certificates. Each certificate
issued shall be surrendered before a new certificate in lieu thereof shall be
issued, except in the case of the loss, theft or destruction of a certificate,
in which case a new certificate may be issued in place of the certificate so
lost, stolen or destroyed upon the filing of an affidavit reciting the
circumstances of such loss, theft or destruction and upon the filing of a bond
of indemnity to the corporation in form and amount satisfactory to the
directors.
ARTICLES III
Meetings of Stockholders
Section 3.01. General. All meetings of the stockholders shall be held at
the principal office of the corporation in the State of Arizona or at such other
place as determined by the Board of Directors and stated in the notice or waiver
of notice of the meeting.
Section 3.02. Voting. At all meetings, a stockholder may be represented and
may vote in person or by a proxy in writing filed with the Secretary before
voting. No proxy shall be voted after eleven months from its date unless such
proxy provides for a longer period, but in no event shall a proxy be valid after
three years from the date of execution. All elections for directors shall be
decided by a plurality vote; all other questions shall be decided by a majority
vote, except as otherwise provided by the Articles of Incorporation or the laws
of the State of Arizona.
Section 3.03. Annual Meeting. The annual meeting of the stockholders shall
be held on the first Wednesday in May or each year, at an hour to be named in
the notice or waiver of notice of the meeting. If the date of the annual meeting
2
<PAGE>
falls on a legal holiday, the meeting shall be held on the next succeeding
business day.
Section 3.04. Special Meeting in Lieu of Annual Meeting. In case for any
reason the annual meeting is not held on the date specified in said Section
3.03, a meeting shall thereafter be held in lieu thereof and any business
transacted or elections held at such meeting shall be as valid as if transacted
or held at the annual meeting. Such meeting shall be called in the same manner
and as provided for special meetings of the stockholders.
Section 3.05. Special Meetings. Special meetings of the stockholders may be
called by the President or a Vice President, or by vote of the Board of
Directors, and shall be called by the Secretary or, the case of death, absence,
incapacity or refusal of the Secretary, by any other officer upon the written
application of one or more stockholders who are entitled to vote and who hold at
least a tenth part in interest of the capital stock entitled to vote at the
meeting, stating the time, place and purpose of the meeting.
Section 3.06. Quorum. Except as otherwise required by law, by the Articles
of Incorporation or by the By-Laws, the presence, in person or by proxy, or
stockholders holding a majority of the shares of the corporation entitled to
vote shall constitute a quorum at all meetings of the stockholders. In case a
quorum shall not be present at any meeting, a majority in interest of the
stockholders entitled to vote thereat, present in person or by proxy, shall have
power to adjourn the meeting sine die or, without notice other than announcement
at the meeting, to a stated time and place, until a quorum is present. At any
such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
Section 3.07. Notice of Meeting. A written or printed notice of all
stockholders' meetings, stating the place, date and time and purpose of said
meeting shall be given by the Secretary or an Assistant Secretary at least ten
days before such meeting to each stockholder entitled to vote, by leaving such
notice with him or at his residence or usual place of business or by mailing it,
postage prepaid, and addressed to such stockholder at his address as it appears
upon the books of the corporation, but no such notice of such meeting shall be
required if every stockholder entitled to notice thereof, or his attorney
thereunto authorized by a writing which is filed with the records of the
meeting, waives such notice, which such waiver may be executed and
3
<PAGE>
filed after such meeting has been held. The presence in person, by his attorney
or by proxy, of any person entitled to notice of such meeting shall be deemed a
waiver of such notice as to such person. Any person authorized hereunder to give
notice of any such meeting may make affidavit relative thereto, which, as to the
facts therein stated, shall be conclusive.
Section 3.08. Action Without Meeting. Any action required or permitted to
be taken at a meeting of stockholders by law or the Articles of Incorporation or
the By-Laws, may be taken without a meeting if all the stockholders entitled to
vote thereon consent thereto in writing.
ARTICLE IV
Directors
Section 4.01. General. The officers of the corporation shall consist of a
board of not less than five nor more than fifteen directors, the number to be
seven unless at the meeting at which they are elected and prior to balloting a
different number is fixed to be voted for, a President, one or more
Vice-Presidents, a Secretary, a Treasurer, a Comptroller, a Chief Actuary and
such other officers as the Board of Directors may find necessary or convenient
for the transaction of the business of the corporation.
Section 4.02. Election of Directors and Filling Vacancies. A Board of
Directors shall be elected by ballot at the annual meeting of the stockholders,
in accordance with the cumulative voting procedures prescribed by the laws of
Arizona. The directors shall serve until the next annual meeting of stockholders
and until their successors have been elected and qualified, but the Board of
Directors may fill any vacancy occurring in the office of director from whatever
cause in the interval between the annual meetings of the stockholders by
majority vote of the remaining directors in office, even though there may not be
a quorum, provided, however, that the stockholders entitled to vote may at a
stockholders' meeting called for that purpose fill any such vacancy in the Board
of Directors, if not already filled, or if already filled, substitute some other
person to fill such vacancy, in which case the term of office of the person so
elected by the Board of Directors to fill such vacancy shall forthwith
terminate. The holding of stock in the corporation shall not be a necessary
qualification for the election as a director of the corporation.
4
<PAGE>
Section 4.03. Increase or Decrease of Number. The number of directors may
be increased or decreased within the limits prescribed by Section 4.01 of these
By-Laws by vote of the stockholders at an annual or special meeting of the
stockholders, and the additional directors may be chosen at any such meeting to
hold office until the next annual election and until their successors are
elected and qualify.
Section 4.04. Resignations. Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the Board of Directors.
Section 4.05. Removal. Any director may be removed for cause at any annual
meeting of stockholders, or at a special meeting called for that purpose.
Section 4.06. General Powers. The property and business of the corporation
shall be managed by the Board of Directors, who shall have the power to control
and manage all of the affairs of the corporation and to exercise, in addition to
the powers and authorities by these By-Laws or by the Articles of Incorporation
expressly conferred upon them, all such powers as may be exercised, and to do
all such things as may be done by the corporation which are not expressly
reserved to the stockholders, subject to the provisions of the statutes and laws
of the State of Arizona, and it may restrict, enlarge or otherwise modify the
powers and duties of any or all of the officers of this corporation.
Section 4.07. Committees. The Board of Directors may, by resolution or
resolutions adopted by a majority of the entire Board, appoint one or more
committees, each committee to consist of three or more directors of the
corporation. Any such committee, to the extent provided in the resolution or in
the By-Laws of the corporation, shall have and may exercise all the authority of
the Board of Directors except that no such committee shall
(a) Make, alter or repeal any By-Law of the corporation;
(b) elect, appoint, or remove any director;
(c) submit to stockholders any action that requires stockholders' approval;
or
5
<PAGE>
(d) amend or repeal any resolution theretofore adopted by the Board.
Section 4.08. Quorum. A majority of the total number of directors elected
at the last election, but in no case less than three, shall constitute a quorum
for the transaction of business, but a lesser number may adjourn the meeting
sine die or to a stated time and place, and a majority of the members present at
any meeting at which a quorum is present shall decide any question brought
before such meeting except as otherwise may be provided by law. Any director
shall be counted present at any regular or special meeting of directors and
voting with the majority, if and when such directors shall subsequently approve
the minutes of such meeting and sign the same in the minute book; and such
signature shall be sufficient to make a quorum at such meeting, if necessary.
Section 4.09. Regular Meeting. Regular meetings of the Board of Directors
shall be held without notice following the adjournment of the annual meeting of
the stockholders or any special meeting held in lieu thereof on the same day at
the same time and place as such annual or special meeting and on such other day
and at such other time or place as shall be determined by the Board by prior
resolutions.
Section 4.10. Special Meeting. Special meetings of the Board may be called
by the Chairman of the Board or the President or, at the request of three
members of the Board of Directors, by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer. Notice of any special meeting shall be
given to each director stating the time, place and purpose of the meeting in one
of the following ways: either (a) by communicating actual notice thereof to such
director at least twenty-four hours before the time of such meeting, or (b) by
written notice thereof left at or telegraphed to a usual place of business of
such director or to his residence for the time being, in either case at least
forty-eight hours before the time of such meeting, or (c) by placing a written
notice thereof in the mail, postage prepaid, addressed to a usual place of
business of such director or to his legal residence or to his residence for the
time being, in any such case at least seventy-two hours before the time of such
meeting.
Section 4.11. Waiver of Notice. Notice of any meeting of the Board of
Directors and of the business to be transacted thereat may be waived in writing
before or after
6
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such meeting by any director, and the presence of any director at any meeting of
the Board shall be deemed a waiver of notice by him of the meeting and of the
business to be transacted thereat unless objection is made by him at the time
and noted on the records of the meeting of the Board. Any person authorized
hereunder to give notice of any such meeting may make affidavit relative
thereto, which, as to the facts therein stated, shall be conclusive.
Section 4.12. Action Without Meeting. A resolution in writing, signed by
all members of the Board, or any committee thereof, as the case may be, shall be
deemed to be the action of the Board or such committee as therein expressed,
with the same force and effect as if the same had been passed at a duly convened
meeting; and the Secretary shall record such resolution in the minute book under
its proper date.
ARTICLE V
Officers
Section 5.01. Officers. The officers of the corporation shall be a
President, a Secretary, a Comptroller, a Chief Actuary and a Treasurer, all of
whom shall be elected by the Board of Directors and who shall hold office,
subject to the By-Laws, until their successors are elected and qualified. In
addition, the Board of Directors may elect a Chairman of the Board, one or more
Vice Presidents and such Assistant Secretaries, Assistant Treasurer, Assistant
Actuaries and Assistant Comptrollers as the Board may deem advisable. None of
the officers of the corporation need be directors. Vacancies occurring among the
officers shall be filled by the directors. Any officer may be removed by the
Board, with or without cause, at any time.
Section 5.02. Other Officers. In addition to the officers named in the
preceding By-Laws, the Board of Directors may, without limitation, establish
such other officers as it may from time to time find necessary or convenient for
the transaction of the corporation's business and may provide for the
appointment or election of officers to fill such offices and fix their powers,
duties and terms of office.
Section 5.03. Bonds. The directors may require the Treasurer and any and
all other officers to give bonds to the corporation with good and sufficient
surety for the faithful performance of their respective duties and offices.
7
<PAGE>
Section 5.04. Qualification, Absence or Disability of Officers. The holding
of stock in the corporation shall not be a necessary qualification for election
as an officer of the corporation. In the case of the absence or disability of
any officer of the corporation, the Board of Directors may appoint some other
person to exercise for the time being the powers and perform the duties of such
officer in his place and the authority of such person shall continue until it is
revoked by the Board.
Section 5.05. Chairman of the Board. The Chairman of the Board, if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
Section 5.06. President. The President shall be the chief executive officer
of the corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the
Board, at all meetings of the Board of Directors. He shall have absolute power
to supervise and direct the business of the corporation, subject only to the
power and authority of the Board of Directors and shall, subject to the power of
the Board, have power to appoint, remove and fix the compensation of all persons
employed or to be employed by the corporation in any capacity whatsoever
excepting the officers elected by the Board of Directors, and shall have such
other powers as may be prescribed by the Board or the By-Laws.
Section 5.07. Vice President. The Vice President, or if more than one, the
Vice Presidents in the order established by the Board of Directors, shall in the
absence or incapacity of the President, perform the duties of the President. In
other respects, each Vice President shall exercise such powers and perform such
duties as may be prescribed by the President, the Board of Directors or the
By-Laws.
Section 5.08. Secretary. The Secretary shall keep the minutes of the
meetings of the Board of Directors and any committees thereof and of the
stockholders. He shall have the custody of the seal of the corporation and shall
affix the seal to documents when authorized to do so. He shall perform all other
duties usual to that office, and shall also perform such other duties and have
such powers as may be prescribed or assigned to him from time to time by the
President, the Board of Directors or the By-Laws.
8
<PAGE>
Section 5.09. Treasurer. The Treasurer shall, except as may be otherwise
provided in the By-Laws or by the Board of Directors, perform all the duties
customary to that office, have the care and custody of the funds and securities
of the corporation and deposit the same with such depositories as the Board of
Directors may designate. The Treasurer shall also perform such other duties and
have such powers as may be prescribed or assigned to him from time to time by
the President, the Board of Directors or the By-Laws.
Section 5.10. Comptroller. The Comptroller shall supervise the accounts of
the corporation, shall have supervision over and responsibility for the books,
records, accounting and system of accounting and auditing in each office of the
corporation, and shall perform such other duties as may be assigned to him by
the President, the Board of Directors or the By-Laws.
Section 5.11. Chief Actuary. The Chief Actuary shall make calculations and
tables, shall audit the insurance portion of the annual statements, collect and
arrange data, books, documents, tables and official statements upon the business
of insurance and annuities, and perform such other acts, which may be of an
executive character, as may be required by the President, the Board of Directors
or the By-Laws.
Section 5.12. Assistant Officers. Assistant Secretaries, Treasurers,
Comptrollers, and Actuaries, if any, shall be elected and shall have such powers
and shall perform such duties as shall be assigned to them, respectively, by the
President, the Board of Directors or the By-Laws.
ARTICLE VI
Execution of Contracts, Checks, Etc.
Section 6.01. Execution of Insurance and Annuity Contracts. The President
or a Vice President and the Secretary or an Assistant Secretary shall execute
all contracts of insurance and annuity either by signing such contracts manually
or by causing to be thereto affixed their respective facsimile signatures duly
adopted by each of them for the purpose with the approval of the Board of
Directors. In case any officer, as aforesaid, who shall have signed a contract
form or whose facsimile signature shall have been affixed thereto shall cease to
be such officer by reason of
9
<PAGE>
death, or otherwise before such contract shall have been issued and delivered,
such contract may nevertheless be issued and delivered unless the Board of
Directors shall otherwise determine, and any such contract so issued and
delivered shall be as binding upon the corporation as though every officer who
signed the same or whose facsimile signature was affixed thereto, as aforesaid,
had continued to be such officer of the corporation.
Section 6.02. Checks, Etc. All checks, drafts or orders for the payment of
money shall be signed by such officer or officers or agent or agents, and in
such manner, as shall be determined from time to time by the Board of Directors.
Section 6.03. Execution of Other Instruments. The President or any one of
the Vice Presidents shall have power to execute on behalf of the corporation all
instruments, deeds, contracts and other corporate acts and papers, subject only
to the provisions of Sections 6.01 and 6.02 of these By-Laws.
ARTICLE VII
Conflicting Interests
No director, officer or employee of the Corporation at Manager level or
higher shall have any position with or a substantial interest in any other
enterprise operated for profit, (other than The Prudential Insurance Company of
America or any direct or indirect subsidiary thereof) the existence of which
would conflict or might reasonably be supposed to conflict with the proper
performance of his or her Corporate responsibilities, or, which might tend to
affect his or her independence of judgment with respect to transactions between
the Corporation and such other enterprise.
If a director or any such officer or employee has a position with or
substantial interest in another such enterprise, which, when acquired, did not
create such an actual or apparent conflict of interest, he or she shall make
timely disclosure of such position or interest to the Board of Directors when he
or she learns that there is an impending transaction between such enterprise and
the Corporation or The Prudential Insurance Company of America or any subsidiary
or affiliate of either the Corporation or Prudential that might create such an
actual or apparent conflict.
10
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The Board of Directors, which may act through an appropriate committee or
sub-committee, shall adopt such regulations and procedures as shall from time to
time appear to it sufficient to secure compliance with the above policy.
ARTICLE VIII
Indemnification
Every former and present officer and director of the corporation shall be
indemnified by the corporation against all expenses incurred by him, including
legal fees, or judgments or penalties rendered or levied against him in a legal
action brought against him for actions or omissions alleged to have been
committed by him while acting within the scope of his employment as an officer
or director of the corporation, or in the settlement of any such proceedings,
whether or not he is an officer or director at the time such expenses are
incurred, judgments or penalties are rendered or levied and settlement made,
provided that the Board of Directors shall determine in good faith that he did
not act, fail to act or refuse to act willfully or with gross negligence or with
fraudulent or criminal intent in regard to the matter involved in the action;
and further provided that in the event of a settlement, the indemnification
herein provided shall apply only if the Board of Directors shall approve such
settlement and reimbursement and determine in good faith that such settlement
and reimbursement is in the best interest of the corporation. The foregoing
right of indemnification shall be in addition to and not exclusive of all other
rights to which such officer or director may be entitled.
Pursuant to a resolution of the Board of Directors of the corporation, the
corporation may, subject to the same qualifications, also indemnify (i) any one
or more present or future members of a variable contract account committee
established pursuant to subsection E of A.R.S. (2C-651 and (ii) any one or more
present or future directors, trustees or officers of any other corporation,
which members, directors, trustees or officers shall be serving as such at the
request of the corporation because of the corporation's interest in such
variable contract account or other corporation, or the legal representative of
any such member, director, trustee or officer, against such costs, expenses and
counsel fees; provided that, subject to renewal by resolution of the Board of
Directors of the corporation, any
11
<PAGE>
such indemnification of any such member, director, trustee or officer shall be
in respect of action taken or omitted by him, as such, during a period of not
more than one year, except that, if the period prior to the first annual meeting
of persons having voting rights in respect of such variable contract account or
of stockholders of such corporation shall be longer than one year, such
indemnification may be in respect of action taken or omitted by him during such
period.
Any right to indemnification provided by or pursuant to the foregoing
provisions of this By-Law shall not be exclusive of any other rights to which
any such member, director, trustee or officer or his estate or legal
representative may be entitled as a matter of law and shall inure to the benefit
of the estate or legal representative of a deceased member, director, trustee or
officer.
ARTICLE IX
Amendment of By-Laws
The By-Laws may be altered or repealed and new By-Laws may be made by vote
of the stockholders at any meeting of the stockholders. The Board of Directors
may also alter or repeal the By-Laws and make new By-Laws at any meeting of the
Board of Directors; provided, however, that any By-Laws made by the Board of
Directors may be altered or repealed, and new By-Laws made by the stockholders.
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
ARTICLE 7 OF REGULATION S-X
PRUCO LIFE INSURANCE COMPANY
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0
0
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