<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
33-58482
For Quarter Ended June 30, 1996 Commission File Number 33-1079
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 04-2845273
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
80 Broad Street, New York, New York 10004
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 943-3855
----------------------
NONE
----------------------------------------------------
Former name, former address, and former fiscal year,
if changed since last report
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.
(1) Yes X No
(2) Yes X No
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H (1)
(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT PERMITTED BY INSTRUCTION H.
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
INDEX
Page
Number
Part I: Financial Information
Item 1: Financial Statements:*
Balance Sheets -
June 30, 1996 and December 31, 1995 3
Statements of Operations -
Three Months Ended June 30, 1996 and June 30, 1995 4
Statements of Operations -
Six Months Ended June 30, 1996 and June 30, 1995 5
Statements of Capital Stock and Surplus -
Six Months Ended June 30, 1996 and June 30, 1995 6
Statements of Cash Flows -
Six Months Ended June 30, 1996 and June 30, 1995 7
Notes to Unaudited Financial Statements 8
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Part II: Other Information
NONE
* The balance sheet at December 31, 1995 has been taken from the audited
financial statements at that date. All other statements are unaudited.
-2-
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
BALANCE SHEETS
(UNAUDITED) (SEE NOTE BELOW)
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
------------ ------------
Bonds $125,114,320 $132,026,064
Mortgage loans 43,134,383 51,843,936
Real estate 1,387,908 0
Policy loans 606,027 476,194
Cash 363,896 1,267,905
Investment income due and accrued 2,690,651 3,255,286
Other assets 323,592 443,663
------------ ------------
General account assets 173,620,777 189,313,048
------------ ------------
Separate account assets
Unitized 263,093,886 250,782,417
Non-unitized 80,956,984 81,110,554
------------ ------------
Total assets $517,671,647 $521,206,019
------------ ------------
------------ ------------
LIABILITIES
Policy reserves $ 24,797,523 $ 23,548,885
Annuity and other deposits 109,595,601 129,743,536
Accrued expenses and taxes 451,482 376,573
Other liabilities 788,818 906,238
Due to (from) parent and affiliates - net 1,021,978 (1,292,878)
Due to separate accounts 73,891 1,036,679
Interest maintenance reserve 1,534,735 1,648,375
Asset valuation reserve 1,710,143 1,545,857
------------ ------------
General account liabilities 139,974,171 157,513,265
------------ ------------
Separate account liabilities
Unitized 262,925,319 250,617,786
Non-unitized 80,956,984 81,110,554
------------ ------------
Total liabilities 483,856,474 489,241,605
------------ ------------
CAPITAL AND SURPLUS
Capital stock - Par value $1,000:
Authorized, issued and outstanding
2,000 shares 2,000,000 2,000,000
Surplus 31,815,173 29,964,414
------------ ------------
Total capital stock and surplus 33,815,173 31,964,414
------------ ------------
Total liabilities, capital stock and surplus $517,671,647 $521,206,019
------------ ------------
------------ ------------
Note: The balance sheet at December 31, 1995 has been taken from the audited
financials at that date.
See notes to unaudited financial statements.
-3-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
INCOME 1996 1995
------------ ------------
<S> <C> <C>
Premiums and annuity considerations $ 2,783,666 $ 3,124,693
Annuity and other deposit funds 3,191,354 12,917,230
Net investment income 3,758,326 4,667,728
Amortization of interest maintenance reserve 189,400 176,357
Realized losses on investments (599,526) (222,277)
Mortality and expense risk charges 865,104 726,103
------------ ------------
10,188,324 21,389,834
------------ ------------
BENEFITS AND EXPENSES
Increase in policy reserves 463,959 617,718
Decrease in liability for annuity and other deposit funds (10,192,146) (18,727,088)
Death, health benefits and annuity payments 1,984,363 2,111,892
Annuity and other deposit fund withdrawals 14,173,214 23,491,384
Surplus transfer to (from) separate account (1,153,280) 1,633,928
Transfers to non-unitized separate account 635,329 9,819,463
------------ ------------
5,911,439 18,947,297
General expenses 1,301,687 1,401,949
Commissions 583,165 866,779
Taxes, licenses and fees 224,269 215,509
------------ ------------
8,020,560 21,431,534
------------ ------------
NET INCOME (LOSS) FROM OPERATIONS BEFORE
FEDERAL INCOME TAX 2,167,764 (41,700)
Federal income tax expense (benefit) 473,324 (991,398)
------------ ------------
NET INCOME $ 1,694,440 $ 949,698
------------ ------------
------------ ------------
</TABLE>
See notes to unaudited financial statements.
-4-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
INCOME 1996 1995
------------ ------------
<S> <C> <C>
Premiums and annuity considerations $ 5,978,776 $ 5,577,604
Annuity deposit funds 5,734,214 35,969,744
Net investment income 7,314,973 9,767,045
Amortization of interest maintenance reserve 372,797 362,016
Realized losses on investments (599,526) (672,277)
Mortality and expense risk charges 1,701,903 1,415,510
------------ ------------
20,503,137 52,419,642
------------ ------------
BENEFITS AND EXPENSES
Increase in actuarial reserves 1,248,638 727,729
Decrease in liability for annuity and other deposit funds (20,147,935) (33,932,883)
Death, health benefits and annuity payments 3,931,702 4,379,226
Annuity deposit fund withdrawals 29,379,174 43,106,230
Surplus transfer to (from) separate account (962,788) 3,837,362
Transfers to non-unitized separate account 596,183 29,862,596
------------ ------------
14,044,974 47,980,260
General expenses 2,538,855 3,133,440
Commissions 1,267,283 2,040,263
Taxes, licenses and fees 400,615 341,962
------------ ------------
18,251,727 53,495,925
------------ ------------
NET INCOME (LOSS) FROM OPERATIONS BEFORE
FEDERAL INCOME TAX 2,251,410 (1,076,283)
Federal income tax expense (benefit) 735,453 (1,838,723)
------------ ------------
NET INCOME $ 1,515,957 $ 762,440
------------ ------------
------------ ------------
</TABLE>
See notes to unaudited financial statements.
-5-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CAPITAL STOCK AND SURPLUS
SIX MONTHS ENDED JUNE 30,
1996 1995
----------- -----------
CAPITAL STOCK $ 2,000,000 $ 2,000,000
PAID-IN SURPLUS
Balance, beginning of period 28,750,000 28,750,000
Transfer from special contingency reserve 750,000 0
----------- -----------
Balance, end of period 29,500,000 28,750,000
SPECIAL CONTINGENCY RESERVE
Balance, beginning of period 750,000 750,000
Transfer to paid-in-surplus (750,000) 0
----------- -----------
Balance, end of period 0 750,000
UNASSIGNED SURPLUS
Balance, beginning of period 464,414 (90,931)
Net income 1,515,957 762,440
Unrealized losses 474,526 0
Change in non-admitted assets 20,626 31,138
Change in separate account surplus 3,936 4,256
Change in asset valuation reserve (164,286) 119,885
----------- -----------
Balance, end of period 2,315,173 826,788
----------- -----------
TOTAL SURPLUS 31,815,173 30,326,788
----------- -----------
TOTAL CAPITAL STOCK AND SURPLUS $33,815,173 $32,326,788
----------- -----------
----------- -----------
See notes to unaudited financial statements.
-6-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from operations $ 1,515,957 $ 762,440
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH:
Increase in policy reserves 1,248,638 727,729
Decrease in liability for annuity and other deposit funds (20,147,935) (33,932,883)
Decrease in investment income due and accrued 564,635 638,535
Net accrual and amortization of discount and
premium on investments 108,673 122,463
Realized losses on investments 599,526 672,277
Change in non-admitted assets 20,626 31,138
Other 598,721 1,780,919
------------ ------------
Net cash used in operating activities (15,491,159) (29,197,382)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale and maturity of investments 40,082,037 71,937,645
Purchase of investments (23,880,322) (36,857,639)
Net change in short-term investments (1,614,565) (4,064,207)
------------ ------------
Net cash provided by investing activities 14,587,150 31,015,799
------------ ------------
Increase (decrease) in cash during the period (904,009) 1,818,417
Cash, beginning of period 1,267,905 (756,378)
------------ ------------
Cash, end of period $ 363,896 $ 1,062,039
------------ ------------
------------ ------------
</TABLE>
See notes to unaudited financial statements.
-7-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) GENERAL
In management s opinion all adjustments, which include only normal recurring
adjustments, necessary for a fair presentation of the financial statements
have been made.
(2) MANAGEMENT AND SERVICE CONTRACTS
The Registrant has agreements with Sun Life (Canada) which provide that Sun
Life (Canada) will furnish to the Registrant, as requested, personnel as well
as certain investment and administrative services on a cost reimbursement
basis. Expenses under these agreements amounted to approximately $454,000
and $878,000 for the three and six month periods in 1996 and approximately
$388,000 and $894,000 for the three and six month periods in 1995,
respectively.
-8-
<PAGE>
ITEM 2
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Registrant had net income of $1,694,000 and $1,516,000 for the three and
six month periods ended June 30, 1996 as compared to $950,000 and $762,000
for the same periods ended June 30, 1995. The $744,000 and $754,000 increase
between periods was due primarily to a decrease in the surplus transfer to
the separate account offset by a decrease in net investment income and an
increase in federal income tax expense.
Total income decreased by $11,202,000 and $31,917,000 for the three and six
month periods ended June 30, 1996 as compared with the same periods in 1995
primarily as a result of decreases in annuity sales and net investment
income. The decrease in annuity sales was due directly to lower crediting
rates, while the decrease in net investment income was due to a decline in
invested assets, the result of the Registrant selling fixed income securities
to cover maturing annuity deposit fund obligations.
Policyholder benefits decreased by $13,036,000 and $33,935,000 for the three
and six month periods ended June 30, 1996 as compared with the same periods
in 1995 as a result of decreases in transfers to the non-unitized separate
account and surplus transfer to the separate account. The decrease in
transfers to the non-unitized separate account was due to a decrease in sales
of the Registrant's market-value adjusted deferred annuity contract. The
decrease in the surplus transfer to the separate account was due primarily to
a decrease in annuity sales during the current period, as compared to 1995
when a high volume of fixed annuity sales, coupled with a steep drop in
interest rates, made it difficult to acquire assets to support the guarantees
of the product.
General expenses and commissions decreased by $384,000 and $1,368,000 for the
three and six month periods ended June 30, 1996 as a result of a decrease in
annuity sales.
The increase in federal income taxes for the three and six month periods
ended June 30, 1996 was due primarily to an under-accrued income tax
provision at June 30, 1995.
-9-
<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.
Sun Life Insurance and Annuity Company of New York
August 9, 1996
------------------------------------
David D. Horn, Senior Vice President
August 9, 1996
------------------------------------
Bonnie S. Angus, Secretay
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<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.
Sun Life Insurance and Annuity Company of New York
August 9, 1996 /s/ David D. Horn
------------------------------------
David D. Horn, Senior Vice President
August 9, 1996 /s/ Bonnie S. Angus
------------------------------------
Bonnie S. Angus, Secretay
-10-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM
10Q FOR THE YEAR-TO-DATE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 125,114,000
<DEBT-MARKET-VALUE> 126,822,000
<EQUITIES> 0
<MORTGAGE> 43,134,000
<REAL-ESTATE> 1,388,000
<TOTAL-INVEST> 170,242,000
<CASH> 364,000
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 517,672,000
<POLICY-LOSSES> 24,798,000
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 109,596,000
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,000,000
<OTHER-SE> 31,815,000
<TOTAL-LIABILITY-AND-EQUITY> 517,672,000
13,415,000
<INVESTMENT-INCOME> 7,688,000
<INVESTMENT-GAINS> (600,000)
<OTHER-INCOME> 0
<BENEFITS> 14,045,000
<UNDERWRITING-AMORTIZATION> 1,268,000
<UNDERWRITING-OTHER> 2,939,000
<INCOME-PRETAX> 2,251,000
<INCOME-TAX> 735,000
<INCOME-CONTINUING> 1,516,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,516,000
<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>
