<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 September 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
----------------------------
----------------------------------------------------
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 -
September 30, 1996 and December 31, 1995 3
Statements of Operations -
Three Months Ended September 30, 1996 and
September 30, 1995 4
Statements of Operations -
Nine Months Ended September 30, 1996 and
September 30, 1995 5
Statements of Capital Stock and Surplus -
Nine Months Ended September 30, 1996 and
September 30, 1995 6
Statements of Cash Flows -
Nine Months Ended September 30, 1996 and
September 30, 1995 7
Notes to Unaudited Financial Statements 8
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)
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
------------ ------------
Bonds $ 91,419,003 $132,026,064
Mortgage loans 42,652,692 51,843,936
Real estate 1,369,771 0
Policy loans 647,896 476,194
Cash 311,870 1,267,905
Investment income due and accrued 2,177,769 3,255,286
Other assets 5,730,604 443,663
------------ ------------
General account assets 144,309,605 189,313,048
------------ ------------
Separate account assets
Unitized 277,315,881 250,782,417
Non-unitized 80,161,606 81,110,554
------------ ------------
Total assets $501,787,092 $521,206,019
------------ ------------
------------ ------------
LIABILITIES
Policy reserves $ 24,555,229 $ 23,548,885
Annuity and other deposits 79,278,807 129,743,536
Accrued expenses and taxes 603,947 376,573
Other liabilities 1,697,773 906,238
Due to (from) parent and affiliates - net 2,562,044 (1,292,878)
Due to (from) separate accounts (5,717,310) 1,036,679
Interest maintenance reserve 1,341,598 1,648,375
Asset valuation reserve 1,512,677 1,545,857
------------ ------------
General account liabilities 105,834,765 157,513,265
------------ ------------
Separate account liabilities
Unitized 277,145,218 250,617,786
Non-unitized 80,161,606 81,110,554
------------ ------------
Total liabilities 463,141,589 489,241,605
------------ ------------
CAPITAL AND SURPLUS
Capital stock - Par value $1,000:
Authorized, issued and outstanding
2,000 shares 2,000,000 2,000,000
Surplus 36,645,503 29,964,414
------------ ------------
Total capital stock and surplus 38,645,503 31,964,414
------------ ------------
Total liabilities, capital stock and surplus $501,787,092 $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 SEPTEMBER 30,
INCOME 1996 1995
------------- -------------
<S> <C> <C>
Premiums and annuity considerations $ 2,915,344 $ 2,984,454
Annuity and other deposit funds 4,679,199 4,472,087
Net investment income 2,760,560 4,509,944
Amortization of interest maintenance reserve 163,422 189,274
Realized losses on investments (137,029) (677,723)
Mortality and expense risk charges 904,715 778,353
------------- -------------
11,286,211 12,256,389
------------- -------------
BENEFITS AND EXPENSES
(Decrease) increase in policy reserves (242,294) 500,221
Decrease in liability for annuity and other deposit funds (30,316,794) (16,656,867)
Death, health benefits and annuity payments 3,635,689 2,582,284
Annuity and other deposit fund withdrawals 33,057,052 23,290,856
Surplus transfer from separate account (5,791,201) (2,102,070)
Transfers to non-unitized separate account 1,973,456 166,284
------------- -------------
2,315,908 7,780,708
General expenses 1,350,234 1,260,125
Commissions 851,401 702,453
Taxes, licenses and fees 166,792 93,291
------------- -------------
4,684,335 9,836,577
------------- -------------
NET INCOME FROM OPERATIONS BEFORE FEDERAL INCOME TAX 6,601,876 2,419,812
FEDERAL INCOME TAX EXPENSE 1,867,330 2,954,370
------------- -------------
NET INCOME (LOSS) $ 4,734,546 $ (534,558)
------------- -------------
------------- -------------
</TABLE>
See notes to unaudited financial statements.
-4-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
INCOME 1996 1995
------------- -------------
<S> <C> <C>
Premiums and annuity considerations $ 8,894,120 $ 8,562,058
Annuity deposit funds 10,413,413 40,441,831
Net investment income 10,075,533 14,276,989
Amortization of interest maintenance reserve 536,219 551,290
Realized losses on investments (736,555) (1,350,000)
Mortality and expense risk charges 2,606,618 2,193,863
------------- -------------
31,789,348 64,676,031
------------- -------------
BENEFITS AND EXPENSES
Increase in actuarial reserves 1,006,344 1,227,950
Decrease in liability for annuity and other deposit funds (50,464,729) (50,589,750)
Death, health benefits and annuity payments 7,567,391 6,961,510
Annuity deposit fund withdrawals 62,436,226 66,397,086
Surplus transfer to (from) separate account (6,753,989) 1,735,292
Transfers to non-unitized separate account 2,569,639 30,028,880
------------- -------------
16,360,882 55,760,968
General expenses 3,889,089 4,393,565
Commissions 2,118,684 2,742,716
Taxes, licenses and fees 567,407 435,253
------------- -------------
22,936,062 63,332,502
------------- -------------
NET INCOME FROM OPERATIONS BEFORE FEDERAL INCOME TAX 8,853,286 1,343,529
FEDERAL INCOME TAX EXPENSE 2,602,783 1,115,647
------------- -------------
NET INCOME $ 6,250,503 $ 227,882
------------- -------------
------------- -------------
</TABLE>
See notes to unaudited financial statements.
-5-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CAPITAL STOCK AND SURPLUS
NINE MONTHS ENDED SEPTEMBER 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 6,250,503 227,882
Unrealized losses 361,555 0
Change in non-admitted assets 29,819 27,460
Change in separate account surplus 6,032 6,362
Change in asset valuation reserve 33,180 403,569
------------ ------------
Balance, end of period 7,145,503 574,342
------------ ------------
TOTAL SURPLUS 36,645,503 30,074,342
------------ ------------
TOTAL CAPITAL STOCK AND SURPLUS $38,645,503 $32,074,342
------------ ------------
------------ ------------
See notes to unaudited financial statements.
-6-
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from operations $ 6,250,503 $ 227,882
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH:
Increase in policy reserves 1,006,344 1,227,950
Decrease in liability for annuity and other deposit funds (50,464,729) (50,589,750)
Decrease in investment income due and accrued 1,077,517 806,935
Net accrual and amortization of discount and
premium on investments 194,984 176,013
Realized losses on investments 736,555 1,350,000
Change in non-admitted assets 29,819 27,460
Other (8,351,904) 1,440,410
------------- -------------
Net cash used in operating activities (49,520,911) (45,333,100)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale and maturity of investments 71,504,746 96,914,436
Purchase of investments (28,454,037) (49,531,245)
Net change in short-term investments 5,514,167 153,506
------------- -------------
Net cash provided by investing activities 48,564,876 47,536,697
------------- -------------
Increase (decrease) in cash during the period (956,035) 2,203,597
Cash, beginning of period 1,267,905 (756,378)
------------- -------------
Cash, end of period $ 311,870 $ 1,447,219
------------- -------------
------------- -------------
</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 $366,000
and $1,244,000 for the three and nine month periods in 1996 and approximately
$546,000 and $1,440,000 for the three and nine month periods in 1995,
respectively.
-8-
<PAGE>
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 $4,735,000 and $6,251,000 for the three and
nine month periods ended September 30, 1996 as compared to a net loss of
$535,000 and net income of $228,000 for the same periods ended September 30,
1995. The $5,270,000 and $6,023,000 increase between periods was due
primarily to a decrease in the surplus transfer to the separate account.
Total income for the three month period ended September 30, 1996 decreased by
$970,000 as compared to the same three month period in 1995 as a result of a
decrease in net investment income, while total income decreased $32,887,000
for the nine months ended September 30, 1996 as compared with the same period
in 1995 primarily as a result of decreases in annuity sales and net
investment income. The decrease in annuity sales for the nine month period
ended September 30, 1996 was due directly to lower policyholder crediting
rates, while the decrease in net investment income for the three and nine
month periods ended September 30, 1996 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 for the three month period ended September 30, 1996
decreased $5,465,000 as compared to the same period in 1995 as a result of a
decrease in the surplus transfer to the separate account, while policyholder
benefits decreased $39,400,000 for the nine months ended September 30, 1996
as compared with the same period 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 for the nine month period ended September 30, 1996 was due directly
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 for the three and nine month periods ended September 30, 1996 was due
primarily to the release of excess reserves during the current period as a
result of cash flow testing and the re-positioning of the investment
portfolio to better match liability durations. In addition, current market
conditions compare more favorably to 1995 when high volumes of fixed annuity
sales, coupled with a steep drop in interest rates, made it difficult to
match the new asset streams with the liability streams.
General expenses and commissions increased by $239,000 for the three month
period ended September 30, 1996 as a result of an increase in separate
account sales during the quarter, while general expenses and commissions
decreased by $1,129,000 for the nine month period ended September 30, 1996 as
a result of a decrease in fixed annuity sales.
The decrease in federal income taxes for the three month period ended
September 30, 1996 was due primarily to an under-accrued income tax provision
during the first six months of 1995, while the increase in federal income
taxes for the nine month period ended September 30, 1996 was due primarily to
an increase in earnings.
-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
November 14, 1996
----------------------------------------------
David D. Horn, Senior Vice President
November 14, 1996
----------------------------------------------
Margaret S. Mead, Assistant Vice President and
Secretary
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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
November 14, 1996 s/ David D. Horn
----------------------------------------------
David D. Horn, Senior Vice President
November 14, 1996 s/ Margaret S. Mead
----------------------------------------------
Margaret S. Mead, Assistant Vice President and
Secretary
-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 5 OF THE
COMPANY'S FORM 10Q FOR THE YEAR-TO-DATE.
</LEGEND>
<CIK> 0000779955
<NAME> SUN LIFE INSURANCE & ANNUITY CO OF NEW YORK
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 91,419,000
<DEBT-MARKET-VALUE> 91,646,000
<EQUITIES> 0
<MORTGAGE> 42,653,000
<REAL-ESTATE> 1,370,000
<TOTAL-INVEST> 136,090,000
<CASH> 312,000
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 501,787,000
<POLICY-LOSSES> 24,555,000
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 79,279,000
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,000,000
<OTHER-SE> 36,646,000
<TOTAL-LIABILITY-AND-EQUITY> 501,787,000
21,914,000
<INVESTMENT-INCOME> 10,612,000
<INVESTMENT-GAINS> (737,000)
<OTHER-INCOME> 0
<BENEFITS> 16,361,000
<UNDERWRITING-AMORTIZATION> 2,119,000
<UNDERWRITING-OTHER> 4,456,000
<INCOME-PRETAX> 8,853,000
<INCOME-TAX> 2,603,000
<INCOME-CONTINUING> 6,250,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,250,000
<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>
