<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Period Ended September 30, 1995.
Commission file number 33-87272
GOLDEN AMERICAN LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-0991508
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
(Address of principal executive offices) (Zip Code)
(302)576-3400
(Registrant's telephone number, including area code)
Not applicable
(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 periods 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 ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $10 Par Value - 250,000 shares as of September 30, 1995.
NOTE: WHEREAS GOLDEN AMERICAN LIFE INSURANCE COMPANY MEETS THE CONDITIONS
SET FORTH IN GENERAL INSTRUCTION H (I)(a) AND (b) OF FORM 10Q,
THIS FORM IS BEING FILED WITH THE REDUCED DISCLOSURE FORMAT.
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Index
<TABLE>
<CAPTION>
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page
<S> <C>
Condensed consolidated balance sheets - September 30, 1995 and December 31, 1994 3
Condensed consolidated statements of income - Quarter ended September 30, 1995 and 4
1994
Condensed consolidated statements of income - Nine months ended September 30, 4
1995 and 1994
Condensed consolidated statements of cash flows - Nine months ended September 30, 5
1995 and 1994
Notes to condensed consolidated financial statement - September 30, 1995 6
Item 2. Management's Narrative Analysis of the Results of Operations 6-7
Part II. Other Information 7
Item 1. Legal Proceedings 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
Exhibit 11 Earnings per Share 9
</TABLE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Golden American Life Insurance Company
- ---------------------------------------------------------------------
Condensed Balance Sheets (unaudited)
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
(in thousands)
<S> <C> <C>
Assets:
Fixed maturities available for sale $ 31,786 $ 2,749
Short-term investments 18,481 13,933
Equity securities, at market value 24 16
Policy loans 1,360 513
Cash 2,582 3,316
Accrued investment income 665 92
Deferred policy acquisition costs 65,289 60,662
Other assets 10,493 13,187
Separate Account Assets 1,017,787 950,292
------------ -----------
Total Assets $1,148,467 $1,044,760
=========== ==========
Liabilities and shareholder's equity:
Liabilities:
Insurance and annuity reserves $ 31,741 $ 1,051
Accrued expenses and other liabilities 6,279 3,911
Separate Account liabilities 1,017,787 950,292
--------- -----------
Total liabilities 1,055,807 955,254
--------- -----------
Shareholder's equity:
Common Stock 2,500 2,500
Preferred Stock 50,000 50,000
Additional paid-in capital 40,530 37,086
Unrealized appreciation (depreciation) of equity
securities 2 (1)
Unrealized appreciation (depreciation) on fixed
maturities available-for-sale 88 --
Retained earnings (460) (79)
------------ -----------
Total shareholder's equity 92,660 89,506
------------ -----------
Total liabilities and shareholder's equity $1,148,467 $1,044,760
============ ===========
See Notes to the Financial Statements
</TABLE>
<PAGE>
Golden American Life Insurance Company
- ---------------------------------------------------------------------
Condensed Statements of Income (unaudited)
<TABLE>
<CAPTION>
Quarter Ended September 30
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Revenues:
Variable life and annuity product fees and policy $4,838 $4,809
charges
Net investment income 857 95
Realized gains / (losses) on investments 83 --
-------- --------
5,778 4,904
Expenses:
Operating and administrative 3,950 3,201
Amortization of deferred policy acquisition costs 763 1,144
-------- --------
4,713 4,345
-------- --------
Net Income $1,065 $ 559
======== ========
Nine Months Ended September 30
1995 1994
---- ----
(in thousands)
Revenues
Variable life and annuity product fees and policy $13,922 $12,756
charges
Net investment income 1,978 306
Realized gains / (losses) on investments 71 2
-------- --------
15,971 13,064
Expenses:
Operating and administrative 11,674 7,991
Amortization of deferred policy acquisition costs 2,121 3,577
-------- --------
13,795 11,568
-------- --------
Net Income $2,176 $ 1,496
======== ========
See Notes to the Financial Statements
</TABLE>
<PAGE>
Golden American Life Insurance Company
- ---------------------------------------------------------------------
Condensed Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Net cash provided by operating activities $32,345 $(18,187)
Investing activities:
Purchases of fixed maturities (41,648) (857)
Sales and redemptions of fixed maturities 13,078 319
(Purchases) sales of short-term investments, net (4,548) 3,740
(Increase) decrease in policy loans (847) (158)
Funds held in escrow pursuant to an
Exchange Agreement -- (1,347)
---------- -----------
Net cash provided (by used) in investing activities (33,965) 1,697
Financing Activities:
Issuance of short-term debt -- 10,000
Contributions of capital by parent 3,443 3,000
Dividends paid on preferred stock (2,557) --
---------- -----------
Net cash provided by financing activities 886 13,000
---------- -----------
(Decrease) in cash (734) (3,490)
Cash at beginning of period 3,316 4,076
---------- -----------
Cash at end of period $ 2,582 $ 586
========== ===========
</TABLE>
See Notes to the Financial Statements
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1995
Note A -- Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended September 30,
1995 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Golden American Life
Insurance Company annual report included in the Report of Additional
Information.
Item 2. Management's Narrative Analysis of the Results of Operations
Net income for the first nine months of 1995 was $2.18 million, an increase of
$.68 million or 45% from the first nine months of 1994. Premiums for the first
nine months of 1995 were $94 million, a decrease of $178 million or 65% from the
comparative period in 1994.
Variable life and annuity product fees and policy charges increased from $12.8
million for the first nine months of 1994 to $13.9 million for the first nine
months of 1995, an increase of $1.1 million or 9%. The increase is primarily due
to fees earned from the increasing block of business under management in the
Separate Accounts, an increase in the collection of surrender charges, primarily
in the first quarter 1995, and an increase in the collection of net deferred
policy loadings.
Net investment income was $1.98 million for the first nine months of 1995, an
increase of $1.7 million or 546% over the comparable 1994 period. Approximately
$.95 million of the increase was due to the additional investment income earned
on invested assets held in the General Account to back the Fixed Rate Option
that was introduced in first quarter 1995. (The increase in investment income
attributable to the Fixed Rate Option was offset by an approximately $.84
million increase in related interest credited to policyholders.) The balance of
the increase in investment income is attributable to an increase in the average
invested surplus asset base.
<PAGE>
Operating and administrative expenses were $11.7 million for the first nine
months of 1995, an increase of $3.7 million or 46% from the comparable 1994
period. The increase was due primarily to an increase in general expenses, net
of capitalized acquisition costs, of approximately $3.5 million. This increase
was largely a result of the lower level of production achieved in 1995, which
has led to a lower capitalization of the Company's acquisition costs. The
increased expenses were also due in part to a decline in fund values in 1994.
This decline in fund values increased the Company's net amount at risk, which in
turn resulted in an increase in reinsurance fees of $667 thousand for the first
nine months of 1995 as compared to the first nine months of 1994. And finally,
as discussed above, interest credited to policyholders related to the Fixed Rate
Option introduced in 1995 increased expenses by approximately $.85 million for
the nine month period. Partially offsetting these increases was a decrease in
interest expense of $1.3 million for the first nine months of 1995 compared to
the first nine months of 1994. The elimination of interest expense in 1995
resulted from the retirement of the Company's debt in December 1994 with the
proceeds from the issuance of preferred stock. As of September 30, 1995, the
Company has paid dividends on preferred stock of $2.56 million. There had been
no preferred stock issued as of September 30, 1994.
Amortization of deferred policy acquisition costs (DPAC) was $2.12 million for
the first nine months of 1995, a decrease of $1.46 million or 41% from the
comparative prior year period. DPAC is being amortized over the lives of the
policies in relation to the present value of estimated future gross profits. The
relatively strong performance of the funds and earnings in 1995 has slowed the
amortization of DPAC in 1995 as compared to 1994.
Part II. Other Information
Item 1. Legal Proceedings
Golden American, as an insurance company, is ordinarily involved in
litigation. We do not believe that any current litigation is material and we do
not expect to incur significant losses from such actions.
Item 6. Exhibits and Reports on Form 8-k.
a) Exhibits:
11 Computation of earnings per share
27 Financial Data Schedule
b) Reports on Form 8-k: None
<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.
Golden American Life Insurance Company
Date November 10, 1995 By /s/ STEPHEN J. PRESTON
----------------- -----------------------------------
Stephen J. Preston
Senior Vice President, Controller
and Chief Actuary
Signing on behalf of the registrant
and as chief accounting officer.
<PAGE>
Exhibit 11
Golden American Life Insurance Company
Computation of Earnings Per Share (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended September 30 Nine Months Ended September 30
-------------------------- ------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $1,065 $ 559 $2,176 $1,496
Weighted average number of shares
outstanding during the period 250 250 250 250
----- ----- ----- -----
Earnings Per Share $4.26 $2.24 $8.70 $5.98
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
ARTICLE 7 OF REGULATION S-X
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 31,786
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 24
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 51,651
<CASH> 2,582
<RECOVER-REINSURE> 366
<DEFERRED-ACQUISITION> 65,289
<TOTAL-ASSETS> 1,148,467
<POLICY-LOSSES> 31,590
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 2,500
0
50,000
<OTHER-SE> 40,160
<TOTAL-LIABILITY-AND-EQUITY> 1,148,467
0
<INVESTMENT-INCOME> 1,978
<INVESTMENT-GAINS> 71
<OTHER-INCOME> 13,922
<BENEFITS> 2,302
<UNDERWRITING-AMORTIZATION> 2,121
<UNDERWRITING-OTHER> 9,372
<INCOME-PRETAX> 2,176
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,176
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,176
<EPS-PRIMARY> 8.70
<EPS-DILUTED> 8.70
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
