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 March 31, 1996.
Commission file number 33-87272
GOLDEN AMERICAN LIFE INSURANCE COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 41-0991508
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
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(Address of principal executive (Zip Code)
offices)
(302) 576-3400
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(Registrant's telephone number, including area code)
Not applicable
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(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
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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 May 10, 1996
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.
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GOLDEN AMERICAN LIFE INSURANCE COMPANY
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INDEX
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PAGE
Part 1. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed balance sheets March 31, 1996
and December 31, 1995 3
Condensed statements of income - Quarter ended
March 31, 1996 and 1995 4
Condensed statements of cash flows - Quarter ended
March 31, 1996 and 1995 5
Notes to condensed financial statement -
March 31, 1996 6
Item 2. Management's Narrative Analysis of the Results of
Operations 6
Part II. Other Information 7
Item 1. Legal Proceedings 7
Item 5. Other Information - Events Subsequent 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 7
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Part 1. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
Golden American Life Insurance Company
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Condensed Balance Sheets (unaudited)
March 31, 1996 December 31, 1995
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(in thousands)
<S> <C> <C>
Assets:
Fixed maturities available for sale $ 105,793 $ 49,629
Short-term investments 14,003 15,614
Equity securities, at market value 30 29
Policy loans 2,769 2,021
Cash (679) (323)
Accrued investment income 2,236 768
Deferred policy acquisition costs 75,816 67,314
Other assets 13,530 13,683
Separate account assets 1,100,781 1,048,953
----------------- -----------------
Total assets $ 1,314,279 $ 1,197,688
================= =================
Liabilities and shareholder's equity:
Liabilities:
Insurance and annuity reserves $ 102,524 $ 33,673
Accrued expenses and other liabilities 12,845 16,937
Separate account liabilities 1,100,781 1,048,953
----------------- -----------------
Total liabilities 1,216,150 1,099,563
----------------- -----------------
Shareholder's equity:
Common Stock $ 2,500 $ 2,500
Preferred Stock 50,000 50,000
Additional paid-in capital 45,030 45,030
Unrealized appreciation (depreciation) of
equity securities 4 2
Unrealized appreciation (depreciation) on
fixed maturities available-for-sale (108) 656
Retained earnings 703 (63)
----------------- -----------------
Total shareholder's equity 98,129 98,125
---------------- -----------------
Total liabilities and shareholder's equity $ 1,314,279 $ 1,197,688
================= =================
See Notes to the Financial Statements
</TABLE>
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<TABLE>
<CAPTION>
Golden American Life Insurance Company
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Condensed Statements of Income (unaudited)
Quarter Ended March 31,
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(in thousands)
1996 1995
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<S> <C> <C>
Revenues:
Life and annuity product fees and policy
charges $ 4,449 $ 4,643
Management fee revenue 540 -
Net investment income 1,370 406
Realized capital gains/(losses) (327) (34)
----------------- -----------------
6,032 5,015
Expenses:
Operating and administrative 4,254 3,956
Amortization of deferred policy acquisition
Costs 291 1,216
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4,545 5,172
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Net Income $ 1,487 $ (157)
================= =================
</TABLE>
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<TABLE>
<CAPTION>
Golden American Life Insurance Company
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Condensed Statements of Cash Flows (unaudited)
Quarter Ended March 31,
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(in thousands)
1996 1995
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<S> <C> <C>
Net cash provided by operating activities $ (4,910) $ 17,471
Investing activities:
Purchases of investments (115,199) (19,216)
Sales and redemptions of investments 53,727 4,386
(Purchases) sales of short-term investments 1,611 (1,407)
(Increase) decrease in policy loans (748) (1,508)
----------------- -----------------
Net cash provided (by used) in investing
activities (60,609) (17,745)
Financing Activities:
Investment contract deposits 66,987 -
Investment contract withdrawals (1,824) -
Dividends paid on preferred stock - (763)
----------------- -----------------
Net cash provided by (used in) financing
activities 65,163 (763)
----------------- -----------------
(Decrease) in cash (356) (1,037)
Cash at beginning of period (323) 3,316
----------------- -----------------
Cash at end of period $ (679) $ 2,279
================= =================
See Notes to the Financial Statements
</TABLE>
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GOLDEN AMERICAN LIFE INSURANCE COMPANY
Notes to Condensed Financial Statements
(unaudited)
March 31, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed 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 three month period ended March 31, 1996 are
not necessarily indicative of the results that may be expected for the
year ended December 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in the Golden
American Life Insurance Company annual report on form 10-K for the year
ended December 31, 1995.
Item 2. Management's Narrative Analysis of the Results of Operations
Net income for the first three months of 1996 was $1.49 million, an
increase of $1.64 million from the $.16 million loss for the first three
months of 1995. Premiums for the first three months of 1996 were
$120.60 million, an increase of $93.63 million or 347% from the
comparative period in 1995.
Life and annuity product fees and policy charges decreased from $4.64
million for the first three months of 1995 to $4.45 million for the
first three months of 1996, a decrease of $.19 million or 4%. The
decrease is attributable to a $.27 million decline in surrender charges
collected due to higher overall persistency in the first quarter, plus
a decrease of $.34 million in the revenue recognition of distribution
fees offset by a $.42 million increase in the asset based fees earned
from the increasing block of business.
In fourth quarter 1995, the service agreement between DSI and Golden
American was amended to provide for a management fee from DSI to Golden
American for certain managerial and supervisory services provided by
Golden American. This fee, calculated as a percentage of average assets
in the variable separate accounts, was $.54 million for the first three
months of 1996.
Net investment income was $1.37 million for the first three months of
1996, an increase of $.96 million or 37% over the comparable 1995
period. The increase was primarily due to the additional investment
income earned on invested assets held to back the fixed interest
divisions that were introduced in 1995.
Realized losses increased from $.03 million for the first three months
of 1995 to $.33 million for the comparative 1996 period, an increase of
962%. The increase was attributable to changes in short term interest
rates that led to losses on funds held in temporary short term
investment vehicles prior to being reinvested in more suitable, longer
term securities.
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Operating and administrative expenses were $4.25 million for the first
three months of 1996, an increase of $.30 million or 8% from the
comparable 1995 period. The increase was due to an increase of $.92
million in interest credited to the fixed interest divisions, offset by
a reduction in benefits expense of $.23 million, a reduction in the
amortization of the unamortized costs assigned to insurance contracts in
force, and a reduction of other expenses of approximately $.20 million.
Amortization of deferred policy acquisition costs (DPAC) was $.29
million for the first three months of 1996, a decrease of $.93 million
or 76% from the comparative prior year period. The 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 in 1996 has slowed the amortization in 1996 as
compared to 1995.
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 5. Other Information - Events Subsequent.
Equitable of Iowa Companies ("Equitable of Iowa") and Whitewood
Properties Corp., a Subsidiary of Bankers Trust Company, have entered
into a definitive agreement providing for the acquisition by Equitable
of Iowa of all interest in BT Variable, Inc. BT Variable, Inc., an
indirect subsidiary of Bankers Trust Company, is the corporate parent of
Golden American and DSI. The acquisition, which is subject to the
approval of the appropriate regulators and satisfaction of certain other
customary conditions set forth in the agreement, is expected to close
during the second half of 1996. With assets of $10 billion as of March
31, 1996, Equitable of Iowa is the holding company for Equitable Life
Insurance Company of Iowa, USG Annuity & Life Company, Locust Street
Securities, Inc., and Equitable Investment Services, Inc.
Item 6. Exhibits and Reports on Form 8-k.
a) Exhibits:
27 Financial Data Schedule
b) Reports on Form 8-k: None
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
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Date: May 14, 1995 By/s
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Stephen J. Preston
Senior Vice President, Controller
and Chief Actuary
Signing on behalf of the
registrant and as chief
accounting officer.
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<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
ARTICLE 7 OF REGULATION S-X
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 105,193
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 30
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 122,595
<CASH> (679)
<RECOVER-REINSURE> 573
<DEFERRED-ACQUISITION> 75,816
<TOTAL-ASSETS> 1,314,279
<POLICY-LOSSES> 102,524
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
50,000
<COMMON> 2,500
<OTHER-SE> 45,629
<TOTAL-LIABILITY-AND-EQUITY> 1,314,279
0
<INVESTMENT-INCOME> 1,370
<INVESTMENT-GAINS> (327)
<OTHER-INCOME> 4,989
<BENEFITS> 1,375
<UNDERWRITING-AMORTIZATION> 291
<UNDERWRITING-OTHER> 2,879
<INCOME-PRETAX> 1,478
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,478
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,478
<EPS-PRIMARY> 5.95
<EPS-DILUTED> 5.95
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
