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 June 30, 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 August 7, 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 consolidated balance sheets - June 30, 1996 and
December 31, 1995 3
Condensed consolidated statements of income - Quarter
ended June 30, 1996 and 1995 4
Condensed consolidated statements of income - Six months
ended June 30, 1996 and 1995 4
Condensed consolidated statements of cash flows - Six
months ended June 30, 1996 and 1995 5
Notes to condensed consolidated financial statement -
June 30, 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
Part 1. Financial Information
Item 1. Financial Statements
2
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<TABLE>
<CAPTION>
Golden American Life Insurance Company
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Condensed Balance Sheets (unaudited)
June 31, 1996 December 31, 1995
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(in thousands)
<S> <C> <C>
Assets:
Fixed maturities available for sale $ 151,152 $ 49,629
Short-term investments 8,850 15,614
Equity securities 27 29
Policy loans 3,101 2,021
Cash (1,033) (323)
Accrued investment income 2,610 768
Deferred policy acquisition costs 83,781 67,314
Other assets 14,084 13,683
Separate account assets 1,137,522 1,048,953
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Total assets $1,400,094 $1,197,688
========== ==========
Liabilities and shareholder's equity:
Liabilities:
Insurance and annuity reserves $ 152,482 $ 33,673
Accrued expenses & other liabilities 11,765 16,937
Separate account liabilities 1,137,522 1,048,953
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Total liabilities 1,301,769 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 (923) 658
Retained earnings 1,718 (63)
Total shareholder's equity 98,325 98,125
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Total liabilities and shareholder's equity $1,400,094 $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 June 30,
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(in thousands)
1996 1995
<S> <C> <C>
Revenues:
Life and annuity product fees and
policy charges $ 5,120 $ 4,441
Management fee revenue 570 -
Net investment income 2,239 715
Realized gains/(losses) on investments (91) 22
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7,838 5,178
Expenses:
Operating and administrative 5,819 3,768
Amortization of deferred policy
acquisition costs 1,003 142
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6,822 3,910
Net Income $ 1,016 $ 1,268
========== ===========
</TABLE>
<TABLE>
<CAPTION>
Golden American Life Insurance Company
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Condensed Statements of Income (unaudited)
Six Months Ended June 30,
-------------------------
(in thousands)
1996 1995
<S> <C> <C>
Revenues
Variable life and annuity product
fees and policy charges $ 9,569 $ 9,084
Management fee revenue 1,110 -
Net investment income 3,609 1,121
Realized gains / (losses) on investments (418) (12)
----------- ----------
13,870 10,193
Expenses:
Operating and administrative 10,073 7,724
Amortization of deferred policy
acquisition costs 1,294 1,358
11,367 9,082
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Net Income $ 2,503 $ 1,111
========== ==========
</TABLE>
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<TABLE>
<CAPTION>
Golden American Life Insurance Company
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Condensed Statements of Cash Flows (unaudited)
Six Months Ended June 30,
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(in thousands)
1996 1995
<S> <C> <C>
Net cash provided by (used in)
operating activities $ (13,625) $ 29,766
Investing activities:
Purchases of investments (166,933) (32,032)
Sales and redemptions of investments 55,446 7,170
(Purchases) sales of short-term investments 6,764 (6,490)
(Increase) decrease in policy loans (1,080) (695)
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Net cash provided by (used in)
investing activities (105,803) (32,046)
Financing Activities:
Investment contract deposits 121,434 -
Investment contract withdrawals (1,994) -
Dividends paid on preferred stock (722) (764)
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Net cash provided by (used in)
financing activities 118,718 (764)
(Decrease) in cash (710) (3,044)
Cash at beginning of period (323) 3,316
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Cash at end of period $ (1,033) $ 272
========== ==========
See Notes to the Financial Statements
</TABLE>
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GOLDEN AMERICAN LIFE INSURANCE COMPANY
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Notes to Condensed Financial Statements (unaudited)
June 30, 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 six month period ended June 30,
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 six months of 1996 was $2.50 million, an
increase of $.14 million or 125% from the first six months of 1995.
Net income for the second quarter of 1996 was $1.02 million, a
decrease of $.25 million or 20% from the second quarter of 1995.
Premiums for the first six months of 1996 were $234.50 million, an
increase of $173.5 million or 284% from the comparative period in
1995.
Life and annuity product fees and policy charges increased from $9.08
million for the first six months of 1995 to $9.57 million for the
first six months of 1995, an increase of $.48 million or 5%. The
increase is primarily attributable to a $.91 million increase in the
asset based fees earned from the increasing block of business, offset
primarily by a $.43 million decrease in surrender charges collected
due to higher overall persistency in the first half of 1996. Product
fees and policy charges were $5.12 million for the second quarter of
1996, an increase of $.68 million or 15% from the comparative 1995
period.
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 $1.11 million
for the first six months of 1996 and $.57 million for the second
quarter of 1996.
Net investment income was $3.61 million for the first six months of
1996, an increase of $2.49 million or 222% over the comparable 1995
period. Second quarter 1996 investment income was $2.24 million, an
increase of $1.52 million or 213% from the comparative 1995 period.
The increases were 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 $.01 million for the first six months
of 1995 to $.42 million for the comparative 1996 period. The increase
was attributable to changes in short term interest rates in the first
quarter of 1996 that led to losses on funds held in temporary short
term investment vehicles prior to being reinvested in more suitable,
longer term securities. Realized losses for the second quarter of
1996 were $.09 million versus a $.02 million gain in second quarter
1995.
6
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Operating and administrative expenses were $10.07 million for the
first six months of 1996, an increase of $2.35 million or 13% from the
comparable 1995 period. The increase was due to an increase of $2.68
million in interest credited to the fixed interest divisions, offset
by a reduction in benefits expense of $.43 million. Operating and
administrative expenses were $5.82 million for the second quarter of
1996, an increase of $2.05 million or 54% from the second quarter of
1995. The increase was due to a $1.77 million increase in interest
credited to the fixed interest division, an increase of $.17 million
in the amortization of the unamortized costs assigned to insurance
contracts in force, an increase of other expenses of $.20 million,
offset by a reduction in benefits expense of $.20 million.
Amortization of deferred policy acquisition costs (DPAC) for the first
six months of 1996 was $1.29 million, essentially unchanged from the
$1.36 million for the first six months of 1995. Second quarter 1996
DPAC amortization was $1.00 million, an increase of $.86 million from
second quarter 1995. The DPAC is being amortized over the lives of
the policies in relation to the present value of estimated future
gross profits. The relative performance of the funds during reporting
periods results in the accelerating or slowing of the amortization
during that reporting period.
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:
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: August 7, 1996 By/s
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Stephen J. Preston
Senior Vice President, Controller and Actuary
Signing on behalf of the registrant and as chief accounting officer.
7
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
ARTICLE 7 OF REGULATION S-X
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 151,152
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 27
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 163,130
<CASH> (1,033)
<RECOVER-REINSURE> 787,703
<DEFERRED-ACQUISITION> 83,781
<TOTAL-ASSETS> 1,400,094
<POLICY-LOSSES> 152,482
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
50,000
<COMMON> 2,500
<OTHER-SE> 45,825
<TOTAL-LIABILITY-AND-EQUITY> 1,400,094
0
<INVESTMENT-INCOME> 3,609
<INVESTMENT-GAINS> (418)
<OTHER-INCOME> 10,679
<BENEFITS> 3,842
<UNDERWRITING-AMORTIZATION> 1,294
<INCOME-PRETAX> 2,503
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,503
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,503
<EPS-PRIMARY> 10.01
<EPS-DILUTED> 10.01
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
