SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
=========
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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 (IRS employer identification no.)
incorporation or organization)
1001 Jefferson Street, Suite 400, Wilmington, Delaware 19801
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (302) 576-3400
__________________________________________________________________________
Former name, former address and formal 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. Yes /X/ No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court. Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 250,000 shares of
Common Stock as of May 8, 1998.
NOTE: WHEREAS GOLDEN AMERICAN LIFE INSURANCE COMPANY MEETS THE CONDITIONS SET
FORTH IN GENERAL INSTRUCTION H (1)(a) AND (b) OF FORM 10Q, THIS FORM IS BEING
FILED WITH THE REDUCED DISCLOSURE FORMAT.
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
_____________________________
Person for whom the Financial Information is given: Golden American Life
Insurance Company
Condensed Consolidated Statements of Income (Unaudited):
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
_________________________________
For the Three | For the Three
Months ended | Months ended
March 31, 1998 | March 31, 1997
________________|________________
(Current Year) |(Preceding Year)
|
(Dollars in thousands)
<S> <C> | <C>
REVENUES: |
Annuity and interest sensitive life |
product charges $6,940 | $7,312
Management fee revenue 909 | 618
Net investment income 8,842 | 5,376
Realized gains on investments 87 | --
Other income 45 | 160
________________|________________
16,823 | 13,466
|
INSURANCE BENEFITS AND EXPENSES: |
Annuity and interest sensitive life |
benefits: |
Interest credited to account balances 16,706 | 5,267
Benefit claims incurred in excess of |
account balances 88 | 50
Underwriting, acquisition and |
insurance expenses: |
Commissions 20,909 | 5,717
General expenses 6,311 | 4,287
Insurance taxes 801 | 651
Policy acquisition costs deferred (33,554)| (6,591)
Amortization: |
Deferred policy acquisition costs 935 | 349
Present value of in force acquired 1,588 | 2,101
Goodwill 945 | 392
________________|________________
14,729 | 12,223
Interest expense 913 | 560
________________|________________
15,642 | 12,783
________________|________________
1,181 | 683
|
Income taxes 764 | 270
________________|________________
NET INCOME $417 | $413
=================================
</TABLE>
See accompanying notes.
Condensed Consolidated Balance Sheets (Unaudited):
<TABLE>
<CAPTION>
POST-MERGER
_________________________________
March 31, 1998 |December 31, 1997
_______________|_________________
(Dollars in thousands)
<S> <C> | <C>
ASSETS |
Investments: |
Fixed maturities, available for sale, |
at fair value (cost: 1998 - $455,281; |
1997 - $413,288) $455,536 | $414,401
Equity securities, at fair value |
(cost: 1998 - $14,437; 1997 - $4,437) 14,711 | 3,904
Mortgage loans 86,397 | 85,093
Policy loans 8,950 | 8,832
Short-term investments 35,394 | 14,460
_______________|_________________
TOTAL INVESTMENTS 600,988 | 526,690
|
Cash and cash equivalents 15,435 | 21,039
Due from affiliates 602 | 827
Accrued investment income 9,376 | 6,423
Deferred policy acquisition costs 45,372 | 12,752
Present value of in force acquired 41,899 | 43,174
Current income taxes recoverable 272 | 272
Deferred income tax asset 35,374 | 36,230
Property and equipment, less allowances for |
depreciation of $276 in 1998 and $97 in 1997 2,006 | 1,567
Goodwill, less accumulated amortization of |
$1,575 in 1998 and $630 in 1997 149,553 | 150,497
Other assets 178 | 195
Separate account assets 2,067,176 | 1,646,169
_______________|_________________
TOTAL ASSETS $2,968,231 | $2,445,835
===============|=================
|
LIABILITIES AND STOCKHOLDER'S EQUITY |
Policy liabilities and accruals: |
Annuity and interest sensitive life products $560,965 | $505,304
Unearned revenue reserve 2,621 | 1,189
Other policy claims and benefits -- | 10
_______________|_________________
563,586 | 506,503
Reciprocal loan with affiliate 39,437 | --
Line of credit with affiliate -- | 24,059
Surplus note 25,000 | 25,000
Due to affiliates 4,786 | 80
Other liabilities 21,595 | 16,711
Separate account liabilities 2,067,176 | 1,646,169
_______________|_________________
TOTAL LIABILITIES 2,721,580 | 2,218,522
|
Commitments and contingencies |
</TABLE>
See accompanying notes.
Condensed Consolidated Balance Sheets (Unaudited) (Continued) :
<TABLE>
<CAPTION>
POST-MERGER
__________________________________
March 31, 1998 |December 31, 1997
________________|_________________
(Dollars in thousands)
<S> <C> | <C>
Stockholder's equity: |
Common stock, par value $10 per share, |
authorized, issued and outstanding |
250,000 shares $2,500 | $2,500
Additional paid-in capital 243,890 | 224,997
Accumulated comprehensive income 269 | 241
Retained earnings (deficit) (8)| (425)
________________|_________________
TOTAL STOCKHOLDER'S EQUITY 246,651 | 227,313
________________|_________________
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $2,968,231 | $2,445,835
==================================
</TABLE>
See accompanying notes.
Condensed Consolidated Statements of Cash Flows (Unaudited):
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
_________________________________
For the Three | For the Three
Months ended | Months ended
March 31, 1998 | March 31, 1997
________________|________________
(Current Year) |(Preceding Year)
(Dollars in thousands)
<S> <C> | <C>
NET CASH USED IN OPERATING ACTIVITIES ($2,974)| ($1,911)
|
INVESTING ACTIVITIES |
Sale, maturity or repayment of investments: |
Fixed maturities - available for sale 31,250 | 4,984
Mortgage loans on real estate 447 | 196
Short-term investments - net -- | 6,090
________________|________________
31,697 | 11,270
|
Acquisition of investments: |
Fixed maturities - available for sale (73,944)| (4,431)
Equity securities (10,000)| --
Mortgage loans on real estate (1,825)| (17,020)
Policy loans - net (118)| (2,482)
Short-term investments - net (20,934)| --
________________|________________
(106,821)| (23,933)
Purchase of property and equipment (618)| (57)
________________|________________
NET CASH USED IN INVESTING ACTIVITIES (75,742)| (12,720)
|
FINANCING ACTIVITIES |
Proceeds from reciprocal loan agreement |
borrowings 39,437 | --
Proceeds from line of credit borrowings -- | 18,700
Repayment of line of credit borrowings (24,059)| (17,579)
Receipts from annuity and interest sensitive |
life policies credited to policyholder |
account balances 94,722 | 37,936
Return of policyholder account balances |
on annuity and interest sensitive life |
policies (13,534)| (2,987)
Net reallocations to Separate Accounts (42,204)| (26,864)
Contribution from parent 18,750 | --
________________|________________
NET CASH PROVIDED BY FINANCING ACTIVITIES 73,112 | 9,206
|
DECREASE IN CASH AND CASH EQUIVALENTS (5,604)| (5,425)
|
CASH AND CASH EQUIVALENTS AT BEGINNING |
OF PERIOD 21,039 | 5,839
________________|________________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,435 | $414
=================================
</TABLE>
See accompanying notes.
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued):
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
_________________________________
For the Three | For the Three
Months ended | Months ended
March 31, 1998 | March 31, 1997
________________|________________
(Current Year) |(Preceding Year)
(Dollars in thousands)
<S> <C> | <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW |
INFORMATION |
|
Cash paid during the period for interest $346 | $295
|
Non-cash financing activities: |
Noncash adjustment to paid in capital |
for adjusted merger costs 143 | --
|
</TABLE>
See accompanying notes.
NOTE 1 -- 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 the instructions to Form
10-Q and Article 10 of Regulation S-X. This form is being filed with the
reduced disclosure format specified in General Instruction H (1)(a) and
(b) of Form 10-Q. Accordingly, the financial statements 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 considered necessary for a fair presentation
have been included. All adjustments were of a normal recurring nature, unless
otherwise noted in Management's Discussion and Analysis and the Notes to
Financial Statements. Operating results for the three months ended March 31,
1998 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. 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, 1997.
CONSOLIDATION
The condensed consolidated financial statements include Golden American Life
Insurance Company ("Golden American") and its wholly owned subsidiary, First
Golden American Life Insurance Company of New York ("First Golden," and
collectively with Golden American, the "Company"). All significant
intercompany accounts and transactions have been eliminated.
ORGANIZATION
On October 24, 1997, PFHI Holdings, Inc. ("PFHI"), a Delaware corporation,
acquired all of the outstanding capital stock of Equitable of Iowa Companies
("Equitable"), pursuant to the terms of the Agreement and Plan of Merger
among Equitable, PFHI, and ING Groep N.V. ("ING"). PFHI is a wholly owned
subsidiary of ING, a global financial services holding company based in The
Netherlands. As a result of the merger, Equitable was merged into PFHI which
was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or the
"Parent"), a Delaware corporation.
On August 13, 1996, Equitable acquired all of the outstanding capital stock of
EIC Variable, Inc. (formerly known as BT Variable, Inc.) and its wholly owned
subsidiaries, Golden American and Directed Services, Inc. ("DSI") from
Whitewood Properties Corporation ("Whitewood") pursuant to the terms of a
Stock Purchase Agreement between Equitable and Whitewood.
For financial statement purposes, the merger was accounted for as a purchase
effective October 25, 1997 and the change in control of Golden American
through the acquisition of BT Variable, Inc. was accounted for as a purchase
effective August 14, 1996. The merger and acquisition resulted in new bases of
accounting reflecting estimated fair values of assets and liabilities at their
respective dates. As a result, the Company's financial statements for the
period subsequent to October 24, 1997, are presented on the Post-Merger new
basis of accounting, for the period August 14, 1996 through October 24, 1997,
are presented on the Post-Acquisition basis of accounting, and for August 13,
1996 and prior periods are presented on the Pre-Acquisition basis of
accounting.
FAIR VALUES
Estimated fair values of investment grade public bonds are estimated using a
third party pricing system. This pricing system uses a matrix calculation
assuming a spread over U.S. Treasury bonds based upon the expected average
lives of the securities.
NOTE 2 -- COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted the Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of this
statement had no impact on the Company's net income or stockholder's equity.
SFAS No. 130 requires unrealized gains or losses on the Company's available
for sale securities (net of deferred income taxes, deferred policy
acquisition costs and present value of in force acquired), which prior to
adoption were reported separately in stockholder's equity, to be included in
other comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
During the first quarter of 1998 and 1997, total comprehensive income (loss)
for the Company amounted to $446,000 and $(1,347,000), respectively.
Included in these amounts are total comprehensive income (loss) for First
Golden of $194,000 and $(138,000) for the first quarter of 1998 and 1997,
respectively.
NOTE 3 -- RELATED PARTY TRANSACTIONS
DSI acts as the principal underwriter (as defined in the Securities Act of
1933 and the Investment Company Act of 1940, as amended) of the variable
insurance products issued by the Company which as of March 31, 1998 are sold
primarily through four broker/dealer institutions. For the first quarter of
1998 and 1997, the Company paid commissions and expenses to DSI totaling
$21,037,000 and $5,717,000, respectively.
Golden American provides certain advisory, computer and other resources and
services to Equitable Life Insurance Company of Iowa ("Equitable Life").
Revenues for these services which reduce general expenses incurred by Golden
American totaled $2,333,000 for the first quarter of 1998.
The Company has a service agreement with Equitable Life in which Equitable
Life provides administrative and financial related services. For the first
quarter of 1998, the Company incurred expenses of $149,000 under this
agreement.
First Golden provides resources and services to DSI. Revenues for these
services which reduce general expenses incurred by the Company totaled $19,000
for the first quarter of 1998.
Golden American maintains a reciprocal loan agreement with ING America
Insurance Holdings, Inc. ("ING AIH"), a Delaware corporation and affiliate of
EIC, to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Under this agreement which became effective January 1,
1998 and expires December 31, 2007, Golden American and ING AIH can borrow up
to $65,000,000 from one another. Prior to lending funds to ING AIH, Golden
American must obtain the prior approval of the State of Delaware Department of
Insurance. Interest on any Golden American borrowings is charged at the rate
of ING AIH's cost of funds for the interest period plus 0.15%. Interest on
any ING AIH borrowings is charged at a rate based on the prevailing interest
rate of U.S. commercial paper available for purchase with a similar
arrangement. Under this agreement, Golden American incurred interest expense
of $187,000 for the quarter ended March 31, 1998.
Effective January 1, 1998, the Company has an asset management agreement with
ING Investment Management LLC ("ING-IM"), an affiliated company, in which
ING-IM provides asset management services. Under the agreement, the Company
records a fee based on the value of the assets under management. The fee is
payable quarterly. For the quarter ended March 31, 1998, the Company incurred
fees of $318,000 under this agreement.
Golden American maintained a line of credit agreement with Equitable to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Under this agreement which became effective December 1, 1996
and expired December 31, 1997, Golden American could borrow up to $25,000,000.
Interest on any borrowings was charged at the rate of Equitable's monthly
average aggregate cost of short-term funds plus 1.00%. Under this agreement,
Golden American incurred interest expense of $211,000 and $43,000 for the
first quarter of 1998 and 1997, respectively.
The Company had premiums, net of reinsurance, for variable products from four
significant broker/dealers for the quarter ended March 31, 1998, that totaled
$158,000,000, or 42% of premiums. Included in this amount are premiums of
$25,800,000 for the first quarter of 1998 from Locust Street Securities, Inc.,
an affiliate. In addition, first quarter premiums of $7,000,000 and
$7,100,000 were received from two affiliates, Vestax Securities Corporation
and DSI, respectively.
NOTE 4 -- COMMITMENTS AND CONTINGENCIES
REINSURANCE: At March 31, 1998, Golden American had reinsurance treaties with
four unaffiliated reinsurers and one affiliated reinsurer covering a
significant portion of the mortality risks under its variable contracts.
Golden American remains liable to the extent its reinsurers do not meet their
obligations under the reinsurance agreements. At March 31, 1998, the Company
has a net payable of $165,000 for reserve credits, reinsurance claims or other
receivables from these reinsurers comprised of $132,000 for claims recoverable
from reinsurers and a payable of $297,000 for reinsurance premiums. Included
in the accompanying financial statements are net considerations to reinsurers
of $938,000 during the first quarter of 1998 compared to $421,000 for the
first quarter of 1997. Also included in the accompanying financial statements
are net policy benefits of $534,000 and $4,000 during the first quarter of
1998 and 1997, respectively.
Effective June 1, 1994, Golden American entered into a modified coinsurance
agreement with an unaffiliated reinsurer. The accompanying financial
statements are presented net of the effects of the treaty.
INVESTMENT COMMITMENTS: At March 31, 1998, outstanding commitments to fund
mortgage loans on real estate totaled $11,465,000.
GUARANTY FUND ASSESSMENTS: Assessments are levied on the Company by life and
health guaranty associations in most states in which the Company is licensed
to cover losses of policyholders of insolvent or rehabilitated insurers. In
some states, these assessments can be partially recovered through a reduction
in future premium taxes. The Company cannot predict whether and to what
extent legislative initiatives may affect the right to offset. The associated
cost for a particular insurance company can vary significantly based upon its
fixed account premium volume by line of business and state premiums as well as
its potential for premium tax offset. The Company has established a reserve
to cover such assessments and regularly reviews information regarding known
failures and revises its estimates of future guaranty fund assessments.
Accordingly, the Company accrued and charged to expense an additional $173,000
for the first quarter of 1998. At March 31, 1998, the Company has an
undiscounted reserve of $1,483,000 to cover estimated future assessments
(net of related anticipated premium tax credits) and has established an asset
totaling $259,000 for assessments paid which may be recoverable through future
premium tax offsets. The Company believes this reserve is sufficient to cover
expected future insurance guaranty fund assessments based upon previous premium
levels and known insolvencies at this time.
LITIGATION: In the ordinary course of business, the Company is engaged in
litigation, none of which management believes is material.
VULNERABILITY FROM CONCENTRATIONS: The Company has various concentrations in
its investment portfolio. The Company's asset growth, net investment income
and cash flow are primarily generated from the sale of variable products and
associated future policy benefits and separate account liabilities. A
significant portion of the Company's sales are generated by four broker/
dealers. Substantial changes in tax laws that would make these products less
attractive to consumers and extreme fluctuations in interest rates or stock
market returns which may result in higher lapse experience than assumed could
cause a severe impact to the Company's financial condition.
YEAR 2000: Based on a study of its computer software and hardware, the
Company has determined its exposure to the Year 2000 change of the century
date issue. Management believes the Company's systems are or will be
substantially compliant by Year 2000 and has engaged external consultants to
validate this assumption. Golden American has spent approximately $75,000 in
the first quarter of 1998 related to the external consultants' analysis. The
additional projected cost to the Company for the external consultants'
analysis is approximately $53,000 to $93,000. The only system known to be
affected by this issue is a system maintained by an affiliate who will incur
the related costs to make the system compliant. To mitigate the effect of
outside influences and other dependencies relative to the Year 2000, the
Company will continue to contact significant customers, suppliers and other
third parties. To the extent these third parties would be unable to transact
business in the Year 2000 and thereafter, the Company's operations could be
adversely affected.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's condensed
consolidated results of operations. In addition, some analysis and
information regarding financial condition and liquidity and capital resources
has also been provided. This analysis should be read in conjunction with the
condensed consolidated financial statements and related notes which appear
elsewhere in this report. The Company reports financial results on a
consolidated basis. The consolidated condensed financial statements include
the accounts of Golden American Life Insurance Company ("Golden American") and
its subsidiary, First Golden American Life Insurance Company of New York
("First Golden," and collectively with Golden American, the "Company").
RESULTS OF OPERATIONS
_____________________
MERGER
On October 23, 1997, Equitable of Iowa Companies' ("Equitable") shareholders
approved the Agreement and Plan of Merger ("Merger Agreement") dated as of
July 7, 1997, among Equitable, PFHI Holdings, Inc. ("PFHI"), and ING Groep
N.V. ("ING"). On October 24, 1997, PFHI, a Delaware corporation, acquired all
of the outstanding capital stock of Equitable pursuant to the Merger Agreement.
PFHI is a wholly owned subsidiary of ING, a global financial services holding
company based in The Netherlands. Equitable, an Iowa corporation, in turn
owned all the outstanding capital stock of Equitable Life Insurance Company of
Iowa ("Equitable Life") and Golden American and their wholly owned subsidiaries.
Equitable also owned all the outstanding capital stock of Locust Street
Securities, Inc., Equitable Investment Services, Inc., Directed Services, Inc.
("DSI"), Equitable of Iowa Companies Capital Trust, Equitable of Iowa Companies
Capital Trust II and Equitable of Iowa Securities Network, Inc. In exchange
for the outstanding capital stock of Equitable, ING paid total consideration
of approximately $2.1 billion in cash and stock plus the assumption of
approximately $400 million in debt according to the Merger Agreement. As a
result of the merger, Equitable of Iowa Companies was merged into PFHI which
was simultaneously renamed Equitable of Iowa Companies, Inc. ("EIC" or
"Parent"), a Delaware corporation.
For financial statement purposes, the change in control of the Company through
the ING merger with EIC, was accounted for as a purchase effective October 25,
1997. This merger resulted in a new basis of accounting reflecting estimated
fair values of assets and liabilities at that date. As a result, the
Company's financial statements for the period subsequent to October 24, 1997,
are presented on the Post-Merger new basis of accounting.
The purchase price was allocated to the companies mentioned previously.
Goodwill of $1.4 billion was established for the excess of the merger cost
over the fair value of the assets and liabilities of EIC with $151.1 million
pushed down to the Company. The allocation of the purchase price to the
Company was $227.6 million as adjusted for the first quarter $143,000 increase
as a result of an adjustment of the merger costs. The cost of the acquisition
is preliminary as it relates to estimated expenses, and as a result, the
allocation of the purchase price to the Company may change. Goodwill
resulting from the merger is being amortized over 40 years on a straight-line
basis. The carrying value will be reviewed periodically for any indication of
impairment in value.
CHANGE IN CONTROL
On August 13, 1996, Equitable acquired all of the outstanding capital stock
of BT Variable, Inc. ("BT Variable") and its wholly owned subsidiaries Golden
American and DSI. Subsequent to the acquisition, the BT Variable, Inc. name
was changed to EIC Variable, Inc. On April 30, 1997, EIC Variable, Inc. was
liquidated and its investments in Golden American and DSI were transferred to
Equitable while the remainder of its net assets were contributed to Golden
American. On December 30, 1997, EIC Variable, Inc. was dissolved.
For financial statement purposes, the change in control of Golden American
through the acquisition of BT Variable was accounted for as a purchase
acquisition effective August 14, 1996. This acquisition resulted in a new
basis of accounting reflecting estimated fair values of assets and liabilities
at that date. As a result, the Company's financial statements for the period
August 14, 1996 through October 24, 1997, are presented on the Post-
Acquisition basis of accounting and for August 13, 1996 and prior periods are
presented on the Pre-Acquisition basis of accounting.
The purchase price was allocated to the three companies purchased - BT
Variable, DSI, and Golden American. Goodwill of $41.1 million was established
for the excess of the acquisition cost over the fair value of the assets and
liabilities and pushed down to Golden American. The allocation of the
purchase price to Golden American was approximately $139.9 million. Goodwill
resulting from the acquisition was being amortized over 25 years on a
straight-line basis.
PREMIUMS
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
______________ ________________
Percentage Dollar
Quarter ended March 31 1998 Change Change 1997
_______________________________________________________________________________
(Dollars in millions)
<S> <C> | <C> | <C> | <C>
Variable annuity | | |
premiums: | | |
Separate account $277.1 | 444.2%| $226.2 | $50.9
Fixed account 93.9 | 153.4 | 56.8 | 37.1
______________|____________|___________|________________
Total variable | | |
annuity premiums 371.0 | 321.8 | 283.0 | 88.0
Variable life | | |
premiums 2.9 | (60.2)| (4.4)| 7.3
______________|____________|___________|________________
Total premiums $373.9 | 292.5%| $278.6 | $95.3
========================================================
</TABLE>
Variable annuity separate account premiums increased 444.2% during the first
quarter of 1998 compared to the first quarter of 1997 and increased 95.9% when
compared to the fourth quarter 1997. These increases are due primarily to
increased sales of the new Premium Plus product introduced in October of 1997.
Although variable life premiums decreased 60.2% during the first quarter of
1998 when compared to the same period in 1997, variable life premiums
increased 51.7% in the first quarter of 1998 compared to the fourth quarter of
1997. The fixed account portion of the Company's variable annuity premiums
increased 153.4% during the first quarter of 1998. Fixed account premiums
increased 4.9% in the first quarter of 1998 when compared to the fourth
quarter of 1997.
Premiums, net of reinsurance, for variable products from four significant
broker/dealers totaled $158.0 million or 42% of total premiums for the first
quarter of 1998.
REVENUES
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
______________ ________________
Percentage Dollar
Quarter ended March 31 1998 Change Change 1997
_______________________________________________________________________________
(Dollars in millions)
<S> <C> | <C> | <C> | <C>
Annuity and interest | | |
sensitive life | | |
product charges $6.9 | (5.1)%| ($0.4)| $7.3
Management fee revenue 0.9 | 47.0 | 0.3 | 0.6
Net investment income 8.8 | 64.5 | 3.4 | 5.4
Realized gains | | |
on investments 0.1 | N/A | 0.1 | --
Other income 0.1 | (71.8) | (0.1)| 0.2
______________|_____________|_________|________________
$16.8 | 24.9% | $3.3 | $13.5
=======================================================
</TABLE>
Total revenues increased 24.9% in the first three months of 1998. Annuity and
interest sensitive life product charges decreased 5.1% in the first three
months of 1998. The elimination of the unearned revenue reserve related to in
force acquired at the merger date will result in lower annuity and interest
sensitive life product charges compared to Post-Acquisition levels.
Golden American provides certain managerial and supervisory services to DSI.
This fee, calculated as a percentage of average assets in the variable
separate accounts, was $0.9 million and $0.6 million during the first quarter
of 1998 and 1997, respectively.
Net investment income increased 64.5% in the first quarter of 1998 compared to
the first quarter of 1997 due to the increase in invested assets. The Company
had $87,000 of realized gains on the sale of investments in the first quarter
of 1998.
EXPENSES
Total insurance benefits and expenses increased $2.5 million, or 20.5%, to
$14.7 million in the first quarter of 1998. Interest credited to account
balances increased $11.4 million, or 217.2% to $16.7 million in the first
quarter of 1998. This increase is a result of an extra credit bonus on the new
Premium Plus product introduced in October of 1997 and higher account balances
associated with the Company's fixed account option within its variable
products.
Commissions increased $15.2 million or 265.8%, to $20.9 million, in the first
quarter of 1998. Insurance taxes increased $0.2 million or 23.1%, to $0.8
million, in the first quarter of 1998. Increases in commissions and insurance
taxes are generally related to changes in the level of variable product sales.
Insurance taxes are impacted by several other factors which include an
increase in FICA taxes primarily due to bonuses and an increase in state
licenses and fees. Most costs incurred as the result of new sales have been
deferred, thus having very little impact on earnings.
General expenses increased $2.0 million or 47.2%, to $6.3 million, in the
first quarter of 1998. The Company uses a network of wholesalers to distribute
its products and the salaries of these wholesalers are included in general
expenses. The portion of these salaries and related expenses which vary with
sales production levels are deferred, thus having little impact on earnings.
The increase in general expenses was partially offset by reimbursements
received from Equitable Life, an affiliate, for certain advisory, computer and
other resources and services provided by Golden American. Management expects
general expenses to continue to increase in 1998 as a result of the emphasis
on expanding the salaried wholesaler distribution network.
The Company's deferred policy acquisition costs ("DPAC"), previous balance of
present value of in force acquired ("PVIF") and unearned revenue reserve, as
of the merger date, were eliminated and an asset of $44.3 million representing
PVIF was established for all policies in force at the merger date. In the
first quarter of 1998, PVIF increased $0.2 million as a result of an
adjustment of the merger costs. The amortization of PVIF and DPAC increased
$73,000, or 3.0%, in the first quarter of 1998. Based on current conditions
and assumptions as to the impact of future events on acquired policies in
force, the expected approximate net amortization is $4.6 million for the
remainder of 1998, $6.0 million in 1999, $5.6 million in 2000, $5.1 million in
2001, $4.2 million in 2002 and $3.4 million in 2003. Certain expense
estimates inherent in the cost of the merger may change resulting in changes
of the allocation of the purchase price. If changes occur, the impact could
result in changes to PVIF and the related amortization and deferred taxes.
Actual amortization may vary based upon changes in assumptions and experience.
Amortization of goodwill during the first quarter of 1998 totaled $0.9
million. Goodwill resulting from the merger is being amortized on a
straight-line basis over 40 years and is expected to approximate $3.8 million
annually.
Interest expense on the $25 million surplus note issued in December 1996, was
$0.5 million, in the first quarter of 1998 and 1997. In addition, Golden
American paid interest of $0.2 million on the line of credit during the first
quarter of 1998. Golden American also paid $0.2 million in the first quarter
of 1998 to ING America Insurance Holdings, Inc. for interest on the reciprocal
loan agreement.
INCOME
Net income for the first quarter of 1998 was $0.4 million, an increase of
$4,000, or 1.0%, from the same period of 1997.
FINANCIAL CONDITION
___________________
INVESTMENTS
The financial statement carrying value of the Company's total investment
portfolio grew 13.2% in the first quarter of 1998. The amortized cost basis
of the Company's total investment portfolio grew 13.4% during the same
period. All of the Company's investments, other than mortgage loans, are
carried at fair value in the Company's financial statements. As such,
growth in the carrying value of the Company's investment portfolio included
changes in unrealized appreciation and depreciation of fixed maturity and
equity securities as well as growth in the cost basis of these securities.
Growth in the cost basis of the Company's investment portfolio resulted from
the investment of premiums from the sale of the Company's fixed account
option. The Company manages the growth of its insurance operations in order
to maintain adequate capital ratios.
To support the fixed account option of the Company's variable insurance
products, cash flow was invested primarily in fixed maturity securities and
equity securities. At March 31, 1998, the Company's investment portfolio at
amortized cost was $589.1 million with a yield of 6.7% and carrying value of
$589.6 million.
FIXED MATURITY SECURITIES: At March 31, 1998, the Company had fixed
maturities with an amortized cost of $455.3 million and an estimated fair
value of $455.5 million. The individual securities in the Company's fixed
maturities portfolio (at amortized cost) include investment grade securities
($397.4 million or 87.3%), which include securities issued by the U.S.
government, its agencies and corporations that are rated at least BBB- by
Standard & Poor's Rating Services ("Standard & Poor's"), and below investment
grade securities ($45.3 million or 9.9%), which are securities issued by
corporations that are rated BB+ to B- by Standard & Poor's. Securities not
rated by Standard & Poor's had a National Association of Insurance
Commissioners ("NAIC") rating of 1, 3 or 4 ($12.6 million or 2.8%).
The Company classifies 100% of its securities as available for sale. Net
unrealized appreciation of fixed maturity securities of $0.2 million was
comprised of gross appreciation of $1.4 million and gross depreciation of $1.2
million. Net unrealized holding gains on these securities, net of adjustments
to DPAC, PVIF and deferred income taxes, increased stockholder's equity by
$91,000 at March 31, 1998.
The Company began investing in below investment grade securities during 1996.
At March 31, 1998, the amortized cost value of the Company's total investment
in below investment grade securities was $46.4 million, or 7.9%, of the
Company's investment portfolio. The Company intends to purchase additional
below investment grade securities, but it does not expect the percentage of
its portfolio invested in below investment grade securities to exceed 10% of
its investment portfolio. At March 31, 1998, the yield at amortized cost on
the Company's below investment grade portfolio was 7.9% compared to 6.4% for
the Company's investment grade corporate bond portfolio. The Company estimates
the fair value of its below investment grade portfolio was $46.8 million, or
100.8% of amortized cost value, at March 31, 1998.
Below investment grade securities have different characteristics than
investment grade corporate debt securities. Risk of loss upon default by the
borrower is significantly greater with respect to below investment grade
securities than with other corporate debt securities. Below investment grade
securities are generally unsecured and are often subordinated to other
creditors of the issuer. Also, issuers of below investment grade securities
usually have higher levels of debt and are more sensitive to adverse economic
conditions, such as recession or increasing interest rates, than are
investment grade issuers. The Company attempts to reduce the overall risk in
its below investment grade portfolio, as in all of its investments, through
careful credit analysis, strict investment policy guidelines, and
diversification by company and by industry.
The Company analyzes its investment portfolio, including below investment
grade securities, at least quarterly in order to determine if its ability to
realize its carrying value on any investment has been impaired. For debt and
equity securities, if impairment in value is determined to be other than
temporary (i.e. if it is probable that the Company will be unable to collect
all amounts due according to the contractual terms of the security), the cost
basis of the impaired security is written down to fair value, which becomes
the security's new cost basis. The amount of the write-down is included in
earnings as a realized loss. Future events may occur, or additional or updated
information may be received, which may necessitate future write-downs of
securities in the Company's portfolio. Significant write-downs in the
carrying value of investments could materially adversely affect the Company's
net income in future periods.
During the first quarter of 1998, fixed maturity securities designated as
available for sale with a combined amortized cost of $31.2 million were
called or repaid by their issuers. In total, net pre-tax gains from sales,
calls and repayments of fixed maturity investments amounted to $87,000 in the
first quarter of 1998.
At March 31, 1998, no fixed maturity securities were deemed to have
impairments in value that are other than temporary. The Company's fixed
maturity investment portfolio had a combined yield at amortized cost of
6.7% at March 31, 1998.
EQUITY SECURITIES: At March 31, 1998, the Company owned equity securities
with a combined cost of $14.4 million and an estimated fair value of $14.7
million. Gross unrealized appreciation of equity securities totaled $0.3
million. Equity securities are primarily comprised of the Company's investment
in shares of the mutual funds underlying the Company's registered separate
accounts.
MORTGAGE LOANS: Mortgage loans represent 14.7% of the Company's investment
portfolio. Mortgages outstanding were $86.4 million at March 31, 1998, with
an estimated fair value of $87.3 million. The Company's mortgage loan
portfolio includes 51 loans with an average size of $1.7 million and average
seasoning of 1.1 years if weighted by the number of loans. The Company's
mortgage loans are typically secured by occupied buildings in major
metropolitan locations and not speculative developments, and are diversified
by type of property and geographic location. At March 31, 1998, the yield on
the Company's mortgage loan portfolio was 7.3%.
At March 31, 1998, no mortgage loans were delinquent by 90 days or more. The
Company does not expect to incur material losses from its mortgage loan
portfolio. The Company's loan investment strategy is consistent with other
life insurance subsidiaries of EIC. The insurance subsidiaries have
experienced a historically low default rate in its mortgage loan portfolio and
has been able to recover 94.2% of the principal amount of problem mortgages
resolved in the last three years.
At March 31, 1998, the Company had no investments in default. The Company
estimates its total investment portfolio, excluding policy loans, had a fair
value approximately equal to 100.2% of its amortized cost value for accounting
purposes at March 31, 1998.
OTHER ASSETS
Accrued investment income increased $3.0 million during the first quarter of
1998 due to an increase in the overall size of the portfolio resulting from
the investment of premiums allocated to the fixed account option of the
Company's variable products.
DPAC represents certain deferred costs of acquiring new insurance business,
principally commissions and other expenses related to the production of new
business subsequent to the merger. The Company's DPAC and previous balance of
PVIF were eliminated as of the merger date and an asset representing PVIF was
established for all policies in force at the merger date. PVIF is amortized
into income in proportion to the expected gross profits of the in force
acquired in a manner similar to DPAC amortization. Any expenses which vary
with the sales of the Company's products are deferred and amortized. At March
31, 1998, the Company had DPAC and PVIF balances of $45.4 million and $41.9
million, respectively. In the first quarter of 1998, PVIF increased $0.2
million as a result of an adjustment of the merger costs.
Goodwill totaling $151.1 million representing the excess of the acquisition
cost over the fair value of net assets acquired, was established at the merger
date. Amortization of goodwill through March 31, 1998, was $0.9 million.
At March 31, 1998, the Company had $2.1 billion of separate account assets
compared to $1.6 billion at December 31, 1997. The increase in separate
account assets is due to market appreciation and growth in sales of the
Company's variable annuity and variable life separate account products.
At March 31, 1998, the Company had total assets of $3.0 billion, a 21.4%
increase from December 31, 1997.
LIABILITIES
In conjunction with the volume of variable insurance sales, the Company's
total liabilities increased $503.1 million, or 22.7%, during the first
quarter of 1998 and totaled $2.7 billion at March 31, 1998. Future policy
benefits for annuity and interest sensitive life products increased $55.7
million, or 11.0%, to $561.0 million reflecting premium growth in the
Company's fixed account option of its variable products. Market
appreciation and premium growth, net of redemptions, also accounted for the
$421.0 million, or 25.6%, increase in separate account liabilities to
$2.1 billion at March 31, 1998.
Golden American maintains a reciprocal loan agreement with ING America
Insurance Holdings Inc. ("ING AIH"), a Delaware corporation and affiliate of
EIC, to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Under this agreement, which became effective January 1,
1998 and expires on December 31, 2007, Golden American and ING AIH can borrow
up to $65 million from one another. Prior to lending funds to ING AIH, Golden
American must obtain approval from the State of Delaware Department of
Insurance. At March 31, 1998, a $39.4 million payable to ING AIH was
outstanding under this agreement.
On December 17, 1996, Golden American issued a $25 million, 8.25% surplus note
to Equitable which matures on December 17, 2026. As a result of the merger,
the surplus note was assumed by EIC.
The effects of inflation and changing prices on the Company are not material
since insurance assets and liabilities are both primarily monetary and remain
in balance. An effect of inflation, which has been low in recent years, is a
decline in purchasing power when monetary assets exceed monetary liabilities.
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
The liquidity requirements of the Company are met by cash flow from variable
insurance premiums, investment income and maturities of fixed maturity
investments and mortgage loans. The Company primarily uses funds for the
payment of insurance benefits, commissions, operating expenses and the
purchase of new investments.
The Company's home office operations are currently housed in leased locations
in Wilmington, Delaware and New York, New York. The Company intends to spend
approximately $5.0 million on capital needs during the remainder of 1998.
The Company intends to continue expanding its operations. Future growth in
the Company's operations will require additional capital. The Company
believes it will be able to fund the capital required for projected new
business primarily with future capital contributions from its Parent. On
February 28, 1998, Golden American received a capital contribution from EIC of
$18.75 million. During April 1998, Golden American received additional
capital contributions from EIC of $12.4 million.
The ability of Golden American to pay dividends to its Parent is restricted
because prior approval of insurance regulatory authorities is required for
payment of dividends to the stockholder which exceed an annual limitation.
During the remainder of 1998, Golden American cannot pay dividends to its
parent without prior approval of statutory authorities. The Company has
maintained adequate statutory capital and surplus and has not used surplus
relief or financial reinsurance, which have come under scrutiny by many state
insurance departments.
Under the provisions of the insurance laws of the State of New York, First
Golden cannot distribute any dividends to its stockholder unless a notice of
its intention to declare a dividend and amount of the dividend has been filed
not less than thirty days in advance of the proposed declaration. The
superintendent may disapprove the distribution by giving written notice to
First Golden within thirty days after the filing should the superintendent
find that the financial condition of First Golden does not warrant the
distribution.
The NAIC's risk-based capital requirements require insurance companies to
calculate and report information under a risk-based capital formula. These
requirements are intended to allow insurance regulators to identify
inadequately capitalized insurance companies based upon the type and mixture
of risks inherent in the company's operations. The formula includes
components for asset risk, liability risk, interest rate exposure and other
factors. Golden American and First Golden have complied with the NAIC's
risk-based capital reporting requirements. Amounts reported indicate that
Golden American and First Golden have total adjusted capital well above all
required capital levels.
YEAR 2000 PROJECT: Based on a study of its computer software and hardware,
the Company has determined its exposure to the Year 2000 change of the century
date issue. Management believes the Company's systems are or will be
substantially compliant by Year 2000 and has engaged external consultants to
validate this assumption. Golden American has spent approximately $75,000 in
the first quarter of 1998 related to the external consultants' analysis. The
additional projected cost for the external consultants analysis is
approximately $53,000 to $93,000. The only system known to be affected by this
issue is a system maintained by an affiliate who will incur the related costs
to make the system compliant. To mitigate the effect of outside influences
and other dependencies relative to the Year 2000, the Company will continue
to contact significant customers, suppliers and other third parties. To the
extent these third parties would be unable to transact business in the Year
2000 and thereafter, the Company's operations could be adversely affected.
SURPLUS NOTE: On December 17, 1996, Golden American issued a surplus note in
the amount of $25 million to Equitable. The note matures on December 17, 2026
and accrues interest of 8.25% per annum until paid. The note and accrued
interest thereon shall be subordinate to payments due to policyholders,
claimant and beneficiary claims, as well as debts owed to all other classes of
debtors of Golden American. Any payment of principal made shall be subject to
the prior approval of the Delaware Insurance Commissioner. On December 17,
1996, Golden American contributed the $25 million to First Golden acquiring
200,000 shares of common stock (100% of shares outstanding) of First Golden.
As a result of the merger, the surplus note was assumed by EIC.
RECIPROCAL LOAN AGREEMENT: Golden American maintains a reciprocal loan
agreement with ING AIH to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Under this agreement, which
became effective January 1, 1998 and expires on December 31, 2007, Golden
American and ING AIH can borrow up to $65 million from one another. Prior
to lending funds to ING AIH, Golden American must obtain approval from the
State of Delaware Department of Insurance. At March 31, 1998, a $39.4
million payable to ING AIH was outstanding under this agreement.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Any forward-looking statement contained herein or in any other oral or written
statement by the Company or any of its officers, directors or employees is
qualified by the fact that actual results of the Company may differ materially
from such statement due to the following important factors, among other risks
and uncertainties inherent in the Company's business:
1. Prevailing interest rate levels and stock market performance, which may
affect the ability of the Company to sell its products, the market value
of the Company's investments and the lapse rate of the Company's policies,
notwithstanding product design features intended to enhance persistency
of the Company's products.
2. Changes in the federal income tax laws and regulations which may affect
the relative tax advantages of the Company's products.
3. Changes in the regulation of financial services, including bank sales and
underwriting of insurance products, which may affect the competitive
environment for the Company's products.
4. Increasing competition in the sale of the Company's products.
5. Other factors affecting the performance of the Company, including, but
not limited to, market conduct claims, litigation, insurance industry
insolvencies, investment performance of the underlying portfolios of
the variable products, variable product design and sales volume by
significant sellers of the Company's variable products.
PART II. OTHER INFORMATION
Item 2-4. CHANGES IN SECURITIES, DEFAULTS UPON SENIOR SECURITIES AND
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Information called for by items 2 through 4 of this part is
omitted pursuant to General Instruction H (2)(b) of Form 10Q.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
A list of exhibits included as part of this report is set
forth in the Exhibit Index which immediately precedes such
exhibits and is hereby incorporated by reference herein.
(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.
DATE: May 14,1998 GOLDEN AMERICAN LIFE INSURANCE COMPANY
By/s/ Barnett Chernow
_____________________________
Barnett Chernow
President and Director
(Officer)
By/s/ Michellen A. Wildin
_____________________________
Michellen A. Wildin
Assistant Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
INDEX
Exhibits to Form 10-Q
Three Months ended March 31, 1998
GOLDEN AMERICAN LIFE INSURANCE COMPANY
2 PLAN OF ACQUISITION
(a) Stock Purchase Agreement dated as of May 3, 1996, between
Equitable and Whitewood Properties Corp. (incorporated by
reference from Exhibit 2 in Equitable's Form 8-K filed August
28, 1996)
(b) Agreement and Plan of Merger dated as of July 7, 1997 among ING
Groep N.V., PFHI Holdings, Inc., and Equitable (incorporated by
reference from Exhibit 2 in Equitable's Form 8-K filed July 11,
1997)
3 ARTICLES OF INCORPORATION AND BY-LAWS
(a) Articles of Incorporation of Golden American Life Insurance
Company ("Registrant" or "Golden American") (incorporated by
reference from Amendment No. 9 to Registrant's Registration
Statement on Form S-1 filed with the Securities and Exchange
Commission ("the SEC") on February 17, 1998 (File No. 33-87272))
(b)(i) By-laws of Golden American Life Insurance Company (incorporated
by reference from Amendment No. 9 the Registrant's Registration
Statement on Form S-1 filed with the SEC on February 17, 1998
(File No. 33-87272))
(ii) By-laws of Golden American Life Insurance Company, as amended
(incorporated by reference from Amendment No. 9 to Registrant's
Registration Statement on Form S-1 filed with the SEC on February
17, 1998 (File No. 33-87272))
(iii) Certificate of Amendment of the By-laws of MB Variable Life
Insurance Company, as amended (incorporated by reference from
Amendment No. 9 Registrant's Registration Statement on Form S-1
filed with the SEC on February 17, 1998 (File No. 33-87272))
(iv) By-laws of Golden American Life Insurance Company, as amended
(12/21/93) (incorporated by reference from Amendment No. 9 to
Registrant's Registration Statement filed on Form S-1 filed with
the SEC on February 17, 1998 (File No. 33-87272))
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
(a) Individual Deferred Combination Variable and Fixed Annuity
Contract (incorporated by reference from Exhibit 4(e) to Amendment
No. 4 of Registrant's Registration Statement on Form S-1 filed
with the SEC on or about May 1, 1996 (File No. 33-87272))
(b) Discretionary Group Deferred Combination Variable Annuity Contract
(incorporated by reference from Exhibit 4(f) to Amendment No. 4 of
Registrant's Registration Statement on Form S-1 filed with the SEC
on or about May 1, 1996 (File No. 33-87272))
(c) Individual Deferred Variable Annuity Contract (incorporated by
reference from Exhibit 4(g) to Amendment No. 4 of Registrant's
Registration Statement on Form S-1 filed with the SEC on or about
May 1, 1996 (File No. 33-87272))
INDEX
Exhibits to Form 10-Q
Three Months ended March 31, 1998
GOLDEN AMERICAN LIFE INSURANCE COMPANY
(d) Individual Deferred Combination Variable and Fixed Annuity
Application (incorporated by reference from Exhibit 4(k) to a
Registration Statement for Golden American on Form S-1 filed
with the SEC on April 29, 1998 (File No. 333-51353))
(e) Group Deferred Combination Variable and Fixed Annuity Enrollment
Form (incorporated by reference from Exhibit 4(l) to a
Registration Statement for Golden American on Form S-1 filed with
the SEC on April 29, 1998 (File No. 333-51353))
(f) Individual Deferred Variable Annuity Application (incorporated by
reference from Exhibit 4(m) to a Registration Statement for
Golden American on Form S-1 filed with the SEC on April 29, 1998
(File No. 333-51353))
(g) Individual Deferred Variable and Fixed Annuity Contract
(incorporated by reference from Exhibit 4(a) to Amendment No. 2
to a Registration Statement for Golden American filed with the
SEC on February 12, 1998 (File No. 333-28765))
(h) Group Deferred Variable and Fixed Annuity Contract Individual
Deferred Variable and Fixed Annuity Contract (incorporated by
reference from Exhibit 4(b) to Amendment No. 2 to a Registration
Statement for Golden American filed with the SEC on February 12,
1998 (File No. 333-28765))
(i) Individual Deferred Variable Annuity Contract (incorporated by
reference from Exhibit 4(c) to Amendment No. 2 to a Registrant
Statement for Golden American filed with the SEC on February 12,
1998 (File No. 333-28765))
(j) Individual Deferred Variable and Fixed Annuity Contract
(incorporated by reference from Exhibit 4(a) to Amendment No. 2
to a Registration Statement for Golden American filed with the
SEC on February 12, 1998 (File No. 333-28681))
(k) Group Deferred Variable and Fixed Annuity Contract Individual
Deferred Variable and Fixed Annuity Contract (incorporated by
reference from Exhibit 4(b) to Amendment No. 2 to a
Registration Statement for Golden American filed with the SEC on
February 12, 1998 (File No. 333-28681))
(l) Individual Deferred Variable Annuity Contract (incorporated
by reference from Exhibit 4(c) to Amendment No. 2 to a
Registration Statement for Golden American filed with the SEC
on February 12, 1998 (File No. 333-28681))
(m) Individual Deferred Variable and Fixed Annuity Contract
(incorporated by reference from Exhibit 4(a) to Amendment No. 2
to a Registration Statement for Golden American filed with the
SEC on February 12, 1998 (File No. 333-28743))
INDEX
Exhibits to Form 10-Q
Three Months ended March 31, 1998
GOLDEN AMERICAN LIFE INSURANCE COMPANY
(n) Group Deferred Variable and Fixed Annuity Contract Individual
Deferred Variable and Fixed Annuity Contract (incorporated by
reference from Exhibit 4(b) to Amendment No. 2 to a
Registration Statement for Golden American filed with the SEC on
February 12, 1998 (File No. 333-28743))
(o) Individual Deferred Variable Annuity Contract (incorporated
by reference from Exhibit 4(c) to Amendment No. 2 to a
Registration Statement for Golden American filed with the SEC on
February 12, 1998 (File No. 333-28743))
10 MATERIAL CONTRACTS
(a) Administrative Services Agreement, dated as of January 1, 1997,
between Golden American Life Insurance Company and Equitable Life
Insurance Company of Iowa (incorporated by reference from Exhibit
10(a) to a Registration Statement for Golden American on Form S-1
filed with the SEC on April 29, 1998 (File No. 333-51353))
(b) Service Agreement, dated as of January 1, 1994, between Golden
American Life Insurance Company and Directed Services, Inc.
(incorporated by reference from Exhibit 10(b) to a Registration
Statement for Golden American on Form S-1 filed with the SEC on
April 29, 1998 (File No. 333-51353))
(c) Service Agreement, dated as of January 1, 1997, between Golden
American Life Insurance Company and Equitable Investment Services,
Inc. (incorporated by reference from Exhibit 10(c) to a
Registration Statement for Golden American on Form S-1 filed with
the SEC on April 29, 1998 (File No. 333-28743))
27 FINANCIAL DATA SCHEDULE (ELECTRONIC FILING ONLY)
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