<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
_____________________
Commission File Number: 33-57020
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Exact name of registrant as specified in its charter)
MICHIGAN
(State or other jurisdiction of incorporation or organization)
23-2030787
(I.R.S. Employer Identification No.)
_____________________
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of principal executive offices)
(416) 926-6700
(Registrant's telephone number, including area code)
_____________________
Indicate by check mark whether the registrant (1) has filed 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.
X Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's sole class of common
stock, as of June 30, 1996 is 4,501,858.
<PAGE> 2
PART I - FINANCIAL INFORMATION
<PAGE> 3
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 1996
OVERVIEW
The Company is active in two distinct businesses:
1) Domestically, the sale of Variable Insurance Products
2) Internationally, the sale of participating insurance products
through Branch Operations in Taiwan
VARIABLE PRODUCTS
- - During the last four years the Company has grown significantly through
the successful growth in variable insurance sales. This growth reflects:
1) a continuing shift in consumer preference as they seek greater control
over their investment decision making,
2) more active marketing/sales practices by the company, and
3) increased consumer acceptance of this relatively new product.
This growth has continued in 1996 with variable universal life premiums being
138% of the same period in 1995. The Company's introduction in late 1995 of a
five year no lapse guarantee on VUL that, prevented policy lapse triggered by
negative investment performance plus the addition on February 16 of eight new
investment accounts have been positively received and will be reflected in
future sales growth.
In particular, the new investment accounts including outside fund managers have
increased available investment options while providing policyholders with the
ability to increase diversification not only by investment type but also by
portfolio management style. Outside fund managers now include: Fidelity
Management Trust Company, Goldman Sachs Asset Management, Salomon Brothers
Asset Management and Wellington Management Trust.
We remain positive about the future growth and profitability from this product
line.
- - Variable annuity deposits during this period are 94% of 1995. The Company
de-emphasized the sale of variable annuities and concentrated on the sale
of estate planning variable life products which is more consistent with
its client/producer base.
Variable annuities for Manulife Financial are being marketed through a recently
acquired company, North American Security Life.
TAIWAN
The Company entered Taiwan in 1993 as a start-up venture. During 1995 the
Company commenced full operations that has resulted in significant expenditures
on agent recruitment and training. The level of recruitment and training
continued in the first half of 1996, and while this has had a negative impact
on short term earnings, future earnings will benefit from this investment. The
growth in this region is promising and offers the opportunity for significant
long term profit.
1
<PAGE> 4
ASSETS
SEPTEMBER, 1996 COMPARED TO DECEMBER, 1995
At September 30, 1996, the Company's total assets were $713.4 million, an
increase of $124.7 million or 21% from year-end 1995. This change is
principally a result of Separate Account asset growth of $123.2 million,
reflecting net cash transfers to the separate accounts of $97.0 million plus
$26.2 million in gains due to strong investment performance of the underlying
investment funds.
Taxes recoverable increased to $8.9 million reflecting the benefit achieved
through the Company filing a consolidated tax return with its parent.
LIABILITIES
SEPTEMBER, 1996 COMPARED TO DECEMBER, 1995
The Company's liabilities have increased by $119.7 million over year-end 1995
mainly due to Separate Account liabilities increasing $123.2 million. Separate
Account liabilities move in tandem with changes in Separate Account assets.
The increase in reserves of $4.7 million is mainly due to the rapid growth in
Taiwan of traditional business.
The increase in amounts due from separate accounts of $13.0 million recognizes
the impact of separate account expense allowance previously netted against
reserves.
2
<PAGE> 5
CAPITAL AND SURPLUS
SEPTEMBER, 1996 COMPARED TO DECEMBER, 1995
At September 30, 1996, The Company's capital and surplus totalled $61.1
million, an increase of $4.8 million over year-end 1995 as a result of:
- - Operating losses totalling $10.8 million.
- - Offsetting the operating losses was a capital contribution of $15 million
from the issuance of common shares.
- - The increase in AVR which flows through the statement of changes in
capital surplus of $1.1 million was largely offset by the unrealized
gains of $1.2 million on the Company's seed money investment in Manulife
Series Fund, Inc. and $510 thousand increase in the equity in
Manufacturers Adviser Corporation.
RESULTS OF OPERATIONS
SEPTEMBER, 1996 COMPARED TO SEPTEMBER, 1995
The loss from operations for the nine months ended September 30, 1996 decreased
from $12.1 million in 1995 to $10.8 million in 1996. The main contributors to
these losses were:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
U.S.Operations ($1.7) ($5.9)
Taiwan Operations (14.5) (6.2)
Tax recovery 5.4
------ ------
($10.8) ($12.1)
====== ======
</TABLE>
U.S. operations improved due to increased policy fees on renewal business as
business matures.
Taiwan's operating loss increased as a result of significant start up costs
associated with the Company's growing Taiwan Branch. In particular, costs
associated with producer recruitment are heavy.
3
<PAGE> 6
CASH FLOW
The majority of the Company's cash flows arise from policyholder transactions
related to the Separate Accounts and, as such, the assets and liabilities of
these products are exactly matched. In the case of death benefits, the Company
cedes a substantial portion of the risk to Manulife Financial and its risk is
therefore minimized. The Company's cash flows on the policies are adequate to
meet the obligations retained on these contracts.
Because of the excess of expense over income, which arises from first policy
year issue, the continued success in generating sales will not only result in
losses in the Results of Operations, but will create a cash flow strain as well.
As a result, the company may look to Manulife Financial to provide the necessary
capital to support its operations. In this respect the Company received an
additional $15 million in capital contributions in the first quarter of 1996 to
fund continuing growth in Taiwan. Manulife Financial has provided a claims
guarantee for all U.S. policyowners. The guarantee does not cover the
performance of any Separate Accounts.
The Company has no material commitments for capital expenditures and with the
exception of the claims paying guarantee, is not the beneficiary of any
financing commitments not reflected on the balance sheet.
4
<PAGE> 7
The Manufacturers Life Insurance Company of America
Balance Sheet
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Assets
Bonds, at amortized cost (market $58,250,725 --1996
and $66,046,733- - 1995) $57,763,786 $62,757,202
Stocks 19,658,787 22,584,259
Short-term investments 1,666,000 0
Policy loans 8,633,442 6,955,292
------------ ------------
Total investments 87,722,015 92,296,753
Cash on hand and on deposit 7,118,793 9,674,362
Insurance premiums deferred and uncollected 1,329,534 504,818
Accrued investment income 1,050,518 1,059,536
Separate account assets 603,572,134 480,404,450
Funds receivable on reinsurance ceded 74,035 73,300
Receivable for undelivered securities 1,864,999 146,328
Taxes recoverable 8,926,316 3,308,316
Investment in subsidiary 1,590,846 1,080,184
Other assets 199,392 193,715
------------ ------------
$713,448,582 $588,741,762
============ ============
Liabilities, capital and surplus
Aggregate policy reserves $69,370,778 $63,426,096
Contract deposit funds 6,044,164 6,462,516
Amounts due from separate accounts (52,800,170) (39,799,129)
Interest maintenance and asset valuation reserves 5,503,906 4,742,400
Policy and contract claims 294,457 582,853
Provision for policyholder dividends payable 1,792,087 2,346,258
Amounts due to affiliates 11,529,256 9,049,217
Accrued liabilities 5,361,074 5,147,865
Amounts payable for undelivered securities 1,666,000 80,821
Separate account liablilities 603,572,134 480,404,450
------------ ------------
Total liabilities 652,333,686 532,443,347
Capital and surplus:
Common shares, par value $1.00; authorized,
5,000,000 shares; issued and outstanding shares
(4,501,858 -- 1996, 4,501,857 -- 1995) 4,501,858 4,501,857
Preferred shared, par value $100; authorized,
5,000,000 shares; issued and outstanding shares
(105,000 -- 1996 and 1995) 10,500,000 10,500,000
Surplus note 8,500,000 8,500,000
Capital paid in excess of par value 78,500,179 63,500,180
Surplus (40,887,141) (30,703,622)
------------ ------------
Total capital and surplus 61,114,896 56,298,415
------------ ------------
Total liablilities, capital, and surplus $713,448,582 $588,741,762
============ ============
</TABLE>
<PAGE> 8
The Manufacturers Life Insurance Company of America
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues:
Life premiums $37,441,887 $26,917,056 $115,841,149 $82,246,124
Annuity deposits 9,109,896 9,176,744 27,904,066 29,606,973
Life premiums, reinsurance assumed (831,831) (372,238) 1,101,533 5,540,618
Investment income, net of investment expenses 1,437,890 1,197,939 4,188,644 3,854,192
Amortization of interest maintenance reserve 6,169 8,353 23,309 14,172
Commission and expense allowances on
reinsurance ceded 43,397 0 147,093
Foreign exchange gain (loss) (1,451) (329,945) 40,625 (329,662)
Other revenue (19,985) 37,106 68,843 92,821
----------- ----------- ------------ -----------
Total revenues 47,185,972 36,635,015 149,315,262 121,025,238
Benefits paid or provided:
Increase (decrease) in aggregate policy reserves (2,507,208) 412,750 5,944,682 10,575,029
Increase (decrease) in liability for deposit funds 531,581 (381,781) (418,352) (223,494)
Transfers to separate accounts, net 26,345,507 19,094,364 83,952,586 65,495,626
Death benefits (68,162) 694,831 2,782,394 2,163,196
Annuity benefits 66,181 (506,892) 401,929 30,802
Disability benefits 46,294 0 151,750
Surrender benefits 8,169,058 6,683,913 17,953,597 12,938,150
----------- ----------- ------------ -----------
32,583,251 25,997,185 110,768,586 90,979,309
Insurance expenses:
Management fee 6,587,000 5,289,000 16,820,000 16,764,000
Commissions 6,896,707 4,471,643 20,718,353 13,449,277
General expenses 3,908,813 4,665,024 15,695,580 9,470,575
Commission and expense allowances
on reinsurance assumed 55,942 13,329 386,701 942,979
Interest expense 142,375 0 427,125 0
----------- ----------- ------------ -----------
17,590,837 14,438,996 54,047,759 40,626,831
----------- ----------- ------------ -----------
Loss before policyholder's dividends
and federal income tax (2,988,116) (3,801,166) (15,501,083) (10,580,902)
Dividends to policyholders 45,402 263,345 569,900 2,172,621
----------- ----------- ------------ -----------
Loss before federal income tax (3,033,518) (4,064,511) (16,070,983) (12,753,523)
Federal income tax benefit (1,009,802) 0 (5,388,798) 0
----------- ----------- ------------ -----------
Net loss from operations after policyholders'
dividends and federal income tax (2,023,716) (4,064,511) (10,682,185) (12,753,523)
Net realized capital loss 48,859 38,348 (90,480) 630,788
----------- ----------- ------------ -----------
Net loss from operations ($1,974,857) ($4,026,163) ($10,772,665) ($12,122,735)
=========== =========== ============ ===========
</TABLE>
<PAGE> 9
The Manufacturers Life Insurance Company of America
Statement of Changes in Capital and Surplus
(Unaudited)
<TABLE>
<CAPTION>
Capital
Paid in
Excess of
Capital Par Value Surplus Total
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 $23,501,857 $63,500,180 ($30,703,622) $56,298,415
Net loss from operations (10,772,665) (10,772,665)
Issuance of common shares 1 14,999,999 15,000,000
Increase in asset valuation reserve (1,118,541) (1,118,541)
Increase in nonadmitted assets 58,854 58,854
Change in net unrealized capital
gains 1,754,077 1,754,077
Change in liability for reinsurance
in unauthorized companies (105,244) (105,244)
----------- ----------- ------------ -----------
Balance, September 30, 1996 $23,501,858 $78,500,179 ($40,887,141) $61,114,896
=========== =========== ============ ===========
</TABLE>
<PAGE> 10
The Manufacturers Life Insurance Company of America
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1996 1995
------------ ------------
<S> <C> <C>
Operating activities:
Premiums collected, net $144,041,813 $117,159,968
Policy benefits paid, net (21,547,307) (15,137,221)
Commissions and other expenses paid (51,399,430) (43,854,220)
Net investment income 4,116,058 3,569,190
Other income and expenses (2,402,311) (1,351,829)
Transfers to separate accounts, net (96,953,627) (72,596,690)
------------ ------------
Net cash (used in) provided by
operating activities (24,144,804) (12,210,802)
Investing activities
Sale, maturity, or repayment of investments 85,756,967 62,744,420
Purchase of investments (77,501,732) (67,892,880)
------------ ------------
Net cash used in investing activities 8,255,235 (5,148,460)
Financing activities
Issuance of stock 15,000,000 5,150,000
------------ ------------
Net cash provided by financing activities 15,000,000 5,150,000
------------ ------------
Net increase in cash and short-term
investments (889,569) (12,209,262)
Cash and short-term investments
at beginning of year 9,674,362 15,983,758
------------ ------------
Cash and short-term investments
at end of year $ 8,784,793 $ 3,774,496
============ ============
</TABLE>
<PAGE> 11
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
September 30, 1996
1. ORGANIZATION
ORGANIZATION
The Manufacturers Life Insurance Company of America (Manufacturers Life of
America or the Company) is a wholly-owned subsidiary of Manulife Reinsurance
Corporation (USA) (The Parent), (formerly Manufacturers Life Insurance Company
of Michigan), which is in turn a wholly-owned subsidiary of The Manufacturers
Life Insurance Company (Manulife Financial), a Canadian-based mutual life
insurance company (Notes 4 and 5).
The Company issues and sells variable universal life and variable annuity
products in the United States. The Company also has a branch operation in
Taiwan to develop and market traditional insurance for the Taiwanese market. At
September 30, 1996 the Company had assets of $16,056,539 and liabilities of
$10,333,710 in the Taiwan branch.
During the nine months ended September 30, 1996, the Company received a capital
contribution of $15,000,000 from the Parent in return for one share of common
stock (par value $1).
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited financial statements of The Manufacturers Life
Insurance Company of America have been prepared in accordance with accounting
practices 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 and should be read in conjunction
with the financial statements and footnotes thereto included in the Annual
Report on Form 10-K of the Company the year ended December 31, 1995. In the
opinion of management, all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation of the financial statements for
these interim periods have been included. The results of interim periods are
not necessarily indicative of the results to be obtained for a full fiscal
year.
6
<PAGE> 12
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION (CONTINUED)
In April 1993, the Financial Accounting Standard Board issued Interpretation
40, "Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises." The Interpretation as amended is effective
for 1996 annual financial statements and thereafter, will no longer allow
statutory financial statements to be described as being prepared in conformity
with generally accepted accounting principles (GAAP). Upon the effective date
of the Interpretation, in order for financial statements to be described as
being prepared in accordance with GAAP, life insurance companies will be
required to adopt all applicable standards promulgated by the FASB in any
general purpose financial statements such companies may issue. While GAAP
standards have recently been developed for mutual life insurance companies, the
Company has not yet completed the complex and extensive historical calculations
and thus is unable to quantify the effects of the Interpretation on its
financial statements. Thus the accompanying financial statements are presented
in accordance with statutory accounting practices prescribed by the Insurance
Department of the State of Michigan.
All amounts presented are expressed in U.S. Dollars.
STOCKS
Stocks are carried at market value.
BONDS
Bonds not backed by other loans are carried at amortized cost as computed using
the interest method. Loan backed bonds and other structured securities are
valued at amortized cost using the interest method including anticipated
prepayments. Prepayment assumptions are updated periodically and are accounted
for using the prospective method. Gains and losses on sales of bonds are
calculated on the specific identification method and recognized into income
based on NAIC prescribed formulas. Short-term investments include investments
with maturities of less than one year at the date of acquisition. Market
values disclosed are based on NAIC quoted values.
POLICY LOANS
Policy loans are reported at unpaid principal balances which approximate fair
value.
ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve and Interest Maintenance Reserve were determined by
NAIC prescribed formulas and are reported as liabilities rather than as
valuation allowances or appropriations of surplus.
POLICY AND CONTRACT CLAIMS
Policy and contract claims are determined on an individual case basis for
reported losses. Estimates of incurred but not reported losses are developed
on the basis of past experience.
7
<PAGE> 13
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEPARATE ACCOUNTS
Separate account assets and liabilities reported in the accompanying financial
statements represent funds that are separately administered, principally for
variable annuity and variable life contracts. For the majority of these
contracts the contractholder, rather than the Company, bears the investment
risk. Separate account assets are recorded at market value. Operations of the
separate accounts are not included in the accompanying financial statements.
REVENUE RECOGNITION
Both premium and investment income are recorded when due.
REINSURANCE
Reinsurance premiums and claims are accounted for on a basis consistent with
that used in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums and claims are reported net of reinsured
amounts.
POLICY RESERVES
Certain policy reserves are calculated based on statutorily required interest
and mortality assumptions.
3. INVESTMENTS AND INVESTMENT INCOME
The amortized cost and market value of investments in fixed maturities (bonds)
as of September 30, 1996 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZE MARKET
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C <C> <C> <C>
U.S. Government $23,574,727 $432,425 $(199,428) $23,807,724
Foreign Government 9,258,320 75,039 (43,707) 9,289,652
Corporate 24,930,739 558,435 (335,825) 25,153,349
----------- ---------- ---------- -----------
$57,763,786 $1,065,899 $(578,960) $58,250,725
=========== ========== ========== ===========
</TABLE>
8
<PAGE> 14
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
Proceeds from sales of investments in debt securities during 1996 were
$81,149,600. Gross gains of $1,101,200 and gross losses of $1,615,209 were
realized on those sales.
The amortized cost and market value of investments in fixed maturities (bonds)
as of December 31, 1995 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
United States Government $15,145,033 $ 681,032 $(57,916) $15,768,149
Foreign Government 6,071,376 157,635 -- 6,229,011
Corporate 31,046,219 2,508,780 -- 33,554,999
Mortgage-backed securities:
U.S. Government agencies 9,522,771 -- -- 9,522,771
Corporate 971,803 -- -- 971,803
----------- ---------- -------- -----------
$62,757,202 $3,347,447 $(57,916) $66,046,733
=========== ========== ======== ===========
</TABLE>
The amortized cost and market value of fixed maturities at September 30, 1996
by contractual maturities, are shown below. Expected maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
YEARS TO MATURITY AMORTIZED COST MARKET VALUE
----------------- -------------- ------------
<S> <C> <C>
One year or less $ 3,370,562 $ 3,370,561
Greater than 1; up to 5 years 3,177,517 3,207,447
Greater than 5; up to 10 years 27,522,948 27,717,746
Due after 10 years 23,692,759 23,954,971
----------- -----------
$57,763,786 $58,250,725
=========== ===========
</TABLE>
At September 30, 1996, $10,644,347 of bonds at amortized cost were on deposit
with government insurance departments to satisfy regulatory regulations.
9
<PAGE> 15
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
Major categories of net investment income for the first nine months were as
follows:
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
1996 1995
--------- ----------
<S> <C> <C>
Gross investment income:
Bond Income $3,285,074 $3,190,652
Policy Loans 434,845 296,205
Short-term investments 645,903 624,593
Dividend Income 95,983 7,848
---------- ----------
4,461,805 4.119,298
Investment Expenses (273,161) (265,106)
---------- ----------
Net investment income $4,188,644 $3,854,192
========== ==========
</TABLE>
4. RELATED PARTY TRANSACTIONS
Manufacturers Life of America has a formal service agreement with Manulife
Financial which can be terminated by either party upon two months' notice.
Under the Agreement, Manufacturers Life of America will pay direct operating
expenses incurred each year by Manulife Financial on behalf of Manufacturers
Life of America. Services provided under the Agreement include legal,
actuarial, investment, data processing and certain other administrative
services. Costs incurred under this Agreement were $17,090,426 in the first
nine months of 1996, and $17,029,106 in 1995. In addition, there was
$4,916,476 agents' bonuses in 1996 and $3,697,487 in 1995 which were allocated
to the Company and are included in commissions.
In addition, the Company has several reinsurance agreements with Manulife
Financial which may be terminated upon the specified notice by either party.
These agreements are summarized as follows:
(a) The Company assumes two blocks of insurance from Manulife Financial under
coinsurance treaties. The Company's risk is limited to $100,000 of
initial face amount per claim plus a pro-rata share of any increase in
face amount.
(b) The Company cedes the risk in excess of $25,000 per life to Manulife
Financial under the terms of an automatic reinsurance agreement.
(c) The Company cedes a substantial portion of its risk on its Flexible
Premium Variable Life policies to Manulife Financial under the terms of a
stop loss reinsurance agreement.
10
<PAGE> 16
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS (CONTINUED)
(d) Under the terms of an automatic coinsurance agreement, the Company cedes
its risk on structured settlements to Manulife Financial.
Selected amounts relating to the above treaties reflected in the financial
statements are as follows:
<TABLE>
<CAPTION>
1996 1995
__________ __________
<S> <C> <C>
Life and annuity premiums assumed $ 1,101,533 $ 5,540,618
Other life and annuity
consideration ceded (371,518) (431,357)
Commissions and expense allowances
on reinsurance assumed (386,701) (942,979)
Policy reserves assumed 45,019,396 47,386,235
Policy reserves ceded 3,853,375 3,833,247
</TABLE>
5. FEDERAL INCOME TAX
The Company joins the Parent, The Manufacturers Life Insurance Co. (USA) and
Manulife Reinsurance Limited in filing a U.S. consolidated income tax return as
a life insurance group under provisions of the Internal Revenue Code. In
accordance with an income tax-sharing agreement dated December 29, 1983, the
Company's income tax provision (or benefit) is computed as if the Company filed
a separate income tax return. The Company receives no surtax exemption. Tax
benefits from operating losses are provided at the U.S. statutory rate plus any
tax credits attributable to the Company, provided the consolidated group
utilizes such benefits currently. Taxes recoverable in the financial
statements represent tax-related amounts receivable from affiliates.
11
<PAGE> 17
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
6. STATUTORY RESTRICTIONS ON DIVIDENDS
The Company is subject to statutory limitations on the payment of dividends to
its Parent. The Company cannot pay dividends during 1996 without the prior
approval of insurance regulatory authorities.
7. INVESTMENT IN SEPARATE ACCOUNTS
The Company markets variable life insurance and variable annuity products
through Separate Accounts which use Manulife Series Fund, Inc. as an
investment vehicle.
Common stock in the amount of $19,658,787 represents the Company's seed money
investment in Manulife Series Fund, Inc..
12
<PAGE> 18
PART II - OTHER INFORMATION
<PAGE> 19
Item 1 - Legal Proceedings
Nothing to report.
Item 2 - Changes in Securities
Nothing to report.
Item 3 - Defaults upon Senior Securities
Nothing to report.
Item 4 - Submission of Matters to a Vote
of Security Holders
On April 1, 1996 the Annual Meeting of
Shareholders was held pursuant to notice. The
following were elected as directors for a one
term:
William J. Atherton
Sandra M. Cotter
James D. Gallagher
Bruce Gordon
Theodore F. Kilkuskie, Jr.
Donald A. Guloien
Joseph J. Pietroski
John D. Richardson.
At this meeting the 1995 financial statements
were unanimously approved; the minutes of the
previous annual shareholders meeting were
unanimously approved and the legal actions of the
officers and directors of the Company taken in
the conduct of its business since the previous
annual shareholders meeting were unanimously
ratified, approved and confirmed.
Item 5 - Other Information
Nothing to report.
<PAGE> 20
Item 6A - Exhibits
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(1) Not applicable
(2) None
(3) Not applicable
(4)(a) Form of Multi-Account Incorporated by reference
Flexible Variable Annnuity to Exhibit (4)(a) to
Policy Pre-Effective Amendment
No. 1 on Form S-1 filed by
The Manufacturers Life
Insurance Company of
America on February 10,
1994 (File No. 33-57020).
(4)(b)(i) Individual Retirement Incorporated by reference
Annuity Rider to Exhibit (4)(b)(i)
to Pre-Effective Amendment
No. 1 on Form S-1 filed by
The Manufacturers Life
Insurance Company of
America on February 10,
1994 (File No. 33-57020).
(4)(b)(i)(a) Trustee-Owned Policies Incorporated by reference
Annuity Rider to Exhibit (4)(b)(i)(a)
to Pre-Effective Amendment
No.1 on Form S-1 filed by
The Manufacturers Life
Insurance Company of
America on February 10,
1994 (File No. 33-57020).
(4)(b)(ii) Unisex Endorsement Incorporated by reference
to Exhibit (4)(b)(ii)
to the registration
statement on Form N-4
filed by The Manufacturers
Life Insurance Company of
America on January 13,
1993 (File No. 33-57018).
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(5) Not Applicable
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10)(a) Reinsurance Agreement Incorporated by reference
to Exhibit (10)(a)
to Pre-Effective Amendment
No. 1 on Form S-1 filed by
The Manufacturers Life
Insurance Company of
America on February 10,
1994 (File No. 33-57020).
(10)(b)(i) Service Agreement between Incorporated by reference
Manufacturers Life of to Exhibit (8)(a)
America and The Manu- to the registration state-
facturers Life ment on Form N-4 filed by
Insurance Company The Manufacturers Life
Insurance Company of
America on January 13,
1993 (File No. 33-57018).
(10)(b)(ii) Amendment to Service Incorporated by reference
Agreement to Exhibit (8)(b)
to the registration state-
ment on Form N-4 filed by
The Manufacturers Life
Insurance Company of
America on January 13,
1993 (File No. 33-57018).
(10)(b)(iii) Second Amendment to Incorporated by reference
Service Agreement to Exhibit (10)(b)(iii)
to the registration state-
ment on Form N-4 filed by
The Manufacturers Life
Insurance Company of
America on April 29, 1994
(File No. 33-57018).
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(10)(b)(iv) Service Agreement between Incorporated by reference
The Manufacturers Life to Exhibit (10)(b)(iv)
Insurance Company and to the registration state-
ManEquity, Inc. dated ment on Form N-4 filed by
January 2, 1991 as amended The Manufacturers Life
March 1, 1994 Insurance Company of
America on April 29, 1994
(File No. 33-57018).
(10)(c) Specimen Agreement between Incorporated by reference
ManEquity, Inc. and to Exhibit (3)(b)
registered representatives (i) to the registration
statement on Form N-4
filed by The Manufacturers
Life Insurance Company of
America on January 13,
1993 (File No. 33-57018).
(10)(d) Specimen Agreement between Incorporated by reference
ManEquity, Inc. and Dealers to Exhibit (3)(b)
(ii) to the registration
statement on Form N-4
filed by The Manufacturers
Life Insurance Company of
America on January 13,
1993 (File No. 33-57018).
(11) None
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) None
(16) Not Applicable
(17) Not Applicable
(18) None
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- ------------------
<S> <C> <C>
(19) None
(20) Not Applicable
(21) Not Applicable
(22) None
(23) None
(23)(a) Consent of Jones & Blouch Incorporated by reference
to Exhibit (23)(a) to the
Post-Effective Amendment
No. 3 to the registration
Statement on Form N-4 filed
by The Manufacturers Life
Insurance Company of
America on April 26, 1996
(File No. 33-57018).
(23)(b) Consent of Ernst & Young Incorporated by reference
to Exhibit (23)(b) to the
Post-Effective Amendment
No. 3 to the registration
Statement on Form N-4 filed
by The Manufacturers Life
Insurance Company of
America on April 26, 1996
(File No. 33-57018).
(23)(c) Consent of Stephen C. Incorporated by reference
Nesbitt to part of Exhibit (5) of
the Registration State-
ment on Form S-1 filed by
The Manufacturers Life
Insurance Company of
America on January 13,
1993 (File No. 33-57020).
(24) None
(25) Not Applicable
(26) Not Applicable
(27) Financial Data Schedules
(28) Not Applicable
</TABLE>
<PAGE> 24
Item 6B - Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
---------------------------------
(Registrant)
November 11, 1996 By: Douglas H. Myers
- --------------------- -----------------------------
Date DOUGLAS H. MYERS
Vice-President, Finance
(Principal Financial Officer)
November 11, 1996 By: Donald A. Guloien
- --------------------- -----------------------------
Date DONALD A. GULOIEN
President & Director
(Principal Executive Officer)
<PAGE> 26
EXHIBITS
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 57,763,786
<DEBT-MARKET-VALUE> 58,250,725
<EQUITIES> 19,658,787
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 87,722,015
<CASH> 8,784,793
<RECOVER-REINSURE> 74,035
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 713,448,582
<POLICY-LOSSES> 69,370,778
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 294,457
<POLICY-HOLDER-FUNDS> 6,044,164
<NOTES-PAYABLE> 0
0
10,500,000
<COMMON> 4,501,858
<OTHER-SE> 46,113,038
<TOTAL-LIABILITY-AND-EQUITY> 713,448,582
144,846,748
<INVESTMENT-INCOME> 4,188,644
<INVESTMENT-GAINS> (90,480)
<OTHER-INCOME> 279,870
<BENEFITS> 110,768,586
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 54,047,759
<INCOME-PRETAX> (15,501,083)
<INCOME-TAX> (5,388,798)
<INCOME-CONTINUING> (10,772,665)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,772,665)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
