FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 333-59765
333-59769
333-82427
LINCOLN BENEFIT LIFE COMPANY
(Exact name of registrant as specified in its charter)
Nebraska 470221457
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2940 South 84th Street
Lincoln, Nebraska 68506-4142
(Address of principal executive offices)(zip code)
1-800-525-9287
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter 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
Indicate the number of shares of each of the issuer's classes of common
stock as of June 30, 2000; there were 25,000 shares of common capital stock
outstanding, par value $100 per share all of which shares are held by Allstate
Life Insurance Company.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Statements of Operations
Three Months Ended June 30, 2000 and
June 30, 1999 (Unaudited)....................................... 3
Statements of Financial Position
June 30, 2000(Unaudited) and December 31, 1999.................. 4
Statements of Cash Flows
Three Months Ended June 30, 2000 and
June 30 , 1999 (Unaudited)................................. 5
Notes to Financial Statements.................................... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................10
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK*.................................................N/A
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS................................................. 14
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS*........................N/A
Item 3. DEFAULTS UPON SENIOR SECURITIES*..................................N/A
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS*..........................................................N/A
Item 5. OTHER INFORMATION................................................. 14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.................................. 14
SIGNATURE PAGE.............................................................. 15
*Omitted pursuant to General Instruction H(2) of Form 10-Q.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LINCOLN BENEFIT LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- ---------------------------------
-------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
($ in thousands) 2000 1999 2000 1999
--------------- --------------- --------------- ----------------
-------------------------------- ---------------------------------
(Unaudited) (Unaudited)
Net investment income $ 3,171 $ 2,727 $ 5,955 $ 5,386
Realized capital gains and losses 3 (410) - (409)
Other income (expense) 7 (144) (19) (173)
------- ------- ------- -------
Income from operations before
income tax expense 3,181 2,173 5,936 4,804
Income tax expense 1,113 751 2,077 1,681
------ ---- ------ ------
Net income $ 2,068 $ 1,422 $ 3,859 $ 3,123
======== ======== ======== =======
</TABLE>
See notes to financial statements.
3
<PAGE>
LINCOLN BENEFIT LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- -------------------
------------------- -------------------
<S> <C> <C>
($ in thousands, except par value data) (Unaudited)
Assets
Investments
Fixed income securities, at fair value
(amortized cost $159,153 and $158,747) $ 157,688 $ 157,218
Short-term 7,709 1,919
------ -----
Total investments 165,397 159,137
Cash 1,260 982
Reinsurance recoverable from
Allstate Life Insurance Company, net 8,093,589 7,539,995
Reinsurance recoverable from non-affiliates, net 293,818 260,324
Receivable from affiliates, net 7,492 -
Other assets 2,751 4,447
Separate Accounts 1,660,881 1,411,996
---------- ----------
Total assets $ 10,225,188 $ 9,376,881
============= ===========
Liabilities
Reserve for life-contingent contract benefits $ 472,059 $ 419,117
Contractholder funds 7,907,432 7,369,664
Current income taxes payable 4,170 3,404
Deferred income taxes 2,079 745
Payable to affiliates, net - 12,650
Other liabilities and accrued expenses 16,890 1,528
Separate Accounts 1,660,881 1,411,996
---------- ----------
Total liabilities 10,063,511 9,219,104
----------- ----------
Commitments and Contingent Liabilities (Note 4)
Shareholder's Equity
Common stock, $100 par value, 30 thousand shares
authorized, 25 thousand issued and outstanding 2,500 2,500
Additional capital paid-in 116,750 116,750
Retained income 43,380 39,521
Accumulated other comprehensive income:
Unrealized net capital losses (953) (994)
----- -----
Total accumulated other comprehensive income (953) (994)
----- -----
Total shareholder's equity 161,677 157,777
-------- -------
Total liabilities and shareholder's equity $ 10,225,188 $ 9,376,881
============= ===========
</TABLE>
See notes to financial statements.
4
<PAGE>
LINCOLN BENEFIT LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
----------------------------------------
($ in thousands) 2000 1999
----------------- -----------------
----------------------------------------
(Unaudited)
Cash flows from operating activities
<S> <C> <C>
Net income $ 3,859 $ 3,123
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and other non-cash items (475) 7
Realized capital gains and losses - 409
Changes in:
Reserve for life-contingent contract benefits
and contractholder funds 3,622 (3,018)
Income taxes payable 2,054 1,678
Other operating assets and liabilities (3,597) 1,329
------ -----
Net cash provided by operating activities 5,463 3,528
------ -----
Cash flows from investing activities
Fixed income securities
Proceeds from sales 8,700 9,193
Investment collections 4,968 8,397
Investment purchases (13,110) (9,805)
Change in short-term investments, net (5,743) (11,919)
------- --------
Net cash used in investing activities (5,185) (4,134)
------- -------
Net (decrease) increase in cash 278 (606)
Cash at the beginning of year 982 1,579
---- -----
Cash at end of year $ 1,260 $ 973
======== ======
</TABLE>
See notes to financial statements.
5
<PAGE>
LINCOLN BENEFIT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying financial statements include the accounts of Lincoln
Benefit Life Insurance Company ("the Company"), a wholly owned subsidiary
of Allstate Life Insurance Company ("ALIC"), which is wholly owned by
Allstate Insurance Company ("AIC"), a wholly owned subsidiary of The
Allstate Corporation (the "Corporation"). These financial statements have
been prepared in conformity with accounting principles generally accepted
in the United States of America.
The financial statements and notes as of June 30, 2000, and for the
three month and six month periods ended June 30, 2000 and 1999, are
unaudited. The financial statements reflect all adjustments (consisting
only of normal recurring accruals) which are, in the opinion of management,
necessary for the fair presentation of the financial position, results of
operations and cash flows for the interim periods. The financial statements
and notes should be read in conjunction with the financial statements and
notes thereto included in the Lincoln Benefit Life Insurance Company Annual
Report on Form 10-K for 1999. The results of operations for the interim
periods should not be considered indicative of results to be expected for
the full year.
On January 25, 2000, the Company paid a dividend of all common shares
of AFD, Inc. ("AFDI") stock, a registered broker-dealer, to ALIC. Prior to
the dividend, AFDI had been consolidated in the Company's financial
statements and related disclosures. In conjunction with the dividend, the
Company has restated its prior year financial results to exclude AFDI.
2. Reinsurance
The Company has reinsurance agreements whereby certain premiums,
contract charges, credited interest, policy benefits and certain expenses
are ceded to ALIC and reflected net of such reinsurance in the statements
of operations. Reinsurance recoverable and the related reserve for
life-contingent contract benefits and contractholder funds are reported
separately in the statements of financial position. The Company continues
to have primary liability as the direct insurer for risks reinsured.
6
<PAGE>
LINCOLN BENEFIT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Investment income earned on the assets which support contractholder funds
and the reserve for life-contingent contract benefits is not included in the
Company's financial statements as those assets are owned and managed under terms
of the reinsurance agreements. The following table summarizes amounts which were
ceded to ALIC under reinsurance agreements.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------ ----------------------------------
($ in thousands) 2000 1999 2000 1999
---------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Premiums $ 16,899 $ 16,541 $ 35,757 $ 29,924
Contract charges 40,935 29,041 75,407 60,938
Credited interest, policy benefits
and certain expenses 138,229 182,651 311,713 349,939
</TABLE>
The Company also purchases reinsurance from non-affiliates. The following
table summarizes amounts which were ceded to third parties under reinsurance
agreements.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------ ----------------------------------
($ in thousands) 2000 1999 2000 1999
---------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Premiums $ 49,688 $ 45,688 $ 95,287 $ 75,625
Credited interest, policy benefits
and certain expenses 49,176 50,905 113,573 108,276
</TABLE>
7
<PAGE>
LINCOLN BENEFIT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Comprehensive Income
The components of other comprehensive income on a pretax and after-tax
basis are as follows:
<TABLE>
<CAPTION>
Three months ended June 30,
------------------------------------------------------------------------
($ in thousands) 2000 1999
---------------------------------- ----------------------------------
After- After-
Pretax Tax tax Pretax Tax tax
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized capital gains and losses:
Unrealized holding gains (losses)
arising during the period $ (63) 22 $ (41) $(4,630) $1,620 $ (3,010)
Less: reclassification adjustments 3 (1) 2 (410) 143 (267)
--------- -------- -------- ------- -------- -------
Unrealized net capital gains (losses) (66) 23 (43) (4,220) 1,477 (2,743)
-------- -------- -------- ------- -------- -------
Other comprehensive income (loss) $ (66) $ 23 (43) $(4,220) $1,477 (2,743)
====== ==== ======= ======
Net income 2,068 1,422
------- -------
Comprehensive income (loss) $ 2,025 $ (1,321)
======= ========
Six months ended June 30,
------------------------------------------------------------------------
($ in thousands) 2000 1999
---------------------------------- ----------------------------------
After- After-
Pretax Tax tax Pretax Tax tax
------------------------------------------------------------------------
Unrealized capital gains and losses:
Unrealized holding gains (losses)
arising during the period $ 64 $ (23) $ 41 $ (7,795) $2,728 $ (5,067)
===== =====
Less: reclassification adjustments - - - (409) 143 (266)
--------- ------- ------- -------- ------- ---------
Unrealized net capital gains (losses) 64 (23) 41 (7,386) 2,585 (4,801)
-------- ------- ------ -------- ------- ---------
Other comprehensive income (loss) $ 64 $ (23) 41 $ (7,386) $2,585 (4,801)
===== ===== ========= ======
Net income 3,859 3,123
------- --------
Comprehensive income (loss) $ 3,900 $ (1,678)
======= ========
</TABLE>
8
<PAGE>
LINCOLN BENEFIT LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. Regulation and legal proceedings
The Company's business is subject to the effects of a changing social,
economic and regulatory environment. Recent public and regulatory
initiatives have varied and include employee benefit regulations, removal
of barriers preventing banks from engaging in the securities and insurance
business, tax law changes affecting the taxation of insurance companies,
and the tax treatment of insurance products and its impact on the relative
desirability of various personal investment vehicles. The ultimate changes
and eventual effects, if any, of these initiatives are uncertain.
In the normal course of its business, the Company is involved in
pending or threatened litigation and regulatory actions in which claims for
monetary damages are asserted. At this time, based on their present status,
it is the opinion of management, that the ultimate liability, if any, in
one or more of these actions in excess of amounts currently reserved is not
expected to have a material effect on the results of operations, liquidity
or financial position of the Company.
9
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTH AND
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
The following discussion highlights significant factors influencing results
of operations and changes in financial position of Lincoln Benefit Life
Insurance Company (the "Company"). It should be read in conjunction with the
financial statements and related notes thereto found under Part I. Item 1
contained herein and with the discussion, analysis, financial statements and
notes thereto in Part I. Item 1 and Part II. Items 7 and 8 of the Lincoln
Benefit Life Insurance Company Annual Report on Form 10-K for the year ended
December 31, 1999.
The Company, a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"), which is a wholly owned subsidiary of Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation ("Corporation"),
markets life insurance and savings products through independent insurance agents
and securities firms. Life insurance consists of traditional products, including
term and whole life, interest-sensitive life, immediate annuities with life
contingencies, variable life and indexed life insurance. Savings products
include deferred annuities and immediate annuities without life contingencies.
Deferred annuities include fixed rate, market value adjusted, indexed and
variable annuities.
The Company has identified itself as a single segment entity.
The assets and liabilities related to variable annuity and variable life
contracts are legally segregated and reflected as Separate Accounts. The assets
of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claim to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized capital gains and losses of the Separate Accounts
accrue directly to the contractholders and therefore, are not included in the
Company's statements of operations.
On January 25, 2000, the Company paid a dividend of all common shares of
AFD, Inc. ("AFDI") stock, a registered broker-dealer, to ALIC. Prior to the
dividend, AFDI had been consolidated in the Company's financial statements and
related disclosures. In conjunction with the dividend, the Company has restated
its prior year financial results to exclude AFDI.
Results of Operations
---------------------
<TABLE>
<CAPTION>
($ in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
-------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Net investment income $ 3,171 $ 2,727 $ 5,955 $ 5,386
======= ======= ======= =======
Realized capital gains and losses, after tax $ 2 $ (267) $ - $ (266)
======= ======= ======= =======
Net income $ 2,068 $ 1,422 $ 3,859 $ 3,123
======= ======= ======= =======
</TABLE>
The Company has reinsurance agreements under which contract and policy
related transactions are transferred, primarily to ALIC. The Company also has
reinsurance agreements with third parties. The Company's results of operations
include primarily net investment income and realized capital gains and losses
earned on the assets of the Company that are not transferred under the
reinsurance agreements. Certain non-investment related expenses which are not
transferred under reinsurance agreements are presented in other expenses.
10
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTH AND
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
Net income for the second quarter and first six months of 2000 increased
45.4% to $2.1 million and 23.6% to $3.9 million, respectively, over the same
periods in 1999, due primarily to increased net investment income during both
periods. Net investment income for the three month and six month periods ended
June 30, 2000 increased 16.3% to $3.2 million and 10.6% to $6.0 million,
respectively, primarily attributable to higher investment balances. Realized
capital gains, after-tax, were $2 thousand for the second quarter and zero for
the first six months of 2000, compared to realized capital losses, after-tax, of
$267 thousand and $266 thousand for the same periods last year, respectively.
Period to period fluctuations in realized capital gains are largely the result
of timing of sales decisions reflecting management's decision on positioning the
portfolio, as well as assessments of individual securities and overall market
conditions.
Financial Position
------------------
<TABLE>
<CAPTION>
($ in thousands)
June 30, December 31,
2000 1999
------------------- --------------------
<S> <C> <C> <C>
Fixed income securities (1) $ 157,688 $ 157,218
Short-term investments 7,709 1,919
------------------ -------------------
Total investments $ 165,397 $ 159,137
=========== ===========
Reinsurance recoverable from ALIC, net $ 8,093,589 $ 7,539,995
=========== ===========
Separate Account assets and liabilities $ 1,660,881 $ 1,411,996
=========== ===========
Contractholder funds $ 7,907,432 $ 7,369,664
=========== ===========
</TABLE>
[FN]
(1) Fixed income securities are carried at fair value. Amortized cost
for these securities was $159,153 and $158,747 at June 30, 2000 and
December 31, 1999, respectively.
</FN>
Total investments were $165.4 million at June 30, 2000 compared to $159.1
million at December 31, 1999. The increase was due primarily to positive cash
flows generated from operations. Unrealized net capital losses on fixed income
securities were $1.5 million at June 30, 2000 and December 31, 1999. Investments
at June 30, 2000, excluding Separate Accounts and unrealized gains and losses on
fixed income securities, grew 3.9% from December 31, 1999.
At June 30, 2000, all of the Company's fixed income securities portfolio is
rated investment grade, which is defined by the Company as a security having a
National Association of Insurance Commissioners ("NAIC") rating of 1 or 2, a
Moody's rating of Aaa, Aa, A or Baa, or a comparable Company internal rating.
During the six months ended June 30, 2000, contractholder funds increased
$537.8 million and amounts recoverable from ALIC under reinsurance agreements
increased $553.6 million as compared to December 31, 1999 balances. The
increases resulted primarily from sales of market value adjusted annuity
contracts, partially offset by fixed annuity surrenders and withdrawals. As the
Company's interest-sensitive life policies and annuity contracts in-force grow
and age, the dollar amount of surrenders and withdrawals will likely increase.
While the overall amount of surrenders may increase in the future, a significant
increase in the level of surrenders relative to total contractholder account
balances is not anticipated. Reinsurance recoverable from ALIC relates to
contract benefit obligations ceded to ALIC.
Separate Account assets and liabilities increased 17.6% to $1.66 billion at
June 30, 2000 as compared to the December 31, 1999 balance. The increases were
primarily attributable to sales of variable annuity contracts, partially offset
by surrenders and withdrawals.
11
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTH AND
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
Liquidity and Capital Resources
-------------------------------
Under the terms of reinsurance agreements, premiums and deposits, excluding
those relating to Separate Accounts, are transferred primarily to ALIC, which
maintains the investment portfolios supporting the Company's products. Payments
of policyholder claims, benefits, contract maturities, contract surrenders and
withdrawals and certain operating costs are also reimbursed primarily by ALIC,
under the terms of the reinsurance agreements. The Company continues to have
primary liability as a direct reinsurer for risks insured. The Company's ability
to meet liquidity demands is dependent on ALIC's ability to meet those demands.
ALIC's claims-paying ability was rated Aa2, AA+, and A+ by Moody's, Standard &
Poor's and A.M. Best, respectively, at June 30, 2000.
The primary sources for the remainder of the Company's funds are collection
of principal and interest from the investment portfolio and capital
contributions from ALIC. The primary uses for the remainder of the Company's
funds are to purchase investments and pay costs associated with the maintenance
of the Company's investment portfolio.
At June 30, 2000, the Moody's, Standard and Poor's and A.M. Best
claims-paying ratings for the Company were Aa2, AA+, and A+ respectively.
Forward-Looking Statements
---------------------------
This document contains "forward-looking statements" that anticipate results
based on management's plans that are subject to uncertainty. These statements
are made subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995.
Forward-looking statements do not relate strictly to historical or current
facts and may be identified by their use of words like "plans," "expects,"
"will," "anticipates," "estimates," "intends," "believes," "likely" and other
words with similar meanings. These statements may address, among other things,
our strategy for growth, product development, regulatory approvals, market
position, expenses, financial results and reserves. Forward-looking statements
are based on management's current expectations of future events. We cannot
guarantee that any forward-looking statement will be accurate. However, we
believe that our forward-looking statements are based on reasonable, current
expectations and assumptions. We assume no obligation to update any
forward-looking statements as a result of new information or future events or
developments.
If the expectations or assumptions underlying our forward-looking
statements prove inaccurate or if risks or uncertainties arise, actual results
could differ materially from those communicated in our forward-looking
statements. In addition to the normal risks of business, the Company is subject
to significant risk factors, including those listed below which apply to it as
an insurance business.
o Changes in market interest rates can have adverse effects on the Company's
investment portfolio, investment income and product sales. Increases in
market interest rates have an adverse impact on the value of the investment
portfolio by decreasing unrealized capital gains on fixed income
securities. In addition, increases in market interest rates as compared to
rates offered on some of the Company's products could make those products
less attractive and therefore decrease sales or increase the level of
surrenders on these products. Declining market interest rates could have an
adverse impact on the Company's investment income as the Company reinvests
proceeds from positive cash flows from operations and maturing and called
investments in new investments that could be yielding less than the
portfolio's average rate. Additionally, the impact of decreasing Separate
Account balances resulting from fluctuating market conditions could cause
contract charges realized by the Company to decrease.
o In order to meet the anticipated cash flow requirements of the obligations
to policyholders, from time to time the effective duration of the assets
and liabilities of the investment portfolio is adjusted. Those adjustments
may have an impact on the value of the investment portfolio and on
investment income.
o State insurance regulatory authorities require insurance companies to
maintain specified levels of statutory capital and surplus. In addition,
competitive pressures require the Company to maintain financial strength or
claims-paying ability ratings. These restrictions affect the Company's
ability to use its capital.
o There is uncertainty involved in estimating the availability of reinsurance
and the collectibility of reinsurance recoverables. This uncertainty arises
from a number of factors, including segregation by the industry generally
of reinsurance exposure into separate legal entities.
12
<PAGE>
o The Company distributes some of its products under agreements with other
financial services entities. Termination of such agreements due to changes
in control of these non-affiliated entities could have a detrimental effect
on the Company's sales. This risk may be increased due to the recent
enactment of the Gramm-Leach-Bliley Act of 1999, which eliminates many
federal and state law barriers to affiliations among banks, securities
firms, insurers and other financial service providers.
o A number of enacted and pending legislative measures may lead to increased
consolidation and increased competition in the financial services industry.
At the federal level, these measures include the recently enacted
Gramm-Leach-Bliley Act of 1999, which eliminates many federal and state law
barriers to affiliations among banks, securities firms, insurers and other
financial service providers. At the state level, these measures include
legislation to permit mutual insurance companies to convert to a hybrid
structure known as a mutual holding company, thereby allowing insurance
companies owned by their policyholders to become stock insurance companies
owned (through one or more intermediate holding companies) at least 51% by
their policyholders and potentially up to 49% by stockholders. Also several
large mutual life insurers have used or are expected to use existing state
laws and regulations governing the conversion of mutual insurance companies
into stock insurance companies (demutualization). These measures may also
increase competition for capital among financial service providers.
o Deferred annuities and interest-sensitive life insurance products receive
favorable policyholder taxation under current tax laws and regulations. Any
legislative or regulatory changes that adversely alter this treatment are
likely to negatively affect the demand for these products.
o Financial strength ratings have become an increasingly important factor in
establishing the competitive position of insurance companies and may
generally be expected to have an effect on an insurance company's business.
On an ongoing basis, rating organizations review the financial performance
and condition of insurers. Downgrades in one or more of the ratings of the
Company could have a material adverse effect on the Company's business,
financial condition and results of operations.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company and its Board of Directors know of no material legal proceedings
pending to which the Company is a party or which would materially affect the
Company. The Company is involved in pending and threatened litigation in the
normal course of its business in which claims for monetary damages are asserted.
Management, after consultation with legal counsel, does not anticipate the
ultimate liability arising from such pending or threatened litigation to have a
material effect on the financial condition of the Company.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-k
(a) Exhibits required by Item 601 of Regulation S-K
(2) None
(3) (i) Articles of Incorporation*
(ii) By-laws*
(4) Lincoln Benefit Life Company Flexible Premium Deferred
Annuity Contract and Application**
(10) Reinsurance Agreement between Lincoln Benefit Life Company
and Allstate Life Insurance Company*
(11) None
(15) None
(18) None
(19) None
(22) None
(23) (a) Consent of Independent Public Accountants***
(b) Consent of Attorneys***
(24) None
(27) Financial Data Schedule
(99) None
(b) Reports on 8-K
No reports on Form 8-K were filed during the second quarter of
1998.
*Incorporated herein by reference to the Registration Statement on Form N-4 for
Lincoln Benefit Life Variable Annuity Account (File No. 333-50545, 811-07924)
filed April 21, 1998.
**Incorporated herein by reference to the Registration Statement on Form N-4 for
Lincoln Benefit Life Variable Annuity Account (File No. 333-50545, 811-07924)
filed April 21, 1998. Incorporated herein by reference to the Registration
Statement on Form N-4 for Lincoln Benefit Life Variable Annuity Account (File
No. 333-50737, 811-07924) filed April 22, 1998. Incorporated by reference to the
Registration Statement on Form N-4 for Lincoln Benefit Life Variable Annuity
Account (File No. 333-82427, 811-07924) filed July 8, 1999.
***Incorporated herein by reference to the Post-effective Amendment #2 to
Registration Statement on Form S-3 for Lincoln Benefit life Company (File No.
333-59765) filed April 28, 2000. Incorporated herein by reference to the
Post-effective Amendment #2 to Registration Statement on Form S-3 for Lincoln
Benefit Life Company (File No. 333-59769) filed April 28, 2000. Incorporated
herein by reference to Post-effective Amendment No. 1 to the Registration
Statement on Form S-3 for Lincoln Benefit Life Company (File No. 333-88045)
filed April 5, 2000.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on the 10th day of August, 2000.
LINCOLN BENEFIT LIFE COMPANY
(Registrant)
/s/B. Eugene Wraith
----------------------- PRESIDENT, CHIEF OPERATING
B. EUGENE WRAITH OFFICER AND DIRECTOR
(PRINCIPAL EXECUTIVE OFFICER)
/S/ Marvin P. Ehly
----------------------- SENIOR VICE PRESIDENT
MARVIN P. EHLY TREASURER, CONTROLLER AND DIRECTOR
(PRINCIPAL FINANCIAL OFFICER)
(PRINCIPAL ACCOUNTING OFFICER)
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