<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995 Commission file number 33-81010
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Aetna Insurance Company of America
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(Exact name of registrant as specified in its charter)
Connecticut 06-1286272
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
151 Farmington Avenue, Hartford, Connecticut 06156
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (203) 273-0978
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None
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Former name, former address and former fiscal year if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter 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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Title of Class at July 31, 1995
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Common Capital Stock,
par value $2,000 1,275
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.
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life insurance and Annuity Company)
Quarterly Report For Period Ended June 30, 1995 on Form 10-Q
TABLE OF CONTENTS
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<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income.......................................... 3
Balance Sheets................................................ 4
Statements of Changes in Shareholder's Equity................. 5
Statements of Cash Flows...................................... 6
Condensed Notes to Financial Statements....................... 7
Independent Auditors' Review Report........................... 8
Item 2. Management's Analysis of the Results of Operations.......... 9
PART II. OTHER INFORMATION........................................... 10
Signatures............................................................ 11
</TABLE>
2
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Statements of Income
(thousands)
<TABLE>
<CAPTION>
3 Months Ended June 30, 6 Months Ended June 30,
----------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Net investment income $ 179.0 $ 150.3 $ 353.0 $ 291.5
----------- ----------- ----------- -----------
Total revenue 179.0 150.3 353.0 291.5
Expenses:
Operating expenses 64.5 12.9 119.0 39.1
----------- ----------- ----------- -----------
Total expenses 64.5 12.9 119.0 39.1
Income before federal income taxes 114.5 137.4 234.0 252.4
Federal income taxes 39.9 48.0 81.7 88.3
----------- ----------- ----------- -----------
Net Income $ 74.6 $ 89.4 $ 152.3 $ 164.1
========== =========== =========== ===========
</TABLE>
See Condensed Notes to Financial Statements.
3
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Balance Sheets
(thousands)
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1995 1994
------ ---- ----
<S> <C> <C>
Investments:
Debt securities available for sale:
(amortized cost $7,957.3 and $7,043.9) $ 8,066.6 $ 6,906.5
Cash and cash equivalents 4,120.2 4,732.7
Accrued investment income 121.8 91.5
Due from parent and affiliates 194.2 --
Deferred tax asset -- 0.4
Other assets 1.4 5.1
Separate Account assets 109.0 --
--------------- ----------------
Total assets $ 12,613.2 $ 11,736.2
=============== ================
Liabilities and Shareholder's Equity
------------------------------------
Liabilities:
Due to parent and affiliates $ -- $ 10.5
Other liabilities 349.3 21.0
Federal income taxes
Current 83.3 29.4
Deferred 35.6 --
Separate Account liabilities 109.0 --
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Total liabilities 577.2 60.9
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Shareholder's equity:
Common capital stock, par value $2000 (1,275
shares authorized, issued and outstanding) 2,550.0 2,550.0
Paid-in capital 7,550.0 7,550.0
Net unrealized capital gains (losses) 71.0 (137.4)
Retained earnings 1,865.0 1,712.7
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Total shareholder's equity 12,036.0 11,675.3
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Total liabilities and shareholder's equity $ 12,613.2 $ 11,736.2
=============== ================
</TABLE>
See Condensed Notes to Financial Statements.
4
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Statements of Changes in Shareholder's Equity
(thousands)
<TABLE>
<CAPTION>
6 Months Ended June 30,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Shareholder's equity, beginning of period $ 11,675.3 $ 11,584.2
Net change in unrealized capital gains (losses) 208.4 (164.0)
Net income 152.3 164.1
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Shareholder's equity, end of period $ 12,036.0 $ 11,584.3
============= =============
</TABLE>
See Condensed Notes to Financial Statements.
5
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Statements of Cash Flows
(thousands)
<TABLE>
<CAPTION>
6 Months Ended June 30,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 152.3 $ 164.1
(Increase) decrease in accrued investment income (30.3) 1.5
Net change in amounts due to/from parent and (204.7) 0.4
affiliates
Net increase (decrease) in other assets and liabilities 332.4 (11.6)
Increase (decrease) in federal income taxes 51.3 (143.8)
Net amortization of a premium on debt securities 17.8 43.5
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Net cash provided by operating activities 318.8 54.1
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Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities 3,000.0 --
Short-term investments 500.0 --
Cost of investment purchases in:
Debt securities (3,939.2) --
Short-term investments (492.1) --
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Net cash used for investing activities (931.3) --
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Net (decrease) increase in cash and cash equivalents (612.5) 54.1
Cash and cash equivalents, beginning of period 4,732.7 4,512.9
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Cash and cash equivalents, end of period $ 4,120.2 $4,567.0
=========== ==========
Supplemental cash flow information:
Income taxes paid, net $ 30.0 $ 232.1
=========== ==========
</TABLE>
See Condensed Notes to Financial Statements.
6
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insurance and Annuity Company)
Condensed Notes to Financial Statements
1. Basis of Presentation
---------------------
Aetna Insurance Company of America (the "Company") is a stock life insurance
company organized in 1990 under the insurance laws of Connecticut. The
Company is a wholly owned subsidiary of Aetna Life Insurance and Annuity
Company ("ALIAC"). ALIAC is a wholly owned subsidiary of Aetna Life and
Casualty Company ("Aetna"). The Company began marketing and servicing
variable individual and group annuity contracts during the second quarter of
1995 through the Company's Separate Accounts.
These financial statements have been prepared in conformity with generally
accepted accounting principles. These interim statements necessarily rely
heavily on estimates including assumptions as to annualized tax rates. In the
opinion of management, all adjustments necessary for a fair statement of
results for the interim periods have been made. All such adjustments are of a
normal recurring nature.
2. Federal Income Tax
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Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. During the six months ended June 30, 1995, the Company
moved from a net unrealized capital loss position of $140.3 thousand at
December 31, 1994, to a net unrealized capital gain position of $71.0
thousand at June 30, 1995, primarily due to decreases in interest rates. As a
result, all valuation allowances previously established related to deferred
tax assets on these capital losses were reversed, which had no impact on net
income for the three and six months ended June 30, 1995.
7
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Independent Auditors' Review Report
-----------------------------------
The Board of Directors
Aetna Insurance Company of America:
We have reviewed the accompanying condensed balance sheet of Aetna Insurance
Company of America as of June 30, 1995, and the related condensed statements of
income for the three-month and six-month periods ended June 30, 1995 and 1994,
and the related condensed statements of changes in shareholder's equity and cash
flows for the six-month periods then ended. These condensed financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Aetna Insurance Company of America as of
December 31, 1994, and the related statements of income, changes in
shareholder's equity, and cash flows for the year then ended (not presented
herein); and in our report dated March 17, 1995, we expressed an unqualified
opinion on those financial statements. In our opinion, the information set
forth in the accompanying condensed balance sheet as of December 31, 1994, is
fairly presented, in all material respects, in relation to the balance sheet
from which it has been derived.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
July 27, 1995
8
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Item 2. Management's Analysis of the Results of Operations
Results of Operations
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<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
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(Thousands) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net investment income $179.0 $150.3 $353.0 $291.5
Operating expenses 64.5 12.9 119.0 39.1
------ ------ ------ ------
Income before federal 114.5 137.4 234.0 252.4
income taxes
Federal income taxes 39.9 48.0 81.7 88.3
------ ------ ------ ------
Net income $ 74.6 $ 89.4 $152.3 $164.1
====== ====== ====== ======
</TABLE>
The Company's net income decreased 17% and 7% for the three and six months
ended June 30, 1995, respectively, when compared with the same periods a year
ago. The decrease in 1995 net income reflects higher operating expenses
attributed to the commencement of the Company's business operations offset in
part by higher net investment income reflecting growth in assets and higher
yields on cash and cash equivalents.
Investments
-----------
As of June 30, 1995 and December 31, 1994, all of the Company's debt
securities were issued by the U. S. Treasury.
<TABLE>
<CAPTION>
June 30, December 31,
(Thousands) 1995 1994
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<S> <C> <C>
Debt securities $ 8,066.6 $ 6,906.5
Cash and cash equivalents 4,120.2 4,732.7
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Total debt securities, cash
and cash equivalents $12,186.4 $11,639.2
========= =========
</TABLE>
9
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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.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule.
(b) Reports on Form 8-K
None.
10
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SIGNATURE
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.
AETNA INSURANCE COMPANY OF AMERICA
(Registrant)
August 11 , 1995 By /s/ James C. Hamilton
--------------------------- -----------------------------------
(Date) James C. Hamilton
Vice President, Treasurer, and
Director
11
<TABLE> <S> <C>
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<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE FORM 10Q FOR THE FISCAL QUARTER ENDED JUNE
30, 1995 FOR AETNA INSURANCE COMPANY OF AMERICA AND IS QAULIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 8,067
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 8,067
<CASH> 4,120
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 12,613
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 2,550
0
0
<OTHER-SE> 9,486
<TOTAL-LIABILITY-AND-EQUITY> 12,613
0
<INVESTMENT-INCOME> 353
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 234
<INCOME-TAX> 82
<INCOME-CONTINUING> 152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152
<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>
