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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 September 30, 1995
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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 (860) 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 October 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.
1
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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 September 30, 1995 on Form 10-Q
TABLE OF CONTENTS
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PAGE
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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
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 September 30, 9 Months Ended September 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Net investment income $ 183.7 $ 150.2 $ 536.7 $ 441.7
Charges assessed against policyholders 35.2 -- 35.2 --
Total revenue ---------- ---------- ---------- ----------
218.9 150.2 571.9 441.7
Expenses:
Operating expenses 78.3 2.2 197.3 41.3
---------- ---------- ---------- ----------
Total expenses 78.3 2.2 197.3 41.3
Income before federal income taxes 140.6 148.0 374.6 400.4
Federal income taxes 49.6 52.1 131.3 140.4
---------- ---------- ---------- ----------
Net Income $ 91.0 $ 95.9 $ 243.3 $ 260.0
========== ========== ========== ==========
</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>
September 30, December 31,
Assets 1995 1994
- ------ ---- ----
<S> <C> <C>
Investments:
Debt securities available for sale:
(amortized cost $7,955.4 and $7,043.9) $ 7,957.6 $ 6,906.5
Cash and cash equivalents 4,040.0 4,732.7
Accrued investment income 125.3 91.5
Deferred policy acquisition costs 1,537.2 --
Deferred tax asset 220.9 0.4
Other assets -- 5.1
Separate Account assets 28,083.4 --
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Total assets $ 41,964.4 $ 11,736.2
============== ==============
Liabilities and Shareholder's Equity
- ------------------------------------
Liabilities:
Due to parent and affiliates $ 128.2 $ 10.5
Other liabilities 1,343.5 21.0
Federal income taxes - Current 351.9 29.4
Separate Account liabilities 28,083.4 --
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Total liabilities 29,907.0 60.9
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Shareholder's equity:
Common capital stock, par value $2,000 (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) 1.4 (137.4)
Retained earnings 1,956.0 1,712.7
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Total shareholder's equity 12,057.4 11,675.3
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Total liabilities and shareholder's equity $ 41,964.4 $ 11,736.2
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See Condensed Notes to Financial Statements.
</TABLE>
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>
9 Months Ended September 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) 138.8 (180.8)
Net income 243.3 260.0
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Shareholder's equity, end of period $ 12,057.4 $ 11,663.4
=========== ===========
</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>
9 Months Ended September 30,
----------------------------
1995 1994
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 243.3 $ 260.0
Increase in accrued investment income (33.8) (112.0)
Increase in deferred policy acquisition costs (1,537.2) --
Net change in amounts due to/from parent and affiliates 117.7 32.3
Net increase (decrease) in other assets and liabilities 1,327.7 (14.6)
Increase (decrease) in federal income taxes 101.2 (106.7)
Net amortization of premium on debt securities 19.7 65.5
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Net cash provided by operating activities 238.6 124.5
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Cash Flows from Investing Activities:
Investment maturities and collection of:
Debt securities available for sale 3,000.0 --
Short-term investments 500.0 --
Cost of investment purchases in:
Debt securities available for sale (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 (692.7) 124.5
Cash and cash equivalents, beginning of period 4,732.7 4,512.9
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Cash and cash equivalents, end of period $ 4,040.0 $ 4,637.4
============== ==============
Supplemental cash flow information:
Income taxes paid, net $ 30.0 $ 247.0
============== ==============
</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
through the Company's Separate Accounts.
These financial statements have been prepared in conformity with generally
accepted accounting principles and are unaudited. 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 nine months ended September 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 $2.2
thousand at September 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 nine months ended September 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 September 30, 1995, and the related condensed
statements of income for the three-month and nine-month periods ended September
30, 1995 and 1994, and the related condensed statements of changes in
shareholder's equity and cash flows for the nine-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
October 26, 1995
8
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Item 2. Management's Analysis of the Results of Operations
<TABLE>
<CAPTION>
Results of Operations
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Three Months Ended Nine Months Ended
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September 30, September 30,
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(Thousands) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net investment income $ 183.7 $ 150.2 $ 536.7 $ 441.7
Charges assessed against policyholders 35.2 -- 35.2 --
------- ------- ------- -------
Total revenue 218.9 150.2 571.9 441.7
------- ------- ------- -------
Operating expenses 78.3 2.2 197.3 41.3
------- ------- ------- -------
Income before federal income taxes 140.6 148.0 374.6 400.4
------- ------- ------- -------
Federal income taxes 49.6 52.1 131.3 140.4
------- ------- ------- -------
Net income $ 91.0 $ 95.9 $ 243.3 $ 260.0
======= ======= ======= =======
</TABLE>
The Company's net income decreased 5% and 6% for the three and nine months ended
September 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 charges assessed against policyholders and higher net investment income
reflecting growth in assets and higher yields on cash equivalents.
Investments
- -----------
As of September 30, 1995 and December 31, 1994, all of the Company's debt
securities were issued by the U.S. Treasury.
<TABLE>
<CAPTION>
September 30, December 31,
(Thousands) 1995 1994
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<S> <C> <C>
Debt securities $ 7,957.6 $ 6,906.5
Cash and cash equivalents 4,040.0 4,732.7
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Total debt securities, cash and
cash equivalents $11,997.6 $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)
November 9, 1995 By /s/ James C. Hamilton
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(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 10-Q for the fiscal quarter ended
September 30, 1995 for Aetna Insurance Company of America and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 7,958
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 7,958
<CASH> 4,040
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 1,537
<TOTAL-ASSETS> 41,964
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 2,550
0
0
<OTHER-SE> 9,507
<TOTAL-LIABILITY-AND-EQUITY> 41,964
0
<INVESTMENT-INCOME> 537
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 374
<INCOME-TAX> 131
<INCOME-CONTINUING> 243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 243
<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>
