<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 MARCH 31, 1996 Commission file number 33-81010
AETNA INSURANCE COMPANY OF AMERICA
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-1286272
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
151 FARMINGTON AVENUE, HARTFORD, CONNECTICUT 06156
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (860) 273-0978
NONE
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 outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
SHARES OUTSTANDING AT
TITLE OF CLASS APRIL 30, 1996
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 March 31, 1996 on Form 10-Q
TABLE OF CONTENTS
PAGE
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 ........................................... 11
Signatures ............................................................... 12
2
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insuranceand Annuity Company)
Statements of Income
(thousands)
<TABLE>
<CAPTION>
3 Months Ended March 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Revenue:
Net investment income $ 174.5 $174.0
Charges assessed against policyholders 160.9 --
---------- ----------
Total revenue 335.4 174.0
Expenses:
Operating expenses 659.1 54.5
---------- ----------
Total expenses 659.1 54.5
Income (loss) before federal income
taxes (benefits) (323.7) 119.5
Federal income taxes (benefits) (158.9) 41.8
---------- ----------
Net income (loss) $ (164.8) $ 77.7
---------- ----------
---------- ----------
</TABLE>
See Condensed Notes to Financial Statements.
3
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AETNA INSURANCE COMPANY OF AMERICA
(A wholly owned subsidiary of Aetna Life Insuranceand Annuity Company)
Balance Sheets
(thousands)
<TABLE>
<CAPTION>
March 31, December 31
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Debt securities available for sale:
(amortized cost $7,985.6 and $7,953.0) $ 8,096.2 $ 8,187.4
Cash and cash equivalents 5,278.1 4,044.2
Accrued investment income 235.2 112.6
Deferred policy acquisition costs 3,389.9 2,066.4
Deferred tax asset 519.6 467.6
Federal income taxes receivable 150.3 --
Other assets 4.1 0.8
Separate Accounts assets 62,015.1 43,810.0
---------- ----------
Total assets $79,688.5 $58,689.0
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Policyholders' funds left with the company $ 558.5 $ --
Due to parent and affiliates 469.6 174.6
Other liabilities 4,757.7 1,932.6
Federal income taxes payable -- 638.8
Separate Accounts liabilities 62,015.1 43,810.0
---------- ----------
Total liabilities 67,800.9 46,556.0
---------- ----------
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 71.8 152.4
Retained earnings 1,715.8 1,880.6
---------- ----------
Total shareholder's equity 11,887.6 12,133.0
---------- ----------
Total liabilities and shareholder's equity $79,688.5 $58,689.0
---------- ----------
---------- ----------
</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)
3 Months Ended March 31,
------------------------
1996 1995
---------- ---------
Shareholder's equity, beginning of period $12,133.0 $11,675.3
Net change in unrealized capital gains (losses) (80.6) 61.7
Net income (loss) (164.8) 77.7
---------- ---------
Shareholder's equity, end of period $11,887.6 $11,814.7
---------- ---------
---------- ---------
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>
3 Months Ended March 31,
------------------------
1996 1995
---------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (164.8) $ 77.7
Increase in accrued investment income (122.6) (111.6)
Increase in deferred policy acquisition costs (1,323.5) (5.8)
Net change in amounts due to/from parent and affiliates 295.0 4.7
Net increase in other assets and liabilities 2,821.8 20.5
Increase (decrease) in federal income taxes (797.8) 41.8
Net amortization of premium on debt securities 2.2 18.6
---------- ---------
Net cash (used for) provided by operating activities 710.3 45.9
---------- ---------
Cash Flows from Investing Activities:
Cost of investment purchases in:
Debt securities available for sale (34.9) (429.3)
Short-term investments -- (492.1)
---------- ---------
Net cash used for investing activities (34.9) (921.4)
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Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts 558.5
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Net cash provided by financing activities 558.5 --
---------- ---------
Net increase (decrease) in cash and cash equivalents 1,233.9 (875.5)
Cash and cash equivalents, beginning of period 4,044.2 4,732.7
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Cash and cash equivalents, end of period $ 5,278.1 $3,857.2
---------- ---------
---------- ---------
Supplemental cash flow information:
Income taxes paid, net $ 639.0 $ --
---------- ---------
---------- ---------
</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 and is a wholly owned subsidiary of Aetna Life Insurance and
Annuity Company ("ALIAC"). ALIAC is a wholly owned subsidiary of Aetna
Retirement Services, Inc. ("ARSI"). ARSI is a wholly owned subsidiary
of Aetna Life and Casualty Company ("Aetna").
These consolidated financial statements have been prepared in
accordance 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.
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 March 31, 1996, and the related condensed
consolidated statements of income for the three-month periods ended March 31,
1996 and 1995, and the related condensed statements of changes in
shareholder's equity and cash flows for the three-month periods ended March
31, 1996 and 1995. 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 consolidated 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, 1995, 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 20, 1996, 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, 1995, 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
April 25, 1996
8
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Item 2. Management's Analysis of the Results of Operations
RESULTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
(Thousands) 1996 1995
-------- ------
Net investment income $ 174.5 $174.0
Charges assessed against policyholders 160.9 --
-------- ------
Total revenue 335.4 174.0
-------- ------
Operating expenses 659.1 54.5
-------- ------
Income (loss) before federal income taxes (benefits) (323.7) 119.5
Federal income taxes (benefits) (158.9) 41.8
-------- ------
Net income (loss) $ (164.8) $ 77.7
-------- ------
1996 1995
-------- ------
Deposits: Fully guaranteed $2,749.0 $ --
Experience rated 558.5 --
Non-guaranteed 14,049.3 --
-------- ------
Total $17,356.8 $ --
-------- ------
Assets under management: Fully guaranteed $11,362.8 $ --
Experience rated 558.5 --
Non-guaranteed 51,224.1 --
-------- ------
Total $63,145.4 $ --
-------- ------
The decrease in the Company's earnings for the three months ended March
31, 1996, when compared with the same period a year ago reflects higher
operating expenses attributed to the commencement of the Company's
business operations offset in part by charges assessed against
policyholders.
9
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INVESTMENTS
As of March 31, 1996 and December 31, 1995, all of the Company's debt
securities were issued by the U.S. Treasury.
March 31, December 31,
(Thousands) 1996 1995
- -------------------------------------------------------------------------------
Debt securities $ 8,096.2 $ 8,187.4
Cash and cash equivalents 5,278.1 4,044.2
--------- ---------
Total debt securities, cash and
cash equivalents $13,374.3 $12,231.6
--------- ---------
--------- ---------
10
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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.
11
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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)
May 10, 1996 By /s/ James C. Hamilton
------------------- ------------------------------
(Date) James C. Hamilton
Vice President, Treasurer, and
Director
12
<TABLE> <S> <C>
<PAGE>
<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
MARCH 31, 1996 FOR AETNA INSURANCE COMPANY OF AMERICA AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000925988
<NAME> AETNA INSURANCE COMPANY OF AMERICA
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 8,096
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 8,096
<CASH> 5,278
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 3,390
<TOTAL-ASSETS> 79,689
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 559
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,550
<OTHER-SE> 9,338
<TOTAL-LIABILITY-AND-EQUITY> 79,689
0
<INVESTMENT-INCOME> 174
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> (324)
<INCOME-TAX> (159)
<INCOME-CONTINUING> (165)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (165)
<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>
