(MARK ONE) | |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
FOR THE TRANSITION PERIOD FROM TO | |
COMMISSION FILE NUMBER 33-37587 |
Pruco Life Insurance Company | ||
(Exact Name of Registrant as Specified in its Charter) | ||
Arizona | 22-1944557 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
Page Number | |||
(a) (1) and (2) Financial Statements of the Registrant and its subsidiary are listed in the accompanying “Index to Consolidated Financial Statements” on page F-1 hereof and are filed as part of this Report. | |||
(a) (3) Exhibits | |||
24. | Powers of Attorney. | ||
31.1 | Section 302 Certification of the Chief Executive Officer, | ||
31.2 | Section 302 Certification of the Chief Financial Officer, | ||
32.1 | Section 906 Certification of the Chief Executive Officer, | ||
32.2 | Section 906 Certification of the Chief Financial Officer. |
PRUCO LIFE INSURANCE COMPANY | ||
(Registrant) | ||
By: | /s/ Bernard J. Jacob | |
Bernard J. Jacob | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
Name | Title | |
James J. Avery, Jr. * | Director | |
James J. Avery, Jr. | ||
/s/ Bernard J. Jacob | Director and President | |
(Principal Executive Officer) | ||
Bernard J. Jacob | ||
Ronald Paul Joelson * | Director | |
Ronald Paul Joelson | ||
C. Edward Chaplin * | Director | |
C. Edward Chaplin | ||
Helen M. Galt * | Director | |
Helen M. Galt | ||
David R. Odenath, Jr. * | Director | |
David R. Odenath, Jr. | ||
/s/ John Chieffo | Chief Financial and Accounting Officer | |
(Principal Accounting and Financial Officer) | ||
John Chieffo |
* By: | /s/ Thomas C. Castano | |
Thomas C. Castano | ||
(Attorney-in-Fact) |
Financial Statements | Page No. | |
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES | ||
Consolidated Financial Statements: | ||
Pruco Life Insurance Company
As described in Note 2, the Company adopted American Institute of Certified Public Accountants Statement of Position 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts” as of January 1, 2004, and the fair value provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation” as of January 1, 2003.
As described in Note 2 to the consolidated financial statements, the Company has restated its 2004, 2003 and 2002 consolidated financial statements.
Consolidated Statements of Financial Position |
As of December 31, 2004 and December 31, 2003 (in thousands, except share amounts) |
2004 | 2003 | ||||||
ASSETS | |||||||
Fixed maturities available for sale, at fair value (amortized cost, 2004 - $6,114,020; 2003 - $5,682,043) | $ | 6,339,103 | $ | 5,953,815 | |||
Policy loans | 856,755 | 848,593 | |||||
Short-term investments | 122,061 | 160,635 | |||||
Other long-term investments | 28,258 | 89,478 | |||||
Total investments | 7,346,177 | 7,052,521 | |||||
Cash and cash equivalents | 743,533 | 253,564 | |||||
Deferred policy acquisition costs | 1,429,027 | 1,380,710 | |||||
Accrued investment income | 101,432 | 96,790 | |||||
Reinsurance recoverables | 765,045 | 517,410 | |||||
Receivables from Parent and affiliates | 50,339 | 53,138 | |||||
Deferred sales inducements and other assets | 124,868 | 88,736 | |||||
Separate account assets | 17,326,555 | 15,772,262 | |||||
TOTAL ASSETS | $ | 27,886,976 | $ | 25,215,131 | |||
LIABILITIES AND STOCKHOLDER’S EQUITY | |||||||
LIABILITIES | |||||||
Policyholders’ account balances | $ | 6,122,924 | $ | 5,582,633 | |||
Future policy benefits and other policyholder liabilities | 1,325,836 | 1,068,977 | |||||
Cash collateral for loaned securities | 410,718 | 431,571 | |||||
Securities sold under agreement to repurchase | 45,254 | 97,102 | |||||
Income taxes payable | 433,966 | 335,665 | |||||
Other liabilities | 330,966 | 111,865 | |||||
Separate account liabilities | 17,326,555 | 15,772,262 | |||||
Total liabilities | 25,996,219 | 23,400,075 | |||||
CONTINGENCIES (See Note 12) | |||||||
STOCKHOLDER’S EQUITY | |||||||
Common stock, ($10 par value; 1,000,000 shares, authorized; 250,000 shares, issued and outstanding) | 2,500 | 2,500 | |||||
Additional paid-in capital | 455,377 | 459,654 | |||||
Deferred compensation | (1,173 | ) | (850 | ) | |||
Accumulated other comprehensive income | 74,527 | 107,687 | |||||
Retained earnings | 1,359,526 | 1,246,065 | |||||
Total stockholder’s equity | 1,890,757 | 1,815,056 | |||||
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ | 27,886,976 | $ | 25,215,131 | |||
Consolidated Statements of Operations and Comprehensive Income |
Years Ended December 31, 2004, 2003 and 2002 (in thousands) |
2004 | 2003 | 2002 | ||||||||
REVENUES | ||||||||||
Premiums | $ | 83,287 | $ | 142,140 | $ | 128,854 | ||||
Policy charges and fee income | 642,021 | 570,158 | 529,887 | |||||||
Net investment income | 373,552 | 344,628 | 334,486 | |||||||
Realized investment gains (losses), net | 5,011 | (2,770 | ) | (68,037 | ) | |||||
Asset management fees | 15,747 | 13,218 | 11,397 | |||||||
Other income | 10,514 | 9,595 | 9,536 | |||||||
Total revenues | 1,130,132 | 1,076,969 | 946,123 | |||||||
BENEFITS AND EXPENSES | ||||||||||
Policyholders’ benefits | 275,378 | 332,114 | 275,251 | |||||||
Interest credited to policyholders’ account balances | 250,675 | 227,992 | 204,813 | |||||||
General, administrative and other expenses | 458,590 | 397,881 | 505,064 | |||||||
Total benefits and expenses | 984,643 | 957,987 | 985,128 | |||||||
Income from operations before income taxes and cumulative effect of accounting change | 145,489 | 118,982 | (39,005 | ) | ||||||
Income taxes: | ||||||||||
Current | 59,682 | (69,617 | ) | (64,656 | ) | |||||
Deferred | (36,804 | ) | 103,666 | 12,153 | ||||||
Total income tax expense (benefit) | 22,878 | 34,049 | (52,503 | ) | ||||||
Net Income from Operations Before Cumulative Effect of Accounting Change | 122,611 | 84,933 | 13,498 | |||||||
Cumulative effect of accounting change, net of taxes | (9,150 | ) | — | — | ||||||
NET INCOME | 113,461 | 84,933 | 13,498 | |||||||
Change in net unrealized investment gains, net of taxes | (41,944 | ) | 8,379 | 57,036 | ||||||
Cumulative effect of accounting change, net of taxes | 4,030 | — | — | |||||||
Foreign currency translation adjustments | — | — | 149 | |||||||
Other comprehensive income (loss), net of taxes | (37,914 | ) | 8,379 | 57,185 | ||||||
COMPREHENSIVE INCOME | $ | 75,547 | $ | 93,312 | $ | 70,683 | ||||
Consolidated Statements of Stockholder’s Equity |
Periods Ended December 30, 2004, 2003 and 2002 (in thousands) |
Common Stock | Paid-in- Capital | Retained Earnings | Deferred Compensation | Accumulated Other Comprehensive Income (Loss) | Total Stockholder’s Equity | ||||||||||||||
Balance, January 1, 2002 | $ | 2,500 | $ | 466,748 | $ | 1,147,665 | $ | — | $ | 34,566 | $ | 1,651,479 | |||||||
Net income | — | — | 13,498 | — | — | 13,498 | |||||||||||||
Adjustments to policy credits issued to eligible policyholders | — | — | (27 | ) | — | — | (27 | ) | |||||||||||
Change in foreign currency translation adjustments, net of taxes | — | — | — | — | 149 | 149 | |||||||||||||
Change in net unrealized investment gains, net of taxes | — | — | — | — | 57,036 | 57,036 | |||||||||||||
Balance, December 31, 2002 | 2,500 | 466,748 | 1,161,136 | — | 91,751 | 1,722,135 | |||||||||||||
Net income | — | — | 84,933 | — | — | 84,933 | |||||||||||||
Adjustments to policy credits issued to eligible policyholders | — | — | (4 | ) | — | — | (4 | ) | |||||||||||
Purchase of fixed maturities from an affiliate, net of taxes | — | (7,557 | ) | — | — | 7,557 | — | ||||||||||||
Stock-based compensation programs | — | 463 | — | (850 | ) | — | (387 | ) | |||||||||||
Change in net unrealized investment gains, net of taxes | — | — | — | — | 8,379 | 8,379 | |||||||||||||
Balance, December 31, 2003 | 2,500 | 459,654 | 1,246,065 | (850 | ) | 107,687 | 1,815,056 | ||||||||||||
Net income | — | — | 113,461 | — | — | 113,461 | |||||||||||||
Purchase of fixed maturities from an affiliate, net of taxes | — | (4,754 | ) | — | — | 4,754 | — | ||||||||||||
Stock-based compensation programs | — | 477 | — | (323 | ) | — | 154 | ||||||||||||
Cumulative effect of accounting change, net of taxes | — | — | — | — | 4,030 | 4,030 | |||||||||||||
Change in net unrealized investment gains, net of taxes | — | — | — | — | (41,944 | ) | (41,944 | ) | |||||||||||
Balance, December 31, 2004 | $ | 2,500 | $ | 455,377 | $ | 1,359,526 | $ | (1,173 | ) | $ | 74,527 | $ | 1,890,757 | ||||||
Consolidated Statements of Cash Flows (Restated) |
Year Ended December 31, 2004, 2003 and 2002 (in thousands) |
2004 | 2003 | 2002 | ||||||||
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES: | ||||||||||
Net income | $ | 113,461 | $ | 84,933 | $ | 13,498 | ||||
Adjustments to reconcile net income to net cash from (used in) operating activities: | ||||||||||
Policy charges and fee income | (109,931 | ) | (83,183 | ) | (79,917 | ) | ||||
Interest credited to policyholders’ account balances | 250,675 | 227,992 | 204,813 | |||||||
Realized investment (gains) losses, net | (5,011 | ) | 2,770 | 68,037 | ||||||
Amortization and other non-cash items | (52,253 | ) | 34,436 | 8,433 | ||||||
Cumulative effect of accounting change | 9,150 | — | — | |||||||
Change in: | ||||||||||
Future policy benefits and other policyholder liabilities | 219,305 | 137,212 | 111,236 | |||||||
Reinsurance recoverable | (247,635 | ) | (116,739 | ) | (99,974 | ) | ||||
Accrued investment income | 1,638 | (10,665 | ) | (8,692 | ) | |||||
Receivables from Parent and affiliates | 2,799 | 461 | (28,025 | ) | ||||||
Payable to Parent and affiliates | 3,034 | 273 | (9,016 | ) | ||||||
Deferred policy acquisition costs | (34,829 | ) | (241,712 | ) | (60,220 | ) | ||||
Income taxes payable | 123,407 | 81,529 | (52,927 | ) | ||||||
Deferred sales inducements and other assets | (36,136 | ) | (47,100 | ) | (20,071 | ) | ||||
Other, net | 21,575 | (29,262 | ) | (33,857 | ) | |||||
Cash Flows From Operating Activities | 259,249 | 40,945 | 13,318 | |||||||
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: | ||||||||||
Proceeds from the sale/maturity/prepayment of: | ||||||||||
Fixed maturities, available for sale | 2,295,893 | 2,503,019 | 1,832,692 | |||||||
Policy loans | 107,906 | 134,360 | 114,541 | |||||||
Commercial loans | 249 | 8,398 | 1,224 | |||||||
Payments for the purchase of: | ||||||||||
Fixed maturities, available for sale | (2,112,893 | ) | (3,330,547 | ) | (2,849,034 | ) | ||||
Policy loans | (78,515 | ) | (65,773 | ) | (82,046 | ) | ||||
Commercial loans | (2,286 | ) | — | — | ||||||
Other long-term investments, net | 38,800 | (11,271 | ) | (11,426 | ) | |||||
Short-term investments, net | 47,709 | 53,705 | 1,256 | |||||||
Cash Flows From (Used in) Investing Activities | 296,863 | (708,109 | ) | (992,793 | ) | |||||
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: | ||||||||||
Policyholders’ account deposits | 2,107,194 | 2,223,777 | 1,841,670 | |||||||
Policyholders’ account withdrawals | (2,095,228 | ) | (1,637,409 | ) | (1,034,133 | ) | ||||
Cash payments to eligible policyholders | — | (4 | ) | (116,000 | ) | |||||
Cash collateral for loaned securities, net | (20,853 | ) | 206,053 | 35,496 | ||||||
Securities sold under agreement to repurchase, net | (51,848 | ) | (303,405 | ) | 319,792 | |||||
Paid in capital transaction associated with the purchase of fixed maturities from an affiliate | (4,754 | ) | (7,557 | ) | — | |||||
Net change in financing arrangements (maturities 90 days or less) | (654 | ) | 3,091 | (5,353 | ) | |||||
Cash Flows From (Used in) Financing Activities | (66,143 | ) | 484,546 | 1,041,472 | ||||||
Net increase (decrease) in cash and cash equivalents | 489,969 | (182,618 | ) | 61,997 | ||||||
Cash and cash equivalents, beginning of year | 253,564 | 436,182 | 374,185 | |||||||
CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 743,533 | $ | 253,564 | $ | 436,182 |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | 2002 | ||||||||
Cash flows from operating activities: | ||||||||||
As originally reported | $ | 448,088 | $ | 94,049 | $ | 107,793 | ||||
Impact of restatements | (188,839 | ) | (53,104 | ) | (94,475 | ) | ||||
Revised for restatements | $ | 259,249 | $ | 40,945 | $ | 13,318 | ||||
Cash flows from (used in) investing activities: | ||||||||||
As originally reported: | $ | 112,342 | $ | (745,932 | ) | $ | (1,059,490 | ) | ||
Impact of restatements | 184,521 | 37,823 | 66,697 | |||||||
Revised for restatements | $ | 296,863 | $ | (708,109 | ) | $ | (992,793 | ) | ||
Cash flows from (used in) financing activities: | ||||||||||
As originally reported: | $ | (70,461 | ) | $ | 469,265 | $ | 1,013,694 | |||
Impact of restatements | 4,318 | 15,281 | 27,778 | |||||||
Revised for restatements | $ | (66,143 | ) | $ | 484,546 | $ | 1,041,472 |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | |||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||
(in thousands) | |||||||||||||
Fixed maturities available for sale | |||||||||||||
Bonds: | |||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 87,013 | $ | 778 | $ | 109 | $ | 87,682 | |||||
States, municipalities and political subdivisions | 173,129 | 8,627 | 191 | 181,565 | |||||||||
Foreign government bonds | 30,005 | 3,982 | 9 | 33,978 | |||||||||
Mortgage-backed securities | 333,720 | 1,685 | 440 | 334,965 | |||||||||
Public utilities | 848,762 | 40,036 | 1,710 | 887,088 | |||||||||
All other corporate bonds | 4,641,391 | 181,494 | 9,060 | 4,813,825 | |||||||||
Redeemable preferred stock | — | — | — | — | |||||||||
Total fixed maturities, available for sale | $ | 6,114,020 | $ | 236,602 | $ | 11,519 | $ | 6,339,103 | |||||
2003 | |||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||
(in thousands) | |||||||||||||
Fixed maturities available for sale | |||||||||||||
Bonds: | |||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 215,305 | $ | 12,204 | $ | 10 | $ | 227,499 | |||||
States, municipalities and political subdivisions | 47,603 | 961 | — | 48,564 | |||||||||
Foreign government bonds | 44,018 | 5,345 | 13 | 49,350 | |||||||||
Mortgage-backed securities | 93,730 | 1,929 | 19 | 95,640 | |||||||||
Public utilities | 702,793 | 41,312 | 2,985 | 741,120 | |||||||||
All other corporate bonds | 4,577,918 | 220,845 | 8,021 | 4,790,742 | |||||||||
Redeemable preferred stock | 676 | 224 | — | 900 | |||||||||
Total fixed maturities, available for sale | $ | 5,682,043 | $ | 282,820 | $ | 11,048 | $ | 5,953,815 | |||||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Available for sale | |||||||
Amortized Cost | Fair Value | ||||||
(in thousands) | |||||||
Due in one year or less | $ | 809,242 | $ | 816,443 | |||
Due after one year through five years | 2,644,613 | 2,726,406 | |||||
Due after five years through ten years | 1,650,713 | 1,749,571 | |||||
Due after ten years | 675,732 | 711,718 | |||||
Mortgage-backed securities | 333,720 | 334,965 | |||||
Total | $ | 6,114,020 | $ | 6,339,103 | |||
2004 | 2003 | ||||||
(in thousands) | |||||||
Joint ventures and limited partnerships | $ | 184 | $ | 37,321 | |||
Company’s investment in Separate accounts | 29,993 | 55,214 | |||||
Derivatives for other than trading | (4,683 | ) | (3,585 | ) | |||
Commercials loans on real estate | 2,286 | 249 | |||||
Equity securities | 478 | 279 | |||||
Total other long- term investments | $ | 28,258 | $ | 89,478 | |||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Fixed maturities, available for sale | $ | 327,899 | $ | 295,357 | $ | 275,843 | ||||
Policy loans | 46,935 | 46,750 | 49,436 | |||||||
Short-term investments and cash equivalents | 7,685 | 7,357 | 13,540 | |||||||
Other | 3,981 | 7,821 | 8,128 | |||||||
Gross investment income | 386,500 | 357,285 | 346,947 | |||||||
Less: investment expenses | (12,948 | ) | (12,657 | ) | (12,461 | ) | ||||
Net investment income | $ | 373,552 | $ | 344,628 | $ | 334,486 | ||||
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Fixed maturities, available for sale | $ | 9,034 | $ | 1,567 | $ | (56,039 | ) | |||
Derivatives | (5,801 | ) | (6,629 | ) | (11,746 | ) | ||||
Other | 1,778 | 2,292 | (252 | ) | ||||||
Realized investment gains (losses), net | $ | 5,011 | $ | (2,770 | ) | $ | (68,037 | ) | ||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Net Unrealized Gains (Losses) on Investments | Deferred Policy Acquisition Costs | Policyholders’ Account Balances | Deferred Income Tax (Liability) Benefit | Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses) | |||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
Balance, January 1, 2002 | $ | 89,622 | $ | (40,313 | ) | $ | 4,937 | $ | (19,528 | ) | $ | 34,718 | |||||||||||||||||
Net investment gains on investments arising during the period | 90,774 | — | — | (32,679 | ) | 58,095 | |||||||||||||||||||||||
Reclassification adjustment for losses included in net income | 56,117 | — | — | (20,202 | ) | 35,915 | |||||||||||||||||||||||
Impact of net unrealized investment gains(losses) on deferred policy acquisition costs | — | (67,053 | ) | — | 24,139 | (42,914 | ) | ||||||||||||||||||||||
Impact of net unrealized investment gains(losses) on policyholders’ account balances | — | — | 9,281 | (3,341 | ) | 5,940 | |||||||||||||||||||||||
Balance, December 31, 2002 | 236,513 | (107,366 | ) | 14,218 | (51,611 | ) | 91,754 | ||||||||||||||||||||||
Net investment gains on investments arising during the period | 25,794 | — | — | (9,330 | ) | 16,464 | |||||||||||||||||||||||
Purchase of fixed maturities from an affiliate (see Note 13) | 11,659 | — | — | (4,102 | ) | 7,557 | |||||||||||||||||||||||
Reclassification adjustment for gains included in net income | (2,177 | ) | — | — | 784 | (1,393 | ) | ||||||||||||||||||||||
Impact of net unrealized investment gains (losses) on deferred policy acquisition costs | — | (13,999 | ) | — | 5,040 | (8,959 | ) | ||||||||||||||||||||||
Impact of net unrealized investment gains(losses) on policyholders’ account balances | — | — | 3,543 | (1,276 | ) | 2,267 | |||||||||||||||||||||||
Balance, December 31, 2003 | 271,789 | (121,365 | ) | 17,761 | (60,495 | ) | 107,690 | ||||||||||||||||||||||
Net investment gains on investments arising during the period | (51,357 | ) | — | — | 20,442 | (30,915 | ) | ||||||||||||||||||||||
Purchase of fixed maturities from an affiliate (see Note 13) | 7,314 | — | — | (2,560 | ) | 4,754 | |||||||||||||||||||||||
Cumulative effect of change in accounting principle | 6,297 | — | — | (2,267 | ) | 4,030 | |||||||||||||||||||||||
Reclassification adjustment for gains included in net income | (8,888 | ) | — | — | 3,111 | (5,777 | ) | ||||||||||||||||||||||
Impact of net unrealized investment gains (losses) on deferred policy acquisition costs | — | (9,616 | ) | — | 2,152 | (7,464 | ) | ||||||||||||||||||||||
Impact of net unrealized investment gains (losses) on policyholders’ account balances | — | — | 3,130 | (918 | ) | 2,212 | |||||||||||||||||||||||
Balance, December 31, 2004 | $ | 225,155 | $ | (130,981 | ) | $ | 20,891 | $ | (40,535 | ) | $ | 74,530 | |||||||||||||||||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Fixed maturities | $ | 225,083 | $ | 271,772 | $ | 236,415 | ||||
Other long-term investments | 72 | 17 | 98 | |||||||
Unrealized gains on investments | $ | 225,155 | $ | 271,789 | $ | 236,513 | ||||
Less than twelve months | Twelve months or more | Total | |||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||
(in thousands) | |||||||||||||||||||
Fixed maturities: | |||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 104,487 | $ | 300 | $ | — | $ | — | $ | 104,487 | $ | 300 | |||||||
Foreign government bonds | 2,656 | 9 | — | — | 2,656 | 9 | |||||||||||||
Corporate securities | 1,113,346 | 8,943 | 50,766 | 1,827 | 1,164,112 | 10,770 | |||||||||||||
Mortgage-backed securities | 80,097 | 438 | 41 | 2 | 80,138 | 440 | |||||||||||||
Total | $ | 1,300,586 | $ | 9,690 | $ | 50,807 | $ | 1,829 | $ | 1,351,393 | $ | 11,519 | |||||||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Balance, beginning of year | $ | 1,380,710 | $ | 1,152,997 | $ | 1,159,830 | ||||
Capitalization of commissions, sales and issue expenses | 221,237 | 371,650 | 328,658 | |||||||
Amortization | (186,408 | ) | (129,938 | ) | (268,438 | ) | ||||
Change in unrealized investment gains | 11,592 | (13,999 | ) | (67,053 | ) | |||||
Impact of adoption of SOP 03-1 | 1,896 | — | — | |||||||
Balance, end of year | $ | 1,429,027 | $ | 1,380,710 | $ | 1,152,997 | ||||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | ||||||
(in thousands) | |||||||
Life insurance – domestic | $ | 761,195 | $ | 646,953 | |||
Life insurance – Taiwan | 467,332 | 376,033 | |||||
Individual annuities | 85,761 | 33,598 | |||||
Group annuities | 11,548 | 12,393 | |||||
Total future policy benefits | $ | 1,325,836 | $ | 1,068,977 | |||
2004 | 2003 | ||||||
(in thousands) | |||||||
Interest-sensitive life contracts | $ | 2,542,797 | $ | 2,270,703 | |||
Individual annuities | 2,679,322 | 2,244,314 | |||||
Guaranteed investment contracts | 900,805 | 1,067,616 | |||||
Total policyholders’ account balances | $ | 6,122,924 | $ | 5,582,633 | |||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Direct premiums and policy charges and fee income | $ | 1,033,174 | $ | 878,669 | $ | 862,723 | ||||
Reinsurance ceded | (307,866 | ) | (166,371 | ) | (203,982 | ) | ||||
Premiums and policy charges and fee income | $ | 725,308 | $ | 712,298 | $ | 658,741 | ||||
Policyholders’ benefits ceded | $ | 129,125 | $ | 99,229 | $ | 70,327 | ||||
2004 | 2003 | ||||||
(in thousands) | |||||||
Domestic life insurance - affiliated | $ | 272,999 | $ | 66,837 | |||
Domestic life insurance - unaffiliated | 13,166 | 62,147 | |||||
Other reinsurance - affiliated | 11,548 | 12,393 | |||||
Taiwan life insurance-affiliated | 467,332 | 376,033 | |||||
$ | 765,045 | $ | 517,410 | ||||
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Life insurance face amount in force | $ | 204,016,616 | $ | 158,488,681 | $ | 118,381,408 | ||||
Ceded to other companies | (179,108,664 | ) | (81,095,301 | ) | (49,113,635 | ) | ||||
Net amount of life insurance in force | $ | 24,907,952 | $ | 77,393,380 | $ | 69,267,773 | ||||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Current tax (benefit) expense benefit: | ||||||||||
U.S. | $ | 61,801 | $ | (69,836 | ) | $ | (65,004 | ) | ||
State and local | (2,119 | ) | 219 | 309 | ||||||
Foreign | — | — | 39 | |||||||
Total | 59,682 | (69,617 | ) | (64,656 | ) | |||||
Deferred tax expense (benefit): | ||||||||||
U.S. | (31,944 | ) | 102,685 | 15,709 | ||||||
State and local | (4,860 | ) | 981 | (3,556 | ) | |||||
Total | (36,804 | ) | 103,666 | 12,153 | ||||||
Total income tax expense (benefit) | $ | 22,878 | $ | 34,049 | $ | (52,503 | ) | |||
2004 | 2003 | 2002 | ||||||||
(in thousands) | ||||||||||
Expected federal income tax (benefit) expense | $ | 50,921 | $ | 41,644 | $ | (13,652 | ) | |||
State and local income taxes | (4,537 | ) | 781 | (2,111 | ) | |||||
Non taxable investment income | (21,908 | ) | (12,165 | ) | (41,745 | ) | ||||
Incorporation of Taiwan branch | 172 | 443 | 7,545 | |||||||
Other | (1,770 | ) | 3,346 | (2,540 | ) | |||||
Total income tax expense (benefit) | $ | 22,878 | $ | 34,049 | $ | (52,503 | ) | |||
2004 | 2003 | ||||||
(in thousands) | |||||||
Deferred tax assets | |||||||
Insurance reserves | $ | 48,116 | $ | 14,875 | |||
Tax loss carry forwards | — | 12,731 | |||||
Investments | 5,652 | — | |||||
Other | 4,743 | 6,419 | |||||
Deferred tax assets | 58,511 | 34,025 | |||||
Deferred tax liabilities | |||||||
Deferred acquisition costs | 366,155 | 383,712 | |||||
Net unrealized gains on securities | 74,984 | 96,998 | |||||
Investments | — | 24,804 | |||||
Other | 24,390 | — | |||||
Deferred tax liabilities | 465,529 | 505,514 | |||||
Net deferred tax liability | $ | 407,018 | $ | 471,489 | |||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
December 31, 2004 | |||||||
Variable Annuity Contracts | In the Event of Death | At Annuitization / Accumulation | |||||
(dollars in thousands) | |||||||
Return of net deposits | |||||||
Account value | $ | 2,241,327 | N/A | ||||
Net amount at risk | $ | 7,373 | N/A | ||||
Average attained age of contractholders | 62 years | N/A | |||||
Minimum return or anniversary contract value | |||||||
Account value | $ | 9,704,195 | $ | 2,034,671 | |||
Net amount at risk | $ | 1,456,702 | $ | 1,122 | |||
Average attained age of contractholders | 65 years | 59 years | |||||
Average period remaining until earliest expected annuitization | N/A | 6.3years |
Market value adjusted annuities | Unadjusted Value | Adjusted Value | |||||
Account value | $ | 328,951 | $ | 345,342 | |||
December 31, 2004 | ||||
Variable Life, Variable Universal Life and Universal Life Contracts | In the Event of Death | |||
(dollars in thousands) | ||||
No Lapse Guarantees | ||||
Separate account value | $ | 1,625,520 | ||
General account value | $ | 393,712 | ||
Net amount at risk | $ | 32,294,429 | ||
Average attained age of contractholders | 45 years |
December 31, 2004 | ||||
(in thousands) | ||||
Equity funds | 8,144,114 | |||
Bond funds | 763,261 | |||
Balanced funds | 320,966 | |||
Money market funds | 267,668 | |||
Specialty funds | 13,006 | |||
Total | $ | 9,509,015 | ||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Guaranteed Minimum Death Benefit (GMDB) | Guaranteed Minimum Income Benefit (GMIB) | Totals | ||||||||
(in thousands) | ||||||||||
Balance as of January 1, 2004 | $ | 42,194 | $ | 2,211 | $ | 44,405 | ||||
Incurred guarantee benefits | 24,700 | 5,100 | 29,800 | |||||||
Paid guarantee benefits | (23,057 | ) | — | (23,057 | ) | |||||
Balance as of December 31, 2004 | $ | 43,837 | $ | 7,311 | $ | 51,148 | ||||
Sales Inducements | ||||
(in thousands) | ||||
Balance as of January 1, 2004 | $ | 79,143 | ||
Capitalization | 43,286 | |||
Amortization | (11,969 | ) | ||
Balance as of December 31, 2004 | $ | 110,460 | ||
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
2004 | 2003 | ||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||
(in thousands) | |||||||||||||
Financial assets: | |||||||||||||
Fixed maturities, available for sale | $ | 6,339,103 | $ | 6,339,103 | $ | 5,953,815 | $ | 5,953,815 | |||||
Policy loans | 856,755 | 960,391 | 848,593 | 992,687 | |||||||||
Short-term investments | 122,061 | 122,061 | 160,635 | 160,635 | |||||||||
Cash and cash equivalents | 743,533 | 743,533 | 253,564 | 253,564 | |||||||||
Separate account assets | 17,326,555 | 17,326,555 | 15,772,262 | 15,772,262 | |||||||||
Financial liabilities: | |||||||||||||
Investment contracts | 3,749,639 | 3,772,610 | 3,438,721 | 3,505,697 | |||||||||
Cash collateral for loaned securities | 410,718 | 410,718 | 431,571 | 431,571 | |||||||||
Securities sold under repurchase agreements | 45,254 | 45,254 | 97,102 | 97,102 | |||||||||
Separate account liabilities | 17,326,555 | 17,326,555 | 15,772,262 | 15,772,262 |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Derivatives | |||||||||||||
2004 | 2003 | ||||||||||||
Notional | Estimated fair value | Notional | Estimated fair value | ||||||||||
(in thousands) | |||||||||||||
Non-Hedge Accounting | |||||||||||||
Swap instruments: | |||||||||||||
Interest rate | $ | 54,750 | $ | (212 | ) | $ | 13,750 | $ | 258 | ||||
Currency | 13,278 | (4,414 | ) | 16,818 | (3,851 | ) | |||||||
Future contracts: | |||||||||||||
US Treasury futures | (137,400 | ) | (240 | ) | 5,600 | (3 | ) |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Pruco Life Insurance Company and Subsidiaries |
Notes to Consolidated Financial Statements |
Three months ended (in thousands) | |||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||
(restated) | |||||||||||||
2004 | |||||||||||||
Total revenues | $ | 287,928 | $ | 280,195 | $ | 275,712 | $ | 286,297 | |||||
Total benefits and expenses | 248,012 | 259,261 | 245,464 | 231,906 | |||||||||
Income from operations before income taxes before | |||||||||||||
Cumulative effect of accounting change | 39,916 | 20,934 | 30,248 | 54,391 | |||||||||
Net income | 22,389 | 18,672 | 28,989 | 43,411 | |||||||||
2003 | |||||||||||||
Total revenues | $ | 257,396 | $ | 275,715 | $ | 274,742 | $ | 269,116 | |||||
Total benefits and expenses | 234,240 | 247,437 | 245,744 | 230,566 | |||||||||
Income from operations before income taxes before | |||||||||||||
Cumulative effect of accounting change | 23,156 | 28,278 | 28,998 | 38,550 | |||||||||
Net income | 18,712 | 21,805 | 19,171 | 25,245 |