SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 33-87272, 333-51353, 333-28765, 333-28681, 333-28743,
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333-51949, 333-65009, 333-66745, 333-76941, 333-76945,
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333-35592, 333-95511, 333-30186, 333-40596, 333-33924,
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333-95457, 333-59386, 333-59398, 333-59408, 333-52320
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333-57212, 333-63694, 333-67660, 333-68138, 333-70602
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333-76150, 333-84394, 333-87152
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GOLDEN AMERICAN LIFE INSURANCE COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 41-0991508
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(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
1475 Dunwoody Drive, West Chester, Pennsylvania 19380-1478
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (610) 425-3400
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Former name, former address and formal 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
As of May 13, 2002, 250,000 shares of Common Stock, $10 Par Value, are
authorized, issued and outstanding.
As of May 13, 2002, 50,000 shares of Preferred Stock, $5000 Par Value, are
authorized.
NOTE: WHEREAS GOLDEN AMERICAN LIFE INSURANCE COMPANY MEETS THE CONDITIONS SET
FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10Q, THIS FORM IS BEING
FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).
Exhibit index - Page 21 Page 1 of 33
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Person for whom the Financial Information is given: Golden American Life Insurance Company
Condensed Consolidated Statements of Income (Unaudited):
For the Three For the Three
Months Ended Months Ended
March 31, 2002 March 31, 2001
-------------------------------------------------------
(DOLLARS IN THOUSANDS)
Revenues:
Contract and other charges assessed against
policyholders $45,044 $40,857
Management fee revenue 6,734 6,131
Net investment income 33,357 19,412
Net realized capital losses (15,713) (1,963)
-------------------------------------------------------
69,422 64,437
Benefits and expenses:
Benefits:
Interest credited and other benefits to policyholders 55,332 42,009
Underwriting, acquisition, and insurance expenses:
Commissions 214 514
Commissions - affiliates 64,001 55,884
General expenses 38,761 27,221
Policy acquisition costs deferred (61,773) 13,419
Amortization:
Deferred policy acquisition costs 535 16,528
Value of business acquired (669) 492
Goodwill (NOTE 2) -- 1,056
Expense and charges reimbursed under modified
coinsurance agreements 208 (880)
Expense and charges reimbursed under modified
coinsurance agreements - affiliates (28,725) (110,705)
Interest expense 4,720 4,743
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72,604 50,281
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Income (loss) before income taxes (3,182) 14,156
Income taxes (985) 5,223
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Net income (loss) $(2,197) $8,933
=======================================================
SEE ACCOMPANYING NOTES
2
Condensed Consolidated Balance Sheets (Unaudited):
March 31, 2002 December 31, 2001
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(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
Investments:
Fixed maturities, available for sale, at fair value
(cost: 2002 - $2,342,463; 2001 - $1,982,527) $2,327,405 $1,994,913
Equity securities, at fair value (cost: 2002 - $74; 2001 - $74) 55 55
Mortgage loans on real estate 222,593 213,883
Policy loans 15,524 14,847
Short-term investments 72,984 10,021
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Total investments 2,638,561 2,233,719
Cash and cash equivalents 183,037 195,726
Reinsurance recoverable 21,846 27,151
Reinsurance recoverable from affiliates 38,400 28,800
Due from affiliates 19,992 20
Accrued investment income 27,214 22,771
Deferred policy acquisition costs 786,906 709,042
Value of business acquired 22,323 20,203
Current income taxes recoverable 8,623 400
Property and equipment, less allowances for depreciation of
$11,515 in 2002 and $10,624 in 2001 9,546 10,468
Goodwill, less accumulated amortization of $17,600 in 2002 and 2001 151,363 151,363
Receivable for securities sold 242,758 8,509
Other assets 4,613 4,279
Separate account assets 11,640,123 10,958,191
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Total assets $15,795,305 $14,370,642
================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Policy liabilities and accruals:
Future policy benefits and claims reserves $2,553,750 $2,178,189
Unearned revenue reserve 5,994 6,241
Other policy claims and benefits 1,237 836
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2,560,981 2,185,266
Surplus notes 245,000 245,000
Revolving note payable -- 1,400
Due to affiliates 11,173 25,080
Deferred income tax liability 17,803 12,612
Payable for securities purchased 319,042 36,283
Dollar roll obligations 63,257 3,951
Other liabilities 129,612 85,030
Separate account liabilities 11,640,123 10,958,191
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14,986,991 13,552,813
Commitments and contingencies
Stockholder's equity:
Preferred stock, par value $5,000 per share, authorized 50,000 shares -- --
Common stock, par value $10 per share, authorized, issued,
and outstanding 250,000 shares 2,500 2,500
Additional paid-in capital 780,436 780,436
Accumulated other comprehensive income (loss) (3,514) 3,804
Retained earnings 28,892 31,089
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Total stockholder's equity 808,314 817,829
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Total liabilities and stockholder's equity $15,795,305 $14,370,642
================================================
SEE ACCOMPANYING NOTES
3
Condensed Consolidated Statements of Changes in Stockholder's Equity(Unaudited):
(DOLLARS IN THOUSANDS)
Accumulated
Additional Other Total
Common Paid-in Comprehensive Retained Stockholder's
Stock Capital Income (Loss) Earnings Equity
----------------------------------------------------------------------------
Balance at December 31, 2000 $2,500 $583,640 $(4,046) $35,043 $617,137
Comprehensive income:
Net loss -- -- -- (3,954) (3,954)
Change in net unrealized investment
gains -- -- 7,850 -- 7,850
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Comprehensive income 3,896
Contribution of capital -- 196,796 -- -- 196,796
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Balance at December 31, 2001 $2,500 $780,436 $3,804 $31,089 $817,829
Comprehensive income:
Net loss -- -- -- (2,197) (2,197)
Change in net unrealized investment
losses -- -- (7,318) -- (7,318)
----------------
Comprehensive loss (9,515)
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Balance at March 31, 2002 $2,500 $780,436 $(3,514) $28,892 $808,314
============================================================================
SEE ACCOMPANYING NOTES
4
Condensed Consolidated Statements of Cash Flows (Unaudited):
For the Three For the Three
Months Ended Months Ended
March 31, 2002 March 31, 2001
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(DOLLARS IN THOUSANDS)
NET CASH PROVIDED BY OPERATING ACTIVITIES $127,400 $107,617
INVESTING ACTIVITIES
Proceeds from sales of investments:
Fixed maturities - available for sale 1,275,674 64,361
Investment maturities, repayments or collections:
Fixed maturities - available for sale 49,297 24,355
Mortgage loans on real estate 3,614 886
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52,911 25,241
Acquisition of investments:
Fixed maturities - available for sale (1,700,768) (406,749)
Mortgage loans on real estate (12,398) --
Policy loans - net (562) (172)
Short-term investments - net (62,963) --
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(1,776,691) (406,921)
Net sale of property and equipment 63 111
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Net cash used in investing activities (448,043) (317,208)
FINANCING ACTIVITIES
Proceeds from reciprocal loan agreement borrowings 8,500 29,300
Repayment of reciprocal loan agreement borrowings (8,500) (29,300)
Proceeds from revolving note payable (1,400) 1,400
Investment contract deposits 671,367 444,841
Investment contract withdrawals (36,269) (34,220)
Investment contract transfers (325,744) (176,098)
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Net cash provided by financing activities 307,954 235,923
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Increase (decrease) in cash and cash equivalents (12,689) 26,332
Cash and cash equivalents at beginning of period 195,726 164,682
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Cash and cash equivalents at end of period $183,037 $191,014
=================================================
SEE ACCOMPANYING NOTES
5
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, the financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. These interim financial statements
necessarily rely heavily on estimates, including assumptions as to annualized
tax rates. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. All adjustments were of a normal
recurring nature, unless otherwise noted in Management's Discussion and Analysis
and the Notes to Financial Statements. Operating results for the three months
ended March 31, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002.
These financial statements should be read in conjunction with the financial
statements and related footnotes included in the Golden American Life Insurance
Company's annual report on Form 10-K for the year ended December 31, 2001.
ORGANIZATION
Golden American is a wholly owned subsidiary of Equitable Life Insurance Company
of Iowa ("Equitable Life" or the "Parent"). Equitable Life is a wholly owned
subsidiary of Equitable of Iowa Companies, Inc. (EIC), which is an indirect
wholly owned subsidiary of ING Groep N.V., a global financial services holding
company based in The Netherlands.
CONSOLIDATION
The consolidated financial statements include Golden American Life Insurance
Company ("Golden American") and its former wholly owned subsidiary, First Golden
American Life Insurance Company of New York ("First Golden," and collectively
with Golden American, the "Companies"). All significant intercompany accounts
and transactions have been eliminated.
As of April 1, 2002, First Golden was merged into Reliastar Life Insurance
Company of New York ("RLNY").
STATUTORY
The net loss for Golden American as determined in accordance with statutory
accounting practices was $28.7 million and $77.3 million for the three months
ended March 31, 2002 and 2001, respectively. Total statutory capital and surplus
was $296.9 million at March 31, 2002 and $451.6 million at December 31, 2001.
RECLASSIFICATIONS
Certain reclassifications have been made to the 2001 information to conform to
the 2002 financial statement presentation.
NOTE 2 - NEW ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combinations", and No. 142,
"Goodwill and Other Intangible Assets," effective for fiscal years beginning
after December 15, 2001. Under the new standards, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the Statements. Other intangible
assets are still amortized over their estimated useful lives.
The Companies adopted the new standards effective January 1, 2002. Application
of the nonamortization provisions of the new standards resulted in an increase
in net income of $1.1 million for the three months ended March 31, 2002;
however, the Companies are still evaluating the impact of the adoption of these
standards. The Companies are performing the first of the required impairment
tests for goodwill as of January 1, 2002 and will complete this calculation as
required by June 30, 2002. The Companies have not yet determined the effect of
adoption on their financial position and results of operations.
6
Had the Companies been accounting for goodwill under SFAS No. 142 for all
periods presented, the Companies' net income would have been as follows:
For The Three Months
Ended March 31, 2001
(IN THOUSANDS)
---------------------------------------------------------------------
Reported net income $8,933
Add back goodwill amortization 1,056
-------------------------
Adjusted net income $9,989
=========================
NOTE 3 -- INVESTMENTS
INVESTMENT VALUATION ANALYSIS: The Companies analyze the investment portfolio at
least quarterly in order to determine if the carrying value of any investment
has been impaired. The carrying value of debt and equity securities is written
down to fair value by a charge to realized losses when impairment in value
appears to be other than temporary.
During the first quarter of 2002, Golden American determined that the carrying
value of seven bonds exceeded their estimated net realizable value. As a result,
at March 31, 2002, Golden American recognized a total pre-tax loss of $447,000
to reduce the carrying value of the bonds to their combined net realizable value
of $557,000. During the first quarter of 2001, Golden American determined that
the carrying value of three bonds exceeded their estimated net realizable value.
As a result, at March 31, 2001, Golden American recognized a total pre-tax loss
of $679,000 to reduce the carrying value of the bonds to their combined net
realizable value of $389,000.
DOLLAR ROLL AGREEMENTS: In 2001, the Companies began entering into dollar roll
agreements to increase the return on investments and improve liquidity. These
transactions involve a sale of securities by the Companies and an agreement to
repurchase substantially the same securities as those sold, typically within one
month. The dollar roll agreements are accounted for as short-term collateralized
financings. The repurchase obligations totalled $63.3 million and $4.0 million
at March 31, 2002 and December 31, 2001, respectively. Such borrowings were
collaterized by investment securities with fair values approximately equal to
loan value. The primary risk associated with short-term collaterized borrowings
is that the counterparty will be unable to perform under the terms of the
contract. The Companies' exposure is limited to the excess of the net
replacement cost of the securities over the value of the short-term investments,
an amount that was not material at March 31, 2002 and December 31, 2001. The
Companies believe the counterparties to dollar roll agreements are financially
responsible and that the counterparty risk is minimal.
NOTE 4 -- DERIVATIVE INSTRUMENTS
The Companies may from time to time utilize various derivative instruments to
manage interest rate and price risk (collectively, market risk). The Companies
have appropriate controls in place, and financial exposures are monitored and
managed by the Companies as an integral part of their overall risk management
program. Derivatives are recognized on the balance sheet at their fair value. At
March 31, 2002, the Companies did not utilize any such derivatives.
The estimated fair values and carrying amounts of the Companies' embedded
derivatives at March 31, 2002 were $3.6 million ($3.1 million at December 31,
2001) on a direct basis, before reinsurance, and $0, net of reinsurance ($0 at
December 31, 2001).
7
The fair value of these instruments was estimated based on quoted market prices,
dealer quotations or internal estimates.
NOTE 5 -- RELATED PARTY TRANSACTIONS
OPERATING AGREEMENTS: Directed Services, Inc. ("DSI"), an affiliate, acts as the
principal underwriter (as defined in the Securities Act of 1933 and the
Investment Company Act of 1940, as amended) and distributor of the variable
insurance products issued by the Companies. DSI is authorized to enter into
agreements with broker/dealers to distribute the Companies' variable products
and appoint representatives of the broker/dealers as agents. The Companies paid
commissions to DSI totaling $64.0 million and $55.9 million for the quarters
ended March 31, 2002 and 2001, respectively.
Golden American provides certain managerial and supervisory services to DSI. The
fee paid by DSI for these services is calculated as a percentage of average
assets in the variable separate accounts. For the quarters ended March 31, 2002
and 2001, the fee was $6.3 million and $5.7 million, respectively.
Golden American has expense sharing agreements with certain of its affiliates.
Golden American has an expense sharing agreement with ING America Insurance
Holdings, Inc. ("ING AIH") for administrative, management, financial, and
information technology services. Under these agreements with ING AIH, Golden
American incurred expenses of $13.2 million for the quarter ended March 31, 2002
($10.8 million for the quarter ended March 31, 2001).
Golden America has an expense sharing agreement with ING Life Insurance and
Annuity Company ("ILIAC") for administrative, management, training, customer
service, information technology, and distribution services. Under this agreement
with ILIAC, Golden American's general expenses were reduced by a net amount of
$6.0 million for the quarter ended March 31, 2002 ($0 for the quarter ended
March 31, 2001).
For the quarter ended March 31, 2002, the Companies received premiums, net of
reinsurance, for variable products sold through eight affiliates, Locust Street
Securities, Inc., Vestax Securities Corporation, DSI, Multi-Financial Securities
Corporation, IFG Network Securities, Inc., Washington Square Securities, Inc.,
PrimeVest Financial Services, Inc., and Compulife Investor Services, Inc. of
$23.9 million, $8.6 million, $0.6 million, $8.0 million, $5.8 million, $44.8
million, $27.0 million and $0.0, respectively ($9.4 million, $3.8 million, $0.1
million, $3.1 million, $1.6 million, $7.3 million, $3.1 million and $1.5
million, respectively, for the same period of 2001).
MODIFIED COINSURANCE AGREEMENT: On June 30, 2000, effective January 1, 2000,
Golden American entered into a modified coinsurance agreement with Equitable
Life, an affiliate, covering a considerable portion of Golden American's
variable annuities issued on or after January 1, 2000, excluding those with an
interest rate guarantee. The financial statements are presented net of the
effects of the agreement.
Under this agreement, Golden American received a net reimbursement of expenses
and charges of $28.7 million in the first quarter of 2002 ($110.7 million in the
first quarter of 2001). This was offset by decreased deferred acquisition costs
of $38.2 million ($108.1 million in the first quarter of 2001). At March 31,
2002, Golden American had a receivable from Equitable Life of $20.2 million due
to the timing of the cash settlement for the modified coinsurance agreement. As
of December 31, 2001, Golden American had a payable to Equitable Life of $22.6
million under the agreement due to the overpayment by Equitable Life of the cash
settlement for the modified coinsurance agreement.
REINSURANCE AGREEMENT COVERING MINIMUM GUARANTEED BENEFITS: On December 28,
2000, Golden American entered into a reinsurance agreement with Security Life of
Denver International Limited ("SLDI"), an affiliate, covering variable annuity
minimum guaranteed death benefits and minimum guaranteed living benefits of
variable annuities issued on or after January 1, 2000. An irrevocable letter of
credit was obtained through Bank of New York in the amount of $25.0 million
related to this agreement. Effective December 24, 2001, the letter of credit
8
amount was revised to $70 million, and effective March 29, 2002, the letter of
credit amount was revised to $75 million. Under this agreement, Golden American
recorded a reinsurance recoverable of $38.4 million at March 31, 2002, and $28.8
million at December 31, 2001.
NOTE 6 -- COMMITMENTS AND CONTINGENCIES
REINSURANCE: Golden American remains liable to the extent its reinsurers do not
meet their obligations under the reinsurance agreements. At March 31, 2002 and
December 31, 2001, the Companies had net receivables of $60.2 million and $56.0
million, respectively, for reinsurance claims, reserve credits, or other
receivables from these reinsurers. At March 31, 2002 and December 31, 2001,
respectively, these net receivables were comprised of $2.8 million and $7.8
million, respectively, for claims recoverable from reinsurers, $3.7 million and
$3.4 million, respectively, for a payable for reinsurance premiums, $38.4
million and $28.8 million, respectively, for reserve credits, and $22.7 million
and $22.7 million, respectively, for reinsured surrenders and allowances due
from an unaffiliated reinsurer. Included in the accompanying financial
statements, excluding the modified coinsurance agreements, are net
considerations to reinsurers of $13.4 million for the first quarter of 2002
compared to $6.7 million for the same period in 2001. Also included in the
accompanying financial statements are net policy benefits recoveries of $10.1 in
the first quarter of 2002 compared to $3.4 million for same period in 2001.
Under the modified coinsurance agreement which Golden American has with
Equitable Life, disclosed in NOTE 5, Golden American received a total settlement
of $28.7 million pertaining to the first quarter of 2002 ($110.7 million in the
first quarter of 2001). The carrying value of the separate account liabilities
covered under this agreement represent 32.5% of total separate account
liabilities outstanding at March 31, 2002 (31.9% at December 31, 2001). Golden
American remains liable to the extent Equitable Life does not meet its
obligations under the agreement. The accompanying financial statements are
presented net of the effects of the agreement.
INVESTMENT COMMITMENTS: At March 31, 2002 and December 31, 2001, outstanding
commitments to fund mortgage loans totaled $1.0 million and $3.2 million,
respectively. At March 31, 2002 and December 31, 2001, outstanding commitments
to fund fixed maturities totaled $10.6 million and $22.0 million, respectively.
LITIGATION: The Companies, like other insurance companies, may be named or
otherwise involved in lawsuits, including class action lawsuits and
arbitrations. In some class action and other actions involving insurers,
substantial damages have been sought and/or material settlement or award
payments have been made. The Companies currently believe no pending or
threatened lawsuits or actions exist that are reasonably likely to have a
material adverse impact on the Companies.
VULNERABILITY FROM CONCENTRATIONS: The Companies have various concentrations in
the investment portfolio. As of March 31, 2002, the Companies had 2 investments
(other than bonds issued by agencies of the United States government) exceeding
ten percent of stockholder's equity. The Companies' asset growth, net investment
income, and cash flow are primarily generated from the sale of variable
insurance products and associated future policy benefits and separate account
liabilities. Substantial changes in tax laws that would make these products less
attractive to consumers and extreme fluctuations in interest rates or stock
market returns, which may result in higher lapse experience than assumed, could
cause a severe impact on the Companies' financial condition. The Premium Plus
product generated 27% of the Companies' sales during the first quarter of 2002
(50% in the same period of 2001).
NOTE 7 - SUBSEQUENT EVENT: MERGER OF FIRST GOLDEN INTO RLNY
On April 1, 2002, First Golden was merged into RLNY. ReliaStar Life Insurance
Company ("ReliaStar"), the parent of Security-Connecticut Life Insurance Company
("Security-Connecticut"), who in turn is the parent of RLNY, paid to Golden
American the preliminary merger consideration of $27.7 million in exchange for
100% of the shares of First Golden. ReliaStar contributed First Golden to
Security-Connecticut who in turn contributed First Golden to RLNY. The final
merger consideration of First Golden will be the fair market value as determined
9
by the first quarter statutory financial statement and will be recorded in the
second quarter of 2002. Approval for the merger was obtained from the Insurance
Departments of the States of New York and Delaware.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS.
The purpose of this section is to discuss and analyze Golden American Life
Insurance Company's ("Golden American") condensed consolidated results of
operations. In addition, some analysis and information regarding financial
condition and liquidity and capital resources has also been provided. This
analysis should be read jointly with the condensed consolidated financial
statements, the related notes, and the Cautionary Statement Regarding
Forward-Looking Statements, which appear elsewhere in this report. Golden
American reports financial results on a consolidated basis. The condensed
consolidated financial statements include the accounts of Golden American and
its subsidiary, First Golden American Life Insurance Company of New York ("First
Golden," and collectively with Golden American, the "Companies").
Golden American is a wholly owned subsidiary of Equitable Life Insurance Company
of Iowa ("Equitable Life" or the "Parent"). Equitable Life is a wholly owned
subsidiary of Equitable of Iowa Companies, Inc. ("EIC") which is an indirect
wholly owned subsidiary of ING Groep N.V. ("ING"), a global financial services
holding company based in The Netherlands.
RESULTS OF OPERATIONS
- ---------------------
PREMIUMS
Percentage Dollar
Three Months ended March 31 2002 Change Change 2001
- -------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
Variable annuity premiums:
Separate account........................................ $326.4 260.4% $529.9 $(203.5)
General account......................................... 669.2 53.0 231.8 437.4
----------------------------------------------------------------
Total variable annuity premiums............................ 995.6 325.7 761.7 233.9
Fixed annuity premiums..................................... 0.7 75.0 0.3 0.4
Variable life premiums..................................... 0.2 (33.3) (0.1) 0.3
----------------------------------------------------------------
Total premiums............................................. $996.5 324.8% $761.9 $234.6
================================================================
For the Companies' variable and fixed insurance contracts, premiums collected
are not reported as revenues, but as deposits to insurance liabilities. Revenues
for these products are recognized over time in the form of investment spread and
product charges.
Variable annuity premiums net of reinsurance increased $761.7 million during the
first three months of 2002 as compared to the same period in 2001. This increase
is primarily due to the reduction of ceded variable annuity separate account
premiums related to the modified coinsurance agreement with Equitable Life from
$815.7 million in the first quarter of 2001 to $264.1 million in the first
quarter of 2002. Also contributing to the increase in variable annuity premiums
were sales of new variable annuity products of $281.8 million during the first
quarter of 2002, including GoldenSelect Landmark, Multi-Rate Index, SmartDesign
Advantage, SmartDesign Variable Annuity, and Retirement Solutions-ING Rollover
Choice.
Premiums, net of reinsurance, for variable products from a significant
broker/dealer having at least ten percent of total sales for the first three
months of 2002 totaled $106.4 million (11% of total premiums), compared to $23.0
million (10%) from a significant broker/dealer for the same period in 2001.
Gross premiums for variable products from a significant broker/dealer (having at
least ten percent of total sales) for the first three months in 2002, totaled
$139.3 million (11%) of total gross premiums compared to $114.8 million (11%),
from a significant broker/dealer for the same period in 2001.
10
REVENUES
Percentage Dollar
Three Months ended March 31 2002 Change Change 2001
- ------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
Contract and other charges assessed against
policyholders............................................. $45.0 10.0% $4.1 $40.9
Management fee revenue..................................... 6.7 9.8 0.6 6.1
Net investment income...................................... 33.4 72.2 14.0 19.4
Net realized capital losses................................ (15.7) 685.0 (13.7) (2.0)
---------------------------------------------------------------
$69.4 7.8% $5.0 $64.4
===============================================================
Total revenues increased 7.8% in the first quarter of 2002 from the same period
in 2001. Contract and other charges assessed against policyholders increased
$4.1 million or 10.0% in the first quarter of 2002, primarily due to additional
fees earned from the higher average level of assets in the variable separate
accounts.
Golden American provides certain managerial and supervisory services to Directed
Services, Inc. ("DSI"), a wholly owned subsidiary of EIC. The fee paid to Golden
American for these services, which is calculated as a percentage of average
assets in the variable separate accounts, was $6.3 million and $5.7 million for
the first quarters of 2002 and 2001, respectively. This increase was due to
increased average assets in the variable separate accounts.
Net investment income increased $14.0 million or 72.2% in the first quarter of
2002 from the same period in 2001. This was due to a growth in invested assets
backing the general account variable products.
For the first three months of 2002, the Companies had net realized capital
losses on investments of $15.7 million, mainly due to capital losses of $15.3
million from the sale of fixed maturities. The Companies also had write downs of
$447,000 from seven impaired fixed maturities.
EXPENSES
Total benefits and expenses increased 47.5%, or $22.3 million, to $72.6 million
in the first quarter of 2002. Interest credited and other benefits to
policyholders increased 31.7%, or $13.3 million, to $55.3 million in the first
quarter of 2002. This increase was largely due to higher average account
balances associated with the Companies' general account options, as well as a
non-recurring reinsurance gain. This was partially offset by lower premium
credits on the Premium Plus product within the variable separate accounts. The
premium credit payments decreased by $2.9 million due to a decrease in variable
annuity sales of the separate account product.
Commissions increased $7.8 million to $64.2 million in the first three months of
2002 due to increased sales of the general account options. Changes in
commissions are generally related to changes in the level and mix or composition
of fixed and variable product sales. Most costs incurred as the result of sales
have been deferred, having little impact on current earnings.
General expenses increased $11.5 million or 42.7% in the first three months of
2002. The Companies use a network of wholesalers to distribute products, and the
salaries and sales bonuses of these wholesalers are included in general
expenses. The portion of these salaries and related expenses that varies
directly with production levels is deferred, thus having little impact on
current earnings. Contributing to the increase in general expenses are
additional salary and consulting expenses, as well as cost allocations during
the first three months in 2002. The increase in general expenses was partially
offset by reimbursements received from the Companies' affiliates including DSI,
Equitable Life, ING Mutual Funds Management Co., LLC, Security Life of Denver
Insurance Company, Southland Life Insurance Company, and United Life & Annuity
Insurance Company, for certain advisory, computer, and other resources and
services provided by the Companies.
11
Policy acquisition costs deferred are offset in part by the expenses reimbursed
under modified coinsurance agreements. Policy acquisition costs deferred were
$61.8 million in the first quarter of 2002, as compared to ($13.4) million in
the first quarter of 2001. The change in the amount of policy acquisition costs
deferred was mainly due to a decrease in the amount of deferred costs that have
been offset due to modified coinsurance agreements ($38.2 million and $108.1
million for the first quarters of 2002 and 2001, respectively). Amortization of
deferred policy acquisition costs ("DPAC") decreased $16.0 million, or 97.0%, in
the first quarter of 2002. The decrease in the amortization was mainly due to
the lower net amount of deferred costs.
During the first quarters of 2002 and 2001, value of business acquired ("VOBA")
was adjusted to decrease amortization by $469,000 and $29,000, respectively, to
reflect changes in the assumptions related to the timing of estimated gross
profits. Based on current conditions and assumptions as to the impact of future
events on acquired policies in force, the expected approximate net amortization
relating to VOBA as of March 31, 2002 is $2.6 million for the reminder of 2002,
$2.8 million in 2003, $2.4 million in 2004, $1.9 million in 2005, $1.5 million
in 2006, and $1.3 million in 2007. Actual amortization may vary based upon
changes in assumptions and experience.
Expenses and charges reimbursed under modified coinsurance agreements decreased
by $83.1 million to $28.5 million during the first three months in 2002 as
compared to the same period in 2001. This reimbursement is primarily due to a
modified coinsurance agreement, with Equitable Life covering a considerable
portion of Golden American's variable annuities issued after January 1, 2000,
excluding those with an interest rate guarantee. Under this reinsurance
agreement, $28.7 million and $110.7 in expenses and charges were reimbursed
during the first three months of 2002 and 2001, respectively. This reimbursement
offset deferred policy acquisition costs and non-deferrable costs related to
policies reinsured under this agreement.
INCOME
Net loss for the first three months of 2002 was $2.2 million, a decrease from
net income of $8.9 million for the same period in 2001. The decrease in net
income is mainly due to the fact that in the first quarter of 2001 there were
some nonrecurring reinsurance gains. In addition, the proportion of deferred
expenses was lower in 2002 than in 2001. Comprehensive loss for the first three
months of 2002 was $9.5 million and comprehensive income of $14.7 million for
the same period in 2001. This decrease was partly due to the decline in net
income and partly related to the change in unrealized gains and losses on fixed
maturities during the first quarter of 2002 as compared to 2001.
The net loss for Golden American as determined in accordance with statutory
accounting practices was $28.7 million and $77.3 million in the first quarters
of 2002 and 2001, respectively. The decrease in statutory loss during the first
quarter of 2002 was mainly due to reduced reserve change resulting from improved
equity market returns during the first quarter of 2002 as compared to the same
period in 2001.
Total statutory capital and surplus was $296.9 million at March 31, 2002 and
$451.6 million at December 31, 2001. The decrease in surplus relates to a
temporary reduction due to a State of Delaware regulatory invesment restriction.
FINANCIAL CONDITION
- -------------------
INVESTMENTS
The financial statement carrying value and amortized cost basis of the
Companies' total investments increased 18.1% and 18.2%, respectively, in the
first quarter of 2002. All of the Companies' investments, other than mortgage
loans on real estate, are carried at fair value in the Companies' financial
statements. The increase in the carrying value of the Companies' investment
portfolio was mainly due to net purchases. Growth in the cost basis of the
Companies' investment portfolio resulted from the investment of premiums from
sales of the general account products as well as increased use of the general
account investment option as part of the variable annuity products. The
Companies manage the growth of insurance operations in order to maintain
adequate capital ratios. To support the general account options of the
Companies' insurance products, cash flow was invested primarily in fixed
maturities and mortgage loans on real estate.
12
The Companies' investments had an average yield of 6.2% at March 31, 2002. The
Companies estimate the total investment portfolio, excluding policy loans, had a
fair value approximately equal to 99.6% of amortized cost value at March 31,
2002.
FIXED MATURITIES: At March 31, 2002, the Companies had fixed maturities with an
amortized cost and an estimated fair value of $2.3 billion. The Companies
classify 100% of securities as available for sale. Net unrealized depreciation
of fixed maturities of $15.1 million was comprised of gross appreciation of
$22.2 million and gross depreciation of $37.3 million. Net unrealized holding
losses on these securities of $3.5 million were included in stockholder's equity
at March 31, 2002 (net of adjustments for VOBA of $0.9 million, DPAC of $10.7
million, and deferred income taxes of $1.2 million, offset by a deferred income
taxes valuation allowance of $1.2 million).
The individual securities in the Companies' fixed maturities portfolio (at
amortized cost) include investment grade securities, which include securities
issued by the U.S. government, its agencies, and corporations that are rated at
least A- by Standard & Poor's ($1.2 billion or 51.7%), that are rated BBB+ to
BBB- by Standard & Poor's ($561.6 million or 24.0%), and below investment grade
securities, which are securities issued by corporations that are rated BB+ and
lower by Standard & Poor's ($68.5 million or 2.9%). Securities not rated by
Standard & Poor's had a National Association of Insurance Commissioners ("NAIC")
rating of 1, 2, 3, 4, or 5, with 1 being the highest rating (totaling $502.3
million or 21.4%), and investments with a rating of 6 on which impairment
writedowns have been recognized ($0.2 million or 0.0%). The Companies' fixed
maturity investment portfolio had a combined yield at amortized cost of 6.4% on
March 31, 2002.
Fixed maturities rated BBB+ to BBB- (24% of the fixed maturities portfolio) may
have speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of the issuer to
make principal and interest payments than is the case with higher rated fixed
maturities.
At March 31, 2002, the amortized cost value of the Companies' total investment
in below investment grade securities, excluding mortgage-backed securities, was
$90.8 million, or 3.3%, of the Companies' investment portfolio. The Companies
intend to purchase additional below investment grade securities, but do not
expect the percentage of the portfolio invested in such securities to exceed 10%
of the investment portfolio. At March 31, 2002, the average yield at amortized
cost on the Companies' below investment grade portfolio was 8.4% compared to
6.8% for the Companies' investment grade corporate bond portfolio. The Companies
estimate the fair value of the below investment grade portfolio was $88.5
million, or 97.4% of amortized cost value, at March 31, 2002.
Below investment grade securities have different characteristics than investment
grade corporate debt securities. Risk of loss upon default by the borrower is
significantly greater with respect to below investment grade securities than
with other corporate debt securities. Below investment grade securities are
generally unsecured and are often subordinated to other creditors of the issuer.
Also, issuers of below investment grade securities usually have higher levels of
debt and are more sensitive to adverse economic conditions, such as recession or
increasing interest rates, than are investment grade issuers. The Companies
attempt to reduce the overall risk in the below investment grade portfolio, as
in all investments, through careful credit analysis, strict investment policy
guidelines, and diversification by issuer and/or guarantor and by industry.
The Companies analyze the investment portfolio, including below investment grade
securities, at least quarterly in order to determine if the Companies' ability
to realize the carrying value on any investment has been impaired. For debt and
equity securities, if impairment in value is determined to be other than
temporary (i.e., if it is probable the Companies will be unable to collect all
amounts due according to the contractual terms of the security), the cost basis
of the impaired security is written down to fair value, which becomes the new
cost basis. The amount of the write-down is included in earnings as a realized
loss. Future events may occur, or additional or updated information may be
received, which may necessitate future write-downs of securities in the
Companies' portfolio. Significant write-downs in the carrying value of
investments could materially adversely affect the Companies' net income in
future periods.
13
During the first quarter of 2002, fixed maturities designated as available for
sale with a combined amortized cost of $1.3 billion were sold, called, or repaid
by their issuers. In total, net pre-tax losses from sales, calls, and repayments
of fixed maturities amounted to $15.3 million during the first quarter of 2002.
During the first quarter of 2002, Golden American determined that the carrying
value of seven impaired fixed maturity investments exceeded their estimated net
realizable value. As a result, during the first quarter of 2002, Golden American
recognized a total pre-tax loss of approximately $0.4 million to reduce the
carrying value of all impaired fixed maturity investments to their net
realizable value of $0.6 million.
At March 31, 2002, the Companies had nine fixed maturity investments in default.
MORTGAGE LOANS ON REAL ESTATE: Mortgage loans on real estate represent 8.2% of
the Companies' investment portfolio. Mortgages outstanding at amortized cost
were $222.6 million at March 31, 2002 with an estimated fair value of $226.0
million. The Companies' mortgage loan portfolio includes 82 loans with an
average size of $2.7 million. The Companies' mortgage loans on real estate are
typically secured by occupied buildings in major metropolitan locations and are
diversified by type of property and geographic location.
At March 31, 2002, no mortgage loan on real estate was delinquent by 90 days or
more. The Companies' loan investment strategy is consistent with other life
insurance subsidiaries of ING in the United States. The Companies have
experienced a historically low default rate in their mortgage loan portfolios.
OTHER ASSETS
Reinsurance recoverables increased $4.3 million during the first quarter of
2002, due largely to an increase of $9.6 million in reinsurance reserves from an
intercompany reinsurance agreement between Golden American and Security Life of
Denver International Limited ("SLDI"). On December 28, 2000, effective January
1, 2000, Golden American entered into a reinsurance agreement with SLDI, an
affiliate, covering variable annuity minimum guaranteed death benefits and
minimum guaranteed living benefits. Negative equity market returns during 2002
led to the increase in the reinsurance reserves under this agreement.
Amounts due from affiliates were $20.0 million and $20,000 at March 31, 2002 and
December 31, 2001, respectively. At March 31, 2002, the Companies had a
receivable of $22.6 million from Equitable Life related to the overpayment for
the amounts due under the modified coinsurance agreement.
Accrued investment income increased $4.4 million during the first three months
of 2002, due to an increase in investments in fixed maturities during the first
three months of 2002, which lead to an increase in investment income from fixed
maturities.
DPAC represents certain deferred costs of acquiring insurance business,
principally first year commissions and interest bonuses, premium credits, and
other expenses related to the production of business. Any expenses which vary
directly with the sales of the Companies' products are deferred and amortized.
VOBA is amortized into income in proportion to the expected gross profits of in
force acquired business in a manner similar to DPAC amortization. At March 31,
2002, the Companies had DPAC and VOBA balances of $786.9 million and $22.3
million, respectively, as compared to DPAC and VOBA balances of $709.0 million
and $20.2 million, respectively, at December 31, 2001. During the first quarter
of 2002, additional policy acquisition costs were deferred due to a lower
reimbursement of expenses under the modified coinsurance agreements. See
Liquidity and Capital Resources for further information regarding the modified
coinsurance agreements.
At March 31, 2002, the Companies had $11.6 billion of separate account assets
compared to $11.0 billion at December 31, 2001. The increase in separate account
assets resulted from sales of the Companies' variable annuity products, net of
redemptions, and from net policyholder transfers to the separate account options
from the fixed account options within the variable products.
14
At March 31, 2002, the Companies had total assets of $15.8 billion, a 9.9%
increase from December 31, 2001.
LIABILITIES
Future policy benefits increased $0.4 billion (17.2%), to $2.6 billion at March
31, 2002 reflecting net sales of the Companies' general account options, net of
transfers to the separate account.
Separate account liabilities increased $0.7 billion (6.2%), to $11.6 billion at
March 31, 2002. Net contributions to the separate account were partially offset
by a decrease in separate account liabilities resulting from negative equity
market returns.
Amounts due to affiliates decreased by $13.9 million from $25.1 million at
December 31, 2001 to $11.2 million at March 31, 2002, mainly due to the
settlement of a payable to Equitable Life related to the modified coinsurance
agreement.
Other liabilities increased $44.6 million from $85.0 million at December 31,
2001 to $129.6 at March 31, 2002, due primarily to the timing of the settlement
of account transfers and an increase in outstanding checks.
In conjunction with the volume of variable annuity sales, the Companies' total
liabilities increased $1.4 billion, or 10.6%, during the first quarter of 2002
and totaled $15.0 billion at March 31, 2002.
The effects of inflation and changing prices on the Companies' financial
position are not material since insurance assets and liabilities are both
primarily monetary and remain in balance. An effect of inflation, which has been
low in recent years, is a decline in stockholder's equity when monetary assets
exceed monetary liabilities.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity is the ability of the Companies to generate sufficient cash flows to
meet the cash requirements of operating, investing, and financing activities.
The Companies' principal sources of cash are variable annuity premiums and
product charges, investment income, maturing investments, proceeds from debt
issuance, and capital contributions. Primary uses of these funds are payments of
commissions and operating expenses, interest and premium credits, investment
purchases, repayment of debt, as well as withdrawals and surrenders.
Net cash provided by operating activities was $127.4 million in the first
quarter of 2002 compared to net cash provided by operating activities of $107.6
million in the same period of 2001. A main source of cash provided from
operating activities is an increase in other liabilities, net of a decrease in
other assets, of $152.1 million in the first quarter of 2002.
Net cash used in investing activities was $448.0 million during the first
quarter of 2002 as compared to net cash used in investing activities of $317.2
million in the same period in 2001. This increase in the net cash used in
investing activities is primarily due to increased net purchases of fixed
maturities during the first three months of 2002. Net purchases of fixed
maturities reached $375.8 million in the first quarter of 2002 versus net
purchases of $318.0 million in the same period in 2001. Net purchases of
mortgage loans on real estate reached $8.8 million in the first quarter of 2002
versus net maturities of $0.8 million during the same period in 2001. Net
purchase of short-term investments increased $63.0 million in the first quarter
of 2002 compared to the same period in 2001. These investment purchases were
mainly due to an increase in sales of the Companies' general account options.
Net cash provided by financing activities was $308.0 million during the first
quarter of 2002 as compared to net cash provided by financing activities of
$235.9 million during the same period in 2001. During the first quarter of 2002,
net cash provided by financing activities was positively impacted by net general
account deposits of $635.1 million compared to $410.6 million in the same period
of 2001 primarily due to the introduction of new variable annuity products.
Offsetting these increases, during the first quarter of 2002, were net
15
reallocations to the Companies' separate accounts, which increased to $325.7
million from $176.1 million during the same period in 2001.
The Companies' liquidity position is managed by maintaining adequate levels of
liquid assets, such as cash or cash equivalents and short-term investments.
Additional sources of liquidity include borrowing facilities to meet short-term
cash requirements. Golden American maintains a $65.0 million reciprocal loan
agreement with ING America Insurance Holdings, Inc. ("ING AIH"), and the
Companies have established an $85.0 million revolving note facility with
SunTrust Bank. This revolving note payable was amended and restated in April
2001 with an expiration date of May 31, 2002. Management believes that these
sources of liquidity are adequate to meet the Companies' short-term cash
obligations.
Based on current trends, the Companies expect to continue to use net cash in
operating activities, given the continued growth of annuity sales. It is
anticipated that a continuation of capital contributions from its Parent, the
issuance of additional surplus notes, and/or the use of modified coinsurance
agreements will cover these net cash outflows. ING AIH is committed to the
sustained growth of Golden American. During 2002, ING AIH maintains Golden
American's statutory capital and surplus at the end of each quarter at a level
such that: 1) the ratio of Total Adjusted Capital divided by Company Action
Level Risk Based Capital exceeds 300%; 2) the ratio of Total Adjusted Capital
(excluding surplus notes) divided by Company Action Level Risk Based Capital
exceeds 200%; and 3) Golden American's statutory capital and surplus exceeds the
"Amounts Accrued for Expense Allowances Recognized in Reserves" as disclosed on
page 3, Line 13 of Golden American's statutory statement.
Golden American occupies 125,000 square feet of leased space in West Chester,
Pennsylvania. At March 31, 2002, First Golden's principal office was located in
Woodbury, New York, where certain of the Company's records were maintained.
The ability of Golden American to pay dividends to the Parent is restricted.
Prior approval of insurance regulatory authorities is required for payment of
dividends to the stockholder which exceed an annual limit. During 2002, Golden
American cannot pay dividends to Equitable Life without prior approval of
statutory authorities.
Under the provisions of the insurance laws of the State of New York, First
Golden could not distribute any dividends to its stockholder, Golden American,
unless a notice of its intent to declare a dividend and the amount of the
dividend has been filed with the New York Insurance Department at least thirty
days in advance of the proposed declaration. If the Superintendent of the New
York Insurance Department finds the financial condition of First Golden does not
warrant the distribution, the Superintendent may disapprove the distribution by
giving written notice to First Golden within thirty days after the filing. First
Golden did not pay dividends to Golden American during the first quarter ended
March 31, 2002.
The NAIC's risk-based capital requirements require insurance companies to
calculate and report information under a risk-based capital formula. These
requirements are intended to allow insurance regulators to monitor the
capitalization of insurance companies based upon the type and mixture of risks
inherent in a company's operations. The formula includes components for asset
risk, liability risk, interest rate exposure, and other factors. The Companies
have complied with the NAIC's risk-based capital reporting requirements. Amounts
reported indicate that the Companies have total adjusted capital above all
required capital levels.
REINSURANCE: At March 31, 2002, Golden American had reinsurance treaties with
five unaffiliated reinsurers and three affiliated reinsurers covering a
significant portion of the mortality risks and guaranteed death and living
benefits under its variable contracts. Golden American remains liable to the
extent its reinsurers do not meet their obligations under the reinsurance
agreements.
On June 30, 2000, effective January 1, 2000, Golden American entered into a
modified coinsurance agreement with Equitable Life covering a considerable
portion of Golden American's variable annuities issued after January 1, 2000,
excluding those with an interest rate guarantee.
16
On December 28, 2000, Golden American entered into a reinsurance agreement with
SLDI, an affiliate, covering variable annuity minimum guaranteed death benefits
and minimum guaranteed living benefits of variable annuities issued after
January 1, 2000. Golden American also obtained an irrevocable letter of credit
was obtained through Bank of New York in the amount of $25 million related to
this agreement. Effective March 29, 2002, the letter of credit amount was
revised to $75 million.
On December 29, 2000, First Golden entered into a reinsurance treaty with London
Life Reinsurance Company of Pennsylvania, an unaffiliated reinsurer, covering
the minimum guaranteed death benefits of First Golden's variable annuities
issued on or after January 1, 2000.
MARKET RISK AND RISK MANAGEMENT
- -------------------------------
Asset/liability management is integrated into many aspects of the Companies'
operations, including investment decisions, product development, and crediting
rates determination. As part of the risk management process, different economic
scenarios are modeled, including cash flow testing required for insurance
regulatory purposes, to determine that existing assets are adequate to meet
projected liability cash flows. Key variables in the modeling process include
anticipated contractholder behavior, and variable separate account performance.
Contractholders bear the majority of the investment risks related to variable
insurance products. The Companies' products also provide certain minimum death
and guaranteed living benefits; the Companies' liabilities related to these
benefits which depend in part on the performance of the variable separate
accounts. Currently, the majority of death and living benefit risks are
reinsured, which protects the Companies from adverse mortality experience and
prolonged capital market decline.
A surrender, partial withdrawal, transfer, or annuitization made prior to the
end of a guarantee period under a fixed account or product may be subject to a
market value adjustment. As the majority of the liabilities in the fixed account
are subject to market value adjustment, the Companies do not face a material
amount of market risk volatility. The fixed account liabilities are supported by
a portfolio principally composed of fixed rate investments that can generate
predictable, steady rates of return. The portfolio management strategy for the
fixed account considers the assets available for sale. This enables the
Companies to respond to changes in market interest rates, changes in prepayment
risk, changes in relative values of asset sectors and individual securities and
loans, changes in credit quality outlook, and other relevant factors. The
objective of portfolio management is to maximize returns, taking into account
interest rate and credit risk, as well as other risks. The Companies'
asset/liability management discipline includes strategies to minimize exposure
to loss as interest rates and economic and market conditions change.
On the basis of these analyses, management believes there is currently no
material solvency risk to the Companies. With respect to a 10% drop in equity
values from year end 2001 levels, variable separate account funds, which
represent 82% of the Companies' in force business, pass the risk in underlying
fund performance to the contractholder (except for certain minimum benefits
guarantees, described above). With respect to interest rate movements up or down
100 basis points from March 31, 2002 levels, the remaining 18% of the in force
are fixed account funds, and almost all of these have market value adjustments
which provide significant protection to the Companies against changes in
interest rates.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the use of estimates and
assumptions in certain circumstances that affect amounts reported in the
accompanying condensed consolidated financial statements and related footnotes.
These estimates and assumptions are evaluated on an on-going basis based on
historical developments, market conditions, industry trends and other
information we believe to be reasonable under the circumstances. There can be no
assurance that actual results will conform to our estimates and assumptions, and
that reported results of operations will not be materially adversely affected by
the need to make accounting adjustments to reflect changes in these estimates
17
and assumptions from time to time. Item 7 of Golden American's Annual Report on
Form 10K discusses several critical accounting policies which we believe are
most sensitive to estimates and judgments and involve a higher degree of
judgment and complexity. There have been no material changes to that information
during the first quarter of 2002.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
- ---------------------------------------------------------
Any forward-looking statement contained herein or in any other oral or written
statement by the Companies or any of their officers, directors, or employees is
qualified by the fact that actual results of the Companies may differ materially
from such statement, among other risks and uncertainties inherent in the
Companies' business, due to the following important factors:
1. Prevailing interest rate levels and equity performance, which may affect
the ability of the Companies to sell their products, the market value and
liquidity of the Companies' investments, fee revenue, and the lapse rate of
the Companies' products, notwithstanding product design features intended
to enhance persistency of the Companies' products.
2. Changes in the federal income tax laws and regulations, which benefit the
tax treatment of investments that compete with annuity products for
retirement savings may adversely affect the tax treatment of the Companies'
products and benefits thereunder.
3. Changes in the regulation of financial services, including potential
federal regulation of insurance, bank sales, and underwriting of insurance
products, which may affect the competitive environment for the Companies'
products.
4. Increasing competition from other market participants for the sale of
annuity products.
5. Other factors that could affect the performance of the Companies,
including, but not limited to, market conduct claims against the Companies
and/or firms selling the Companies' product, litigation, insurance industry
insolvencies, availability of competitive reinsurance on new business,
investment performance of the underlying portfolios of the variable
products, variable product design, and sales volume by significant sellers
of the Companies' variable products.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
PRODUCTS
The Companies offer a portfolio of variable and fixed insurance products
designed to meet customer needs for tax-advantaged saving for retirement and
protection from death. The Companies believe longer life expectancies, an aging
population, and growing concern over the stability and availability of the
Social Security system have made retirement planning a priority for many
Americans. The target market for all products is consumers and corporations
throughout the United States.
Variable and fixed insurance products currently offered by the Companies include
thirteen variable annuity products and two fixed annuity products. During the
year 2002, Golden American began selling one new variable insurance product,
Multi-Rate Index Annuity.
SUBSEQUENT EVENTS - 8K
A filing was made on April 16, 2002, under the Reliastar Life Insurance Company
of New York ("RLNY") registration, in accordance with Item 5 of Form 8-K: Other
Events and Regulation FD Disclosure. The purpose of the filing was to report
18
that on April 1, 2002, First Golden was merged into RLNY. Approval for the
merger was obtained from the Insurance Departments of the States of New York and
Delaware.
ReliaStar Life Insurance Company ("ReliaStar"), the parent of Security-
Connecticut Life Insurance Company ("Security-Connecticut"), who in turn is the
parent of RLNY, paid to Golden American the preliminary merger consideration of
$27.7 million in exchange for 100% of the shares of First Golden. ReliaStar
contributed First Golden to Security-Connecticut who in turn contributed First
Golden to RLNY. The final merger consideration of First Golden will be the fair
market value as determined by the first quarter statutory financial statement
and will be recorded in the second quarter of 2002.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
A list of exhibits included as part of this report is set forth in the Exhibit
Index which immediately precedes such exhibits and is hereby incorporated by
reference herein.
(b) Reports on Form 8-K
None during the first quarter ended March 31, 2002.
19
SIGNATURES
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.
DATE: May 13, 2002 GOLDEN AMERICAN LIFE INSURANCE COMPANY
By/s/ Wayne R. Huneke
--------------------------------
Wayne R. Huneke
Chief Financial Officer and Director
(Principal Financial Officer)
(Duly Authorized Officer)
20
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
2 PLAN OF ACQUISITION
(a) Stock Purchase Agreement dated as of May 3, 1996, between Equitable of Iowa
Companies ("Equitable") and Whitewood Properties Corp. (incorporated by reference from
Exhibit 2 in Equitable's Form 8-K filed August 28, 1996)............................................. __
(b) Agreement and Plan of Merger dated as of July 7, 1997, among ING Groep N.V.,
PFHI Holdings, Inc., and Equitable (incorporated by reference from Exhibit 2 in Equitable's
Form 8-K filed July 11, 1997)........................................................................ __
3 ARTICLES OF INCORPORATION AND BY-LAWS
(a) Articles of Incorporation of Golden American Life Insurance Company ("Registrant"
or "Golden American") (incorporated by reference from Exhibit 3(a) to Registrant's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
(the "SEC") on June 30, 2000 (File No. 333-40596))................................................... __
(b)(i) By-laws of Golden American (incorporated by reference from Exhibit 3(b)(i) to Registrant's
Registration Statement on Form S-1 filed with the SEC on June 30, 2000
(File No. 333-40596))................................................................................ __
(ii) By-laws of Golden American, as amended (incorporated by reference from Exhibit 3(b)(ii)
to the Registrant's Registration Statement on Form S-1 filed with the SEC on
June 30, 2000 (File No. 333-40596)).................................................................. __
(iii)Certificate of Amendment of the By-laws of MB Variable Life Insurance Company, as
amended (incorporated by reference from Exhibit 3(b)(iii) to Registrant's Registration
Statement on Form S-1 filed with the SEC on June 30, 2000 (File No. 333-40596))...................... __
(iv) By-laws of Golden American, as amended (12/21/93) (incorporated by reference
from Exhibit 3(b)(iv) to Registrant's Registration Statement on Form S-1 filed with the
SEC on June 30, 2000 (File No. 333-40596))........................................................... __
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
(a) Individual Deferred Combination Variable and Fixed Annuity Contract (incorporated
by reference from Exhibit 4(a) to Amendment No. 5 of Registrant's Registration
Statement on Form S-1 filed with the SEC on or about April 23, 1999
(File No. 333-51353))................................................................................ __
(b) Discretionary Group Deferred Combination Variable Annuity Contract (incorporated
by reference from Exhibit 4(b) to Amendment No. 5 of Registrant's Registration
Statement on Form S-1 filed with the SEC on or about April 23, 1999
(File No. 333-51353))................................................................................ __
21
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(c) Individual Deferred Variable Annuity Contract (incorporated by reference from
Exhibit 4(c) to Amendment No. 5 of Registrant's Registration Statement on
Form S-1 filed with the SEC on or about December 3, 1999 (File No. 333-51353))....................... __
(d) Individual Deferred Combination Variable and Fixed Annuity Application
(incorporated by reference from Exhibit 4(g) to Amendment No. 6 of Registrant's
Registration Statement on Form S-1 filed with the SEC on or about December 3, 1999
(File No. 333-51353))................................................................................ __
(e) Group Deferred Combination Variable and Fixed Annuity Enrollment Form
(incorporated by reference from Exhibit 4(h) to Amendment No. 6 of Registrant's
Registration Statement on Form S-1 filed with the SEC on or about December 3, 1999
(File No. 333-51353))................................................................................ __
(f) Individual Deferred Variable Annuity Application (incorporated by reference
from Exhibit 4(i) to Amendment No. 6 of Registrant's Registration Statement
on Form S-1 filed with the SEC on or about December 3, 1999 (File No. 333-51353)).................... __
(g) Individual Retirement Annuity Rider Page (incorporated by reference from Exhibit 4(d) to
Registrant's Registration Statement on Form S-1 filed with the SEC on June 30, 2000
(File No. 333-40596))................................................................................ __
(h) ROTH Individual Retirement Annuity Rider (incorporated by reference from Exhibit 4(g) to
Registrant's Registration Statement on Form S-1 filed with the SEC on June 30, 2000
(File No. 333-40596))................................................................................ __
(i) Minimum Guaranteed Accumulation Benefit Rider (REV) (incorporated by reference from
Exhibit 4(k) to Amendment No. 3 to a Registration Statement on Form S-1 filed with the
SEC on April 23, 2001 (File No. 333-35592)).......................................................... __
(j) Minimum Guaranteed Income Benefit Rider (REV) (incorporated by reference from Exhibit
4(l) to Amendment No. 3 to a Registration Statement on Form S-1 filed with the SEC on
April 23, 2001 (File No. 333-35592))................................................................. __
(k) Minimum Guaranteed Withdrawal Benefit Rider (REV) (incorporated by reference from
Exhibit 4(m) to Amendment No. 3 to a Registration Statement on Form S-1 filed with the
SEC on April 23, 2001 (File No. 333-35592)).......................................................... __
(l) Living Benefit Rider Endorsement (incorporated by reference from Exhibit 4(n) to
Amendment No. 3 to a Registration Statement on Form S-1 filed with the SEC on
April 23, 2001 (File No. 333-35592))................................................................. __
22
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(m) Death Benefit Endorsement Number 1 describing the 7% Solution Enhanced Death
Benefit (REV) (incorporated by reference from Exhibit 4(o) to Amendment No. 3 to a
Registration Statement on Form S-1 filed with the SEC on April 23, 2001
(File No. 333-35592))................................................................................ __
(n) Death Benefit Endorsement Number 2 describing the Annual Ratchet Enhanced
Death Benefit (REV) (incorporated by reference from Exhibit 4(p) to Amendment No. 3
to a Registration Statement on Form S-1 filed with the SEC on April 23, 2001
(File No. 333-35592))................................................................................ __
(o) Death Benefit Endorsement Number 3 describing the Standard Death Benefit (REV)
(incorporated by reference from Exhibit 4(q) to Amendment No. 3 to a Registration
Statement on Form S-1 filed with the SEC on April 23, 2001 (File No. 333-35592))..................... __
(p) Death Benefit Endorsement Number 4 describing the Max 7 Enhanced Death Benefit (REV)
(incorporated by reference from Exhibit 4(r) to Amendment No. 3 to a Registration
Statement on Form S-1 filed with the SEC on April 23, 2001 (File No. 333-35592))..................... __
(q) Death Benefit Endorsement Number 5 (Base Death Benefit) (incorporated by reference
from Exhibit 4(s) to Amendment No. 3 to a Registration Statement on Form S-1 filed with
the SEC on April 23, 2001 (File No. 333-35592)) ..................................................... __
(r) Death Benefit Endorsement Number 6 (Inforce Contracts) (incorporated by reference from
Exhibit 4(t) to Amendment No. 3 to a Registration Statement on Form S-1 filed with the
SEC on April 23, 2001 (File No. 333-35592)) ......................................................... __
(s) Individual Deferred Variable and Fixed Annuity Contract (incorporated by
reference from Exhibit 4(a) to Amendment No. 6 to Registrant's Registration
Statement filed with the SEC on or about December 3, 1999 (File No. 333-28765))...................... __
(t) Group Deferred Variable and Fixed Annuity Contract Individual Deferred Variable
and Fixed Annuity Contract (incorporated by reference from Exhibit 4(b) to Amendment
No. 6 to Registrant's Registration Statement filed with the SEC on or about December 3,
1999 (File No. 333-28765))........................................................................... __
(u) Individual Deferred Variable Annuity Contract (incorporated by reference from
Exhibit 4(c) to Amendment No. 6 to Registrant's Registration Statement filed with
the SEC on or about December 3, 1999 (File No. 333-28765))........................................... __
(v) Individual Deferred Variable and Fixed Annuity Contract (incorporated by reference
from Exhibit 4(a) to a Registration Statement for Golden American filed with the SEC
on or about April 23, 1999 (File No. 333-76941))..................................................... __
(w) Group Deferred Variable and Fixed Annuity Contract Individual Deferred Variable
and Fixed Annuity Contract (incorporated by reference from Exhibit 4(b) to a Registration
Statement for Golden American filed with the SEC on or about April 23, 1999
(File No. 333-76941))................................................................................ __
23
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(x) Individual Deferred Variable Annuity Contract (incorporated by reference from
Exhibit 4(c) to a Registration Statement for Golden American filed with the SEC
on or about April 23, 1999 (File No. 333-76941))..................................................... __
(y) Individual Deferred Variable and Fixed Annuity Contract (incorporated by reference
from Exhibit 4(a) to a Registration Statement for Golden American filed with the SEC
on or about April 23, 1999 (File No. 333-76945))..................................................... __
(z) Group Deferred Variable and Fixed Annuity Contract Individual Deferred Variable
and Fixed Annuity Contract (incorporated by reference from Exhibit 4(b) to a
Registration Statement for Golden American filed with the SEC on or about April 23,
1999 (File No. 333-76945))........................................................................... __
(aa) Individual Deferred Variable Annuity Contract (incorporated by reference from
Exhibit 4(c) to a Registration Statement for Golden American filed with the SEC
on or about April 23, 1999 (File No. 333-76945))..................................................... __
(ab) Schedule Page to the Premium Plus Contract featuring the Galaxy VIP Fund
(incorporated by reference from Exhibit 4(i) to a Registration Statement for Golden
American on Form S-1 filed with the SEC on or about September 24, 1999
(File No. 333-76945))................................................................................ __
(ac) Individual Deferred Variable and Fixed Annuity Contract (incorporated by reference
from Exhibit 4(a) to Amendment No. 3 to Registrant's Registration Statement filed
with the SEC on or about April 23, 1999 (File No. 333-66745))........................................ __
(ad) Group Deferred Variable and Fixed Annuity Contract Individual Deferred Variable
and Fixed Annuity Contract (incorporated by reference from Exhibit 4(b) to
Amendment No. 3 to Registrant's Registration Statement filed with the SEC on or
about April 23, 1999 (File No. 333-66745))........................................................... __
(ae) Individual Deferred Variable Annuity Contract (incorporated by reference from
Exhibit 4(c) to Amendment No. 3 to Registrant's Registration Statement filed with
the SEC on or about April 23, 1999 (File No. 333-66745))............................................. __
(af) Single Premium Deferred Modified Guaranteed Annuity Contract (incorporated by reference
to Exhibit 4(a) to Amendment No. 1 to a Registration Statement on Form S-1 filed with the
SEC on September 13, 2000 (File No. 333-40596))...................................................... __
(ag) Single Premium Deferred Modified Guaranteed Annuity Master Contract (incorporated by
reference to Exhibit 4(b) to Amendment No. 1 to a Registration Statement on Form S-1 filed
with the SEC on September 13, 2000 (File No. 333-40596))............................................. __
(ah) Single Premium Deferred Modified Guaranteed Annuity Certificate (incorporated by
reference to Exhibit 4(c) to Amendment No. 1 to a Registration Statement on Form S-1 filed
with the SEC on September 13, 2000 (File No. 333-40596))............................................. __
24
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(ai) Single Premium Deferred Modified Guaranteed Annuity Application (incorporated by
reference to Exhibit 4(e) to Amendment No. 1 to a Registration Statement on Form S-1 filed
with the SEC on September 13, 2000 (File No. 333-40596))............................................. __
(aj) Single Premium Deferred Modified Guaranteed Annuity Enrollment Form (incorporated by
reference to Exhibit 4(f) to Amendment No. 1 to a Registration Statement on Form S-1 filed
with the SEC on September 13, 2000 (File No. 333-40596))............................................. __
(ak) Earnings Enhancement Death Benefit Rider (incorporated by reference from Exhibit 4(u)
to Amendment No. 3 to a Registration Statement on Form S-1 filed with the SEC on
April 23, 2001 (Filed No. 333-35592))................................................................ __
(al) Deferred Combination Variable and Fixed Annuity Group Master Contract (incorporated by
reference from Exhibit 4(a) to a Registration Statement on Form S-1 filed by Registrant with
the SEC on or about April 24, 2001 (File No. 333-59408))............................................. __
(am) Flexible Premium Individual Deferred Combination Variable and Fixed Annuity Contract
(incorporated by reference from Exhibit 4(b) to a Registration Statement on Form S-1 filed
by Registrant with the SEC on or about April 24, 2001 (File No. 333-59408)).......................... __
(an) Flexible Premium Individual Deferred Combination Variable and Fixed Annuity Certificate
(incorporated by reference from Exhibit 4(c) to a Registration Statement on Form S-1 filed
by Registrant with the SEC on or about April 24, 2001 (File No. 333-59408)).......................... __
(ao) Flexible Premium Individual Deferred Variable Annuity Contract (incorporated by
reference from Exhibit 4(d) to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about April 24, 2001 (File No. 333-59408))........................................ __
(ap) Individual Deferred Combination Variable and Fixed Annuity Application (incorporated by
reference from Exhibit 4(e) to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about April 24, 2001 (File No. 333-59408))........................................ __
(aq) Group Deferred Combination Variable and Fixed Annuity Enrollment Form (incorporated
by reference from Exhibit 4(f) to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about April 24, 2001 (File No. 333-59408))........................................ __
(ar) Individual Deferred Variable Annuity Application (incorporated by reference from
Exhibit 4(g) to a Registration Statement on Form S-1 filed by Registrant with the SEC on or
about April 24, 2001 (File No. 333-59408))........................................................... __
25
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(as) Form of Variable Annuity Group Master Contract (incorporated by reference from
Exhibit 4(a) to Pre-Effective Amendment No. 1 to a Registration Statement on Form
S-2 filed by Registrant with the SEC on or about June 29, 2001 (File No. 333-57212))................. __
(at) Form of Variable Annuity Contract (incorporated by reference from Exhibit 4(b) to
Pre-Effective Amendment No. 1 to a Registration Statement on Form S-2 filed by
Registrant with the SEC on or about June 29, 2001 (File No. 333-57212)).............................. __
(au) Form of Variable Annuity Certificate (incorporated by reference from Exhibit 4(c) to
Pre-Effective Amendment No. 1 to a Registration Statement on Form S-2 filed by
Registrant with the SEC on or about June 29, 2001 (File No. 333-57212)).............................. __
(av) Form of GET Fund Rider (incorporated by reference from Exhibit 4(d) to Pre-Effective
Amendment No. 1 to a Registration Statement on Form S-2 filed by Registrant with the
SEC on or about June 29, 2001 (File No. 333-57212)).................................................. __
(aw) Form of Premium Bonus Endorsement Rider (incorporated by reference from Exhibit
4(e) to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-2 filed by
Registrant with the SEC on or about June 29, 2001 (File No. 333-57212)).............................. __
(ax) Form of Individual Retirement Annuity Rider (incorporated by reference from Exhibit
4(d) to Initial Filing to a Registration Statement on Form S-1 filed by Registrant with
the SEC on or about August 16, 2001 (File No. 333-67660))............................................ __
(ay) Form of Variable Annuity Group Master Contract (incorporated by reference from
Exhibit 4(a) to Pre-Effective Amendment No. 1 to a Registration Statement on Form
S-1 filed by Registrant with the SEC on or about October 26, 2001 (File No. 333-63694)).............. __
(az) Form of Variable Annuity Contract (incorporated by reference from Exhibit 4(b) to
Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by
Registrant with the SEC on or about October 26, 2001 (File No. 333-63694))........................... __
(ba) Form of Variable Annuity Certificate (incorporated by reference from Exhibit 4(c) to Pre-Effective
Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about October 26, 2001 (File No. 333-63694))...................................... __
(bb) Form of Premium Bonus Endorsement (incorporated by reference from Exhibit 4(d) to Pre-Effective
Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant with the SEC
on or about October 26, 2001 (File No. 333-63694))................................................... __
(bc) Earnings Enhancement Death Benefit Rider (incorporated by reference from Exhibit
4(e) to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by
Registrant with the SEC on or about October 26, 2001 (File No. 333-63694))........................... __
26
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(bd) Form of Variable Annuity Group Master Contract (incorporated by reference from
Exhibit 4(a) to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1
filed by Registrant with the SEC on or about December 11, 2001 (File No. 333-70602))................. __
(be) Form of Variable Annuity Contract (incorporated by reference from Exhibit 4(b) to
Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by
Registrant with the SEC on or about December 11, 2001 (File No. 333-70602)).......................... __
(bf) Form of Variable Annuity Certificate (incorporated by reference from Exhibit 4(c) to
Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about December 11, 2001 (File No. 333-70602))..................................... __
(bg) Form of GET Fund Rider (incorporated by reference from Exhibit 4(d) to Pre-Effective
Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about December 11, 2001 (File No. 333-70602))..................................... __
(bh) Form of Section 72 Rider (incorporated by reference from Exhibit 4(e) to Pre-Effective
Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant with the
SEC on or about December 11, 2001 (File No. 333-70602)).............................................. __
(bi) Form of Waiver of Surrender Charge Rider (incorporated by reference from Exhibit 4(f)
to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by
Registrant with the SEC on or about December 11, 2001 (File No. 333-70602)).......................... __
10 MATERIAL CONTRACTS
(a) Administrative Services Agreement, dated as of January 1, 1997, between Golden
American and Equitable Life Insurance Company of Iowa (incorporated by reference
from Exhibit 10(a) to a Registration Statement for Golden American on Form S-1 filed
with the SEC on April 29, 1998 (File No. 333-51353))................................................. __
27
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(b) Service Agreement, dated as of January 1, 1994, between Golden American and Directed
Services, Inc. (incorporated by reference from Exhibit 10(b) to a Registration Statement
for Golden American on Form S-1 filed with the SEC on April 29, 1998
(File No. 333-51353))................................................................................ __
(c) Service Agreement, dated as of January 1, 1997, between Golden American and
Equitable Investment Services, Inc. (incorporated by reference from Exhibit 10(c)
to a Registration Statement for Golden American on Form S-1 filed with the SEC on
April 29, 1998 (File No. 333-51353))................................................................. __
(d) Participation Agreement between Golden American and Warburg Pincus Trust
(incorporated by reference from Exhibit 8(a) to Amendment No. 54 to Separate
Account B of Golden American's Registration Statement on Form N-4 filed with
SEC on or about April 30, 1998 (File No. 333-28679 and 811-5626)).................................... __
(e) Participation Agreement between Golden American and PIMCO Variable Trust
(incorporated by reference from Exhibit 8(b) to Amendment No. 54 to Separate
Account B of Golden American's Registration Statement on Form N-4 filed with
the SEC on or about April 30, 1998 (File No. 333-28679 and 811-5626))................................ __
(f) Participation Agreement between Golden American and The Galaxy VIP Fund (incorporated
by reference from Exhibit 10(i) to a Registration Statement for Golden American on Form S-1
filed with the SEC on or about September 24, 1999 (File No. 333-76945)).............................. __
(g) Asset Management Agreement, dated January 20, 1998, between Golden American
and ING Investment Management LLC (incorporated by reference from Exhibit 10(f)
to Golden American's Form 10-Q filed with the SEC on August 14, 1998
(File No. 33-87272))................................................................................. __
(h) Reciprocal Loan Agreement, dated January 1, 1998, as amended March 20, 1998, between Golden
American and ING America Insurance Holdings, Inc. (incorporated by reference from
Exhibit 10(g) to Golden American's Form 10-Q filed with the SEC on August 14, 1998
(File No. 33-87272))................................................................................. __
28
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(i) Underwriting Agreement between Golden American and Directed Services, Inc.
(incorporated by reference from Exhibit 1 to Amendment No. 9 to Registrant's
Registration Statement on Form S-1 filed with the SEC on or about February 17, 1998
(File No. 33-87272))................................................................................. __
(j) Revolving Note Payable, dated July 27, 1998, between Golden American and SunTrust
Bank, Atlanta (incorporated by reference from Exhibit 10(i) to Golden American's
Form 10-Q filed with the SEC on November 13, 1998 (File No. 33-87272))............................... __
(k) Revolving Note Payable, dated July 31, 1999, between Golden American and SunTrust
Bank, Atlanta (incorporated by reference from Exhibit 10(j) to Golden American's
Form 10-Q filed with the SEC on August 13, 1999 (File No. 33-87272))................................. __
(l) Surplus Note, dated December 17, 1996, between Golden American and Equitable of Iowa
Companies (incorporated by reference from Exhibit 10(l) to Golden American's Form 10-K
filed with the SEC on March 29, 2000 (File No. 33-87272)) ........................................... __
(m) Surplus Note, dated December 30, 1998, between Golden American and Equitable Life
Insurance Company of Iowa (incorporated by reference from Exhibit 10(m) to Golden American's
Form 10-K filed with the SEC on March 29, 2000 (File No. 33-87272)).................................. __
(n) Surplus Note, dated September 30, 1999, between Golden American and ING America
Insurance Holdings, Inc. (incorporated by reference from Exhibit 10(n) to Golden
American's Form 10-K filed with the SEC on March 29, 2000 (File No. 33-87272)........................ __
(o) Surplus Note, dated December 8, 1999, between Golden American and First
Columbine Life Insurance Company (incorporated by reference from Exhibit 10(g)
to Amendment No. 7 to a Registration Statement for Golden American on Form S-1
filed with the SEC on or about January 27, 2000 (File No. 333-28765))................................ __
(p) Surplus Note, dated December 30, 1999, between Golden American and Equitable
Life Insurance Company of Iowa (incorporated by reference from Exhibit 10(h) to
Amendment No. 7 to a Registration Statement for Golden American on Form S-1
filed with the SEC on or about January 27, 2000 (File No. 333-28765))................................ __
(q) Reinsurance Agreement, effective January 1, 2000, between Golden American Life
Insurance Company and Security Life of Denver International Limited (incorporated by reference
from Exhibit 10(q) to Golden American's Form 10-K filed with the SEC on March 29, 2001
(File No. 33-87272))................................................................................. __
29
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(r) Participation Agreement between Golden American and Prudential Series Fund, Inc.
(incorporated by reference from Exhibit 10(l) to Registration Statement for Golden American
on Form S-1 filed with the SEC on or about April 26, 2000 (File No. 333-35592)) ..................... __
(s) Participation Agreement between Golden American and ING Variable Insurance Trust
(incorporated by reference from Exhibit 10(m) to Registration Statement for Golden American
on Form S-1 filed with the SEC on or about April 26, 2000 (File No. 333-35592)) ..................... __
(t) Reinsurance Agreement, dated June 30, 2000, between Golden American Life Insurance Company
and Equitable Life Insurance Company of Iowa (incorporated by reference from Exhibit 10(s) to
Golden American's Form 10-Q filed with the SEC on August 11, 2000
(File No. 33-87272)) ................................................................................ __
(u) Renewal of Revolving Note Payable, dated July 31, 2000, between Golden American and SunTrust
Bank, Atlanta (incorporated by reference from Exhibit 10(t) to Golden American's Form 10-Q
filed with the SEC on August 11, 2000 (File No. 33-87272))........................................... __
(v) Amendment to the Participation Agreement between Golden American and Prudential
Series Fund, Inc. (incorporated by reference to Exhibit 10(m) to Amendment No. 10
to a Registration Statement on Form S-1 filed with the SEC on December 15, 2000
(File No. 333-28765)) ............................................................................... __
(w) Letter of Credit between Security Life of Denver International Limited and The Bank
of New York for the benefit of Golden American (incorporated by reference to
Exhibit 10(r) to Amendment No. 3 to a Registration Statement on Form S-1 filed with
the SEC on April 23, 2001 (File No. 333-35592)) ..................................................... __
(x) Participation Agreement between Golden American and ING Variable Products Trust (incorporated by
reference to Exhibit 8(n) to Amendment No. 32 to a Post Effective Amendment to a Registration
Statement on Form N-4 filed with the SEC on April 26, 2002 (File No. 33-23351 and 811-5626)) ........ __
(y) Form of Participation Agreement between Golden American and ProFunds (incorporated by
reference to Exhibit 10(s) to Amendment No. 3 to a Registration Statement on Form S-1
filed with the SEC on April 23, 2001 (File No. 333-35592)) .......................................... __
(z) Renewal of Revolving Note Payable, dated April 30, 2001, between Golden American and
SunTrust Bank, Atlanta (incorporated by reference to Exhibit 10(z) to Golden American's
Form 10-Q filed with SEC on August 14, 2001 (File No. 33-87272))..................................... __
(aa) Amendment to the Reinsurance Agreement between Golden American and Security Life of
Denver International Limited, amended September 28, 2001 (Incorporated by reference from
Exhibit 10(n) Pre-Effective Amendment No. 1 to a Registration Statement for Golden
American on Form S-1 filed with the SEC on October 26, 2001 (Filed No. 333-63694))................... __
30
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(ab) Participation Agreement between Golden American Life Insurance Company, Aetna
Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc.,
Aetna GET Fund, Aetna Variable Portfolios, Inc. and Aeltus Investment Management, Inc.
(incorporated by reference from Exhibit 10(p) to Pre-Effective Amendment No. 1 to a
Registration Statement on Form S-1 filed by Registrant with the SEC on or about
October 26, 2001 (File No. 333-63694))............................................................... __
(ac) Form of Participation Agreement between Golden American Life Insurance Company,
Directed Services, Inc., Alliance Capital Management L.P., Alliance Variable Products
Series Fund, Inc. and Alliance Fund Distributors, Inc. (incorporated by reference from
Exhibit 10(r) to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1
filed by Registrant with the SEC on or about October 26, 2001 (File No. 333-63694)).................. __
(ad) Participation Agreement between Golden American Life Insurance Company, Brinson Series
Trust and Brinson Advisors, Inc. (incorporated by reference from Exhibit 10(s) to
Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about October 26, 2001 (File No. 333-63694))...................................... __
(ae) Participation Agreement between Golden American Life Insurance Company, Fidelity
Distributors Corporation and each of Variable Insurance Products Fund, Variable Insurance
Products Fund II and Variable Insurance Products Fund III. (incorporated by reference from
Exhibit 10(t) to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1
filed by Registrant with the SEC on or about October 26, 2001 (File No. 333-63694)).................. __
(af) Participation Agreement between Golden American Life Insurance Company, INVESCO Variable
Investment Funds, Inc., INVESCO Funds Group, Inc. and INVESCO Distributors, Inc. (incorporated by
reference from Exhibit 10(u) to Post-Effective Amendment No. 32 to a Registration Statement
on Form N-4 filed by Registrant with the SEC on or about April 26, 2002 (File No. 33-23351
and 811-5626))....................................................................................... __
(ag) Form of Participation Agreement between Golden American Life Insurance Company and
Janus Aspen Series (incorporated by reference from Exhibit 10(v) to Pre-Effective Amendment
No. 1 to a Registration Statement on Form S-1 filed by Registrant with the SEC on or about
October 26, 2001 (File No. 333-63694))............................................................... __
(ah) Participation Agreement between Golden American Life Insurance Company and ING
Pilgrim Investors, LLC (incorporated by reference from Exhibit 10(w) to Pre-Effective
Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant with the SEC
on or about October 26, 2001 (File No. 333-63694))................................................... __
(ai) Participation Agreement between Golden American Life Insurance Company and ING
Pilgrim Securities, Inc. (incorporated by reference from Exhibit 10(x) to Pre-Effective
Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant with the SEC
on or about October 26, 2001 (File No. 333-63694))................................................... __
31
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(aj) Participation Agreement between Golden American Life Insurance Company, Pioneer Variable
Contracts Trust, Pioneer Investment Management, Inc. and Pioneer Funds Distributor, Inc.
(incorporated by reference from Exhibit 8(o) to Post-Effective Amendment No. 32 to a
Registration Statement on Form N-4 filed by Registrant with the SEC on or about April 26, 2002
(File No. 33-23351 and 811-5626)).................................................................... __
(ak) Form of Participation Agreement between Golden American Life Insurance Company,
Aetna Life Insurance and Annuity Company and Portfolio Partners, Inc. (incorporated by
reference from Exhibit 10(z) to Pre-Effective Amendment No. 1 to a Registration Statement
on Form S-1 filed by Registrant with the SEC on or about October 26, 2001
(File No. 333-63694))................................................................................ __
(al) Participation Agreement among Golden American Life Insurance Company, Putnam
Variable Trust and Putnam Retail Management, L.P. (incorporated by reference from
Exhibit 10(cc) to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1
filed by Registrant with the SEC on or about October 26, 2001 (File No. 333-63694)).................. __
(am) Participation Agreement between Golden American Life Insurance Company, AIM Variable
Insurance Funds, Inc., and Directed Services, Inc. (incorporated by reference from Exhibit
10(q) to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by
Registrant with the SEC on or about December 11, 2001 (File No. 333-70602)).......................... __
(an) Form of Services Agreement between Golden American Life Insurance Company and the affiliated
companies listed on Exhibit B to that Agreement (incorporated by reference from Exhibit 10(p)
to Pre-Effective Amendment No. 1 to a Registration Statement on Form S-1 filed by Registrant
with the SEC on or about December 11, 2001 (File No. 333-70602))..................................... __
(ao) Form of Services Agreement between Golden American Life Insurance Company and
ING North American Insurance Corporation, Inc. (incorporated by reference from
Exhibit 10(q) to Pre-Effective Amendment No. 1 to a Registration Statement on Form
S-1 filed by Registrant with the SEC on or about December 11, 2001 (File No. 333-70602))............. __
(ap) Form of Shared Services Center Services Agreement by and among ING North America Insurance
Corporation ("Service Provider") and Ameribest Life Insurance Company, a Georgia corporation;
Equitable Life Insurance Company of Iowa, an Iowa corporation; USG Annuity & Life Company,
an Oklahoma corporation; Golden American Life Insurance Company, a Delaware corporation; First
Columbine Life Insurance Company, a Colorado corporation; Life Insurance Company of Georgia, a
Georgia corporation; Southland Life Insurance Company, a Texas corporation; Security Life of Denver
Insurance Company, a Colorado corporation; Midwestern United Life Insurance Company, an Indiana
corporation; and United Life & Annuity Insurance Company, a Texas corporation (incorporated by
reference from Exhibit 10(r) to Pre-Effective Amendment No. 1 to a Registration Statement
on Form S-1 filed by Registrant with the SEC on or about December 11, 2001
(File No. 333-70602))................................................................................ __
32
INDEX
Exhibits to Form 10-Q
Three months ended March 31, 2002
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Page Number
-----------
(aq) Participation Agreement betweeen Golden American Life Insurance Company and Fidelity Distributors
Corporation (incorporated by reference from Exhibit 8(p) to Post-Effective Amendment No. 32 to a
Registration Statement on Form N-4 filed by Registrant with the SEC on or about April 26, 2002
(File No. 33-23351 and 811-5626)).................................................................... __
33