FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 Commission file number: 333-59765
333-59769
333-82427
LINCOLN BENEFIT LIFE COMPANY
(Exact name of registrant as specified in its charter)
Nebraska 470221457
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2940 South 84th Street
Lincoln, Nebraska 68506-4142
(Address of principal executive offices)(zip code)
1-800-525-9287
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes. . ./X/. . No
Indicate the number of shares of each of the issuer's classes of common stock as
of July 30, 2001; there were 25,000 shares of common capital stock outstanding,
par value $100 per share all of which shares are held by Allstate Life Insurance
Company.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Statements of Operations for the Three Month and
Six Month periods Ended June 30, 2001 and 2000 (unaudited).........3
Statements of Financial Position as of
June 30, 2001(unaudited) and December 31, 2000.....................4
Statements of Cash Flows for the
Six Month periods Ended June 30, 2001 and 2000 (unaudited).........5
Notes to Financial Statements (unaudited)..........................6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.....................9
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK*..............................................N/A
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS...................................................14
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS*.........................N/A
Item 3. DEFAULTS UPON SENIOR SECURITIES*...................................N/A
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS*.......................................................N/A
Item 5. OTHER INFORMATION...................................................14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K....................................14
SIGNATURE PAGE................................................................15
*Omitted pursuant to General Instruction H(2) of Form 10-Q.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LINCOLN BENEFIT LIFE COMPANY
STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
(in thousands) 2001 2000 2001 2000
---------------- ---------------- -------------- -----------------
------------------------------------ ------------------------------------
(Unaudited) (Unaudited)
Revenues
Net investment income $ 2,896 $ 3,171 $ 6,033 $ 5,955
Realized capital gains and losses (508) 3 (1,352) -
Other income (expense) - 7 - (19)
------------ ----------- -------------- -------------
Income from operations before
income tax expense 2,388 3,181 4,681 5,936
Income tax expense 834 1,113 1,634 2,077
------------ ----------- -------------- -------------
Net income $ 1,554 $ 2,068 $ 3,047 $ 3,859
============ =========== ============== =============
See notes to financial statements.
3
LINCOLN BENEFIT LIFE COMPANY
STATEMENTS OF FINANCIAL POSITION
June 30, December 31,
2001 2000
------------------- -------------------
------------------- -------------------
(in thousands, except par value data) (Unaudited)
Assets
Investments
Fixed income securities, at fair value
(amortized cost $168,346 and $166,893) $ 172,772 $ 170,142
Short-term 14,681 11,243
----------------- -----------------
Total investments 187,453 181,385
Cash 17,002 76
Reinsurance recoverable from
Allstate Life Insurance Company 8,757,916 8,366,927
Reinsurance recoverable from non-affiliates, net 393,471 353,789
Other assets 4,731 2,393
Separate Accounts 1,598,627 1,648,691
----------------- -----------------
Total assets $ 10,959,200 $ 10,553,261
================= =================
Liabilities
Reserve for life-contingent contract benefits $ 620,933 $ 550,334
Contractholder funds 8,522,366 8,157,502
Current income taxes payable 4,347 2,785
Deferred income taxes 5,091 4,607
Payable to affiliates 8,673 9,210
Other liabilities and accrued expenses 16,590 1,371
Separate Accounts 1,598,627 1,648,691
----------------- -----------------
Total liabilities 10,776,627 10,374,500
----------------- -----------------
Commitments and Contingent Liabilities (Note 4)
Shareholder's Equity
Common stock, $100 par value, 30,000 shares
authorized, 25,000 issued and outstanding 2,500 2,500
Additional capital paid-in 126,750 126,750
Retained income 50,446 47,399
Accumulated other comprehensive income:
Unrealized net capital losses 2,877 2,112
----------------- -----------------
Total accumulated other comprehensive income 2,877 2,112
----------------- -----------------
Total shareholder's equity 182,573 178,761
----------------- -----------------
Total liabilities and shareholder's equity $ 10,959,200 $ 10,553,261
================= =================
See notes to financial statements.
4
LINCOLN BENEFIT LIFE COMPANY
STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
--------------------------------------------
--------------------------------------------
(in thousands) 2001 2000
------------------ ------------------
--------------------------------------------
(Unaudited)
Cash flows from operating activities
Net income $ 3,047 $ 3,859
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and other non-cash items (251) (475)
Realized capital gains and losses 1,352 -
Changes in:
Life-contingent contract benefits and
contractholder funds 4,792 3,622
Income taxes payable 1,634 2,054
Other operating assets and liabilities 12,344 (3,597)
--------------- ---------------
Net cash provided by operating activities 22,918 5,463
--------------- ---------------
Cash flows from investing activities
Fixed income securities
Proceeds from sales 10,923 8,700
Investment collections 8,627 4,968
Investment purchases (22,104) (13,110)
Change in short-term investments, net (3,438) (5,743)
--------------- --------------
Net cash used in investing activities (5,992) (5,185)
--------------- --------------
Net increase in cash 16,926 278
Cash at beginning of period 76 982
--------------- --------------
Cash at end of period $ 17,002 $ 1,260
=============== ==============
See notes to financial statements.
5
LINCOLN BENEFIT LIFE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying financial statements include the accounts of Lincoln
Benefit Life Company ("the Company"), a wholly owned subsidiary of Allstate
Life Insurance Company ("ALIC"), which is wholly owned by Allstate
Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate
Corporation (the "Corporation").
The financial statements and notes as of June 30, 2001, and for the
three month and six month periods ended June 30, 2001 and 2000, are
unaudited. The financial statements reflect all adjustments (consisting
only of normal recurring accruals) which are, in the opinion of management,
necessary for the fair presentation of the financial position, results of
operations and cash flows for the interim periods. The financial statements
and notes should be read in conjunction with the financial statements and
notes thereto included in the Lincoln Benefit Life Company Annual Report on
Form 10-K for 2000. The results of operations for the interim periods
should not be considered indicative of results to be expected for the full
year.
4
LINCOLN BENEFIT LIFE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. Reinsurance
The Company has reinsurance agreements whereby certain premiums,
contract charges, credited interest, policy benefits and certain expenses
are ceded to ALIC and other non-affiliated reinsurers and reflected net of
such reinsurance in the statements of operations. Reinsurance recoverable
and the related reserve for life-contingent contract benefits and
contractholder funds are reported separately in the statements of financial
position. The Company continues to have primary liability as the direct
insurer for risks reinsured.
Investment income earned on the assets which support contractholder
funds and the reserve for life-contingent contract benefits is not included
in the Company's financial statements as those assets are owned and managed
under terms of the reinsurance agreements. The following table summarizes
amounts ceded to ALIC and non-affiliates under reinsurance agreements.
The effects of reinsurance on premiums written and earned and contract
charges are as follows:
Three months ended Six months ended
June 30, June 30,
----------------------------------- ------------------------------------
(in thousands) 2001 2000 2001 2000
------------------ ---------------- ------------------ -----------------
Premiums and Contract Charges
Direct $ 139,050 $ 107,523 $ 240,121 $ 206,450
Assumed - (1) 1 1
Ceded
Affiliate (84,417) (57,834) (142,070) (111,164)
Non-affiliate (54,633) (49,688) (98,052) (95,287)
------------- ------------- ------------ ------------
Premiums and contract
charges, net of reinsurance $ - $ - $ - $ -
============= ============= ============ ============
The effects of reinsurance on credited interest, policy benefits and other expenses are as follows:
Three months ended Six months ended
June 30, June 30,
----------------------------------- -----------------------------------
(in thousands) 2001 2000 2001 2000
----------------- ----------------- ----------------- -----------------
Credited Interest, Policy Benefits and
Other Expenses
Direct $ 273,421 $ 187,398 $ 462,116 $ 425,305
Ceded
Affiliate (208,455) (138,229) (344,202) (311,713)
Non-affiliate (64,966) (49,176) (117,914) (113,573)
------------- ------------- ------------- ------------
Credited interest, policy benefits
and other expenses, net of reinsurance $ - $ (7) $ - $ 19
============= ============= ============= ============
6
LINCOLN BENEFIT LIFE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Comprehensive Income
The components of other comprehensive income on a pretax and after-tax
basis are as follows:
Three months ended June 30,
------------------------------------------------------------------------
(in thousands) 2001 2000
------------------------------------- ------------------------------
After- After-
Pretax Tax tax Pretax Tax tax
Unrealized capital gains and losses:
Unrealized holding gains (losses)
arising during the period $ (2,020) $ 707 $ (1,313) $ (63) $ 22 $ (41)
Less: reclassification adjustments (508) 178 (330) 3 (1) 2
---------- -------- ----------- ------- -------- -------
Unrealized net capital gains (losses) (1,512) 529 (983) (66) 23 (43)
---------- -------- ----------- ------- -------- -------
Other comprehensive income (loss) $ (1,512) $ 529 (983) $ (66) $ 23 (43)
========== ======== ======= ========
Net income 1,554 2,068
----------- -------
Comprehensive income $ 571 $ 2,025
=========== =======
Six months ended June 30,
-------------------------------------------------------------------------
(in thousands) 2001 2000
------------------------------------ ---------------------------------
After- After-
Pretax Tax tax Pretax Tax tax
Unrealized capital gains and losses:
Unrealized holding gains (losses)
arising during the period $ (175) $ 61 $ (114) $ 64 $ (23) $ 41
Less: reclassification adjustments (1,352) 473 (879) - - -
--------- --------- --------- ------- ------- -------
Unrealized net capital gains (losses) 1,177 (412) 765 64 (23) 41
--------- --------- --------- ------- ------- -------
Other comprehensive income (loss) $ 1,177 $ (412) 765 $ 64 $ (23) 41
========= ========= ======= =======
Net income 3,047 3,859
--------- -------
Comprehensive income $ 3,812 $ 3,900
========= =======
7
LINCOLN BENEFIT LIFE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. Regulation and Legal Proceedings
The Company's business is subject to the effects of a changing social,
economic and regulatory environment. Recent state and federal regulatory
initiatives have varied and have included employee benefit regulations,
removal of barriers preventing banks from engaging in the securities and
insurance business, tax law changes affecting the taxation of insurance
companies, the tax treatment of insurance products and its impact on the
relative desirability of various personal investment vehicles, and the
overall expansion of regulation. The ultimate changes and eventual effects,
if any, of these initiatives are uncertain.
In the normal course of its business, the Company is involved from
time to time in pending and threatened litigation and regulatory actions in
which claims for monetary damages are asserted. Regulatory actions include,
but are not limited to, market conduct and compliance issues. At this time,
based on the present status of such litigation and regulatory actions, it
is in the opinion of management that the ultimate liability, if any, in one
or more of these maters in excess of amounts currently reserved is not
expected to have a material adverse effect on the results of operations,
liquidity or financial position of the Company.
8
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTH
AND SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
The following discussion highlights significant factors influencing results
of operations and changes in financial position of Lincoln Benefit Life Company
(the "Company"). It should be read in conjunction with the financial statements
and related notes thereto found under Part I Item 1 contained herein and with
the discussion, analysis, financial statements and notes thereto in Part I Item
1 and Part II Items 7 and 8 of the Lincoln Benefit Life Company Annual Report on
Form 10-K for the year ended December 31, 2000.
OVERVIEW
The Company, a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"), which is a wholly owned subsidiary of Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation ("Corporation"),
markets life insurance and investment products through independent insurance
agents and securities firms. Life insurance consists of traditional products,
including term and whole life, interest-sensitive life, immediate annuities with
life contingencies, variable life and indexed life insurance. Investment
products include deferred annuities and immediate annuities without life
contingencies. Deferred annuities include fixed rate, market value adjusted,
indexed and variable annuities.
The Company has identified itself as a single segment entity.
The assets and liabilities related to variable annuity and variable life
contracts are legally segregated and reflected as Separate Accounts. The assets
of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claim to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized capital gains and losses of the Separate Accounts
accrue directly to the contractholders and therefore, are not included in the
Company's statements of operations.
RESULTS OF OPERATIONS
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
--------------- ---------------- -------------- --------------
Net investment income $ 2,896 $ 3,171 $ 6,033 $ 5,955
Realized capital gains and losses (508) 3 (1,352) -
Other (income) expense - (7) - 19
Income tax expense 834 1,113 1,634 2,077
------------- ------------ ------------- ----------
Net income $ 1,554 $ 2,068 $ 3,047 $ 3,859
============= ============ ============= ==========
The Company has reinsurance agreements under which contract and policy
related transactions are transferred, primarily to ALIC. The Company also has
reinsurance agreements with third parties. The Company's results of operations
include primarily net investment income and realized capital gains and losses
earned on the assets of the Company that are not transferred under the
reinsurance agreements. Certain non-investment related expenses which are not
transferred under reinsurance agreements are presented in other expenses.
9
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTH
AND SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
Net income for the six months of 2001 decreased 21.0% to $3.0 million
compared to the same period in 2000, due to an increase in realized capital
losses. Net income for the second quarter of 2001 decreased 24.9% to $1.6
million compared to the same period in 2000, due to realized capital losses as
well as a decrease in net investment income. Net investment income decreased
8.7% to $2.9 million for the second quarter of 2001 and increased 1.3% to $6.0
million for the first six months of 2001. The decrease in the second quarter of
2001 was attributable to an increase in invested assets being more than offset
by decreased investment yields and increased investment expenses compared to the
same period in 2000. The overall increase in the first six months of 2001 was
primarily attributable to higher investment balances partially offset by
decreased investment yields and increased investment expenses compared to the
same period in 2000.
Realized capital losses, after-tax, were $330 thousand for the second
quarter and $879 thousand for the first six months of 2001, compared to realized
capital gains, after-tax, of $2 thousand and zero for the same periods last
year, respectively. Period to period fluctuations in realized capital gains and
losses are largely the result of timing of sales, reflecting management's
decision on positioning the portfolio, as well as valuation assessments of
individual securities and overall market conditions.
FINANCIAL POSITION
(in thousands)
June 30,
2001
--------------------
Fixed income securities (1) $ 172,772
Short-term 14,681
-----------
Total investments $ 187,453
===========
Reinsurance recoverable from ALIC $ 8,757,916
===========
Separate Accounts assets and liabilities $ 1,598,627
===========
Contractholder funds $ 8,522,366
===========
(1) Fixed income securities are carried at fair value. Amortized cost for these
securities was $168,346 at June 30, 2001.
Total investments were $187.5 million at June 30, 2001 compared to $181.4
million at December 31, 2000. The increase was due primarily to positive cash
flows generated from operations as well as an increase in unrealized net capital
gains during the first six months of 2001. Unrealized net capital gains on`
fixed income securities were $4.4 million and $3.2 million at June 30, 2001 and
December 31, 2000, respectively. Investments at June 30, 2001, excluding
Separate Accounts and unrealized gains and losses on fixed income securities,
grew 2.8% from December 31, 2000.
At June 30, 2001, substantially all of the Company's fixed income
securities portfolio is rated investment grade, which is defined by the Company
as a security having a National Association of Insurance Commissioners ("NAIC")
rating of 1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable Company
internal rating.
During the six months ended June 30, 2001, contractholder funds increased
$364.9 million and amounts recoverable from ALIC under reinsurance agreements
increased $391.0 million as compared to December 31, 2000 balances. The
increases resulted primarily from sales of market value adjusted annuity
contracts and interest credited on market value adjusted annuity and fixed
annuity contracts , partially offset by fixed annuity surrenders and
withdrawals. As the Company's interest-sensitive life policies and annuity
contracts in-force grow and age, the dollar amount of surrenders and withdrawals
will likely increase. While the overall amount of surrenders may increase in the
future, a significant increase in the level of surrenders relative to total
contractholder account balances is not anticipated. Reinsurance recoverable from
ALIC relates to contract benefit obligations ceded to ALIC.
10
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTH
AND SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
Separate Accounts assets and liabilities decreased 3.0% to $1.60 billion at
June 30, 2001 as compared to the December 31, 2000 balance. The decreases were
primarily attributable to unrealized losses in the Separate Accounts investment
portfolios as well as surrenders and withdrawals, partially offset by sales of
variable annuity contracts.
LIQUIDITY AND CAPITAL RESOURCES
Under the terms of reinsurance agreements, premiums and deposits, excluding
those relating to Separate Accounts, are transferred primarily to ALIC, which
maintains the investment portfolios supporting the Company's products. Payments
of policyholder claims, benefits, contract maturities, contract surrenders and
withdrawals and certain operating costs are also reimbursed primarily by ALIC,
under the terms of the reinsurance agreements. The Company continues to have
primary liability as a direct insurer for risks reinsured. The Company's ability
to meet liquidity demands is dependent on ALIC's ability to meet those demands.
ALIC's claims-paying ability was rated Aa2, AA+, and A+ by Moody's, Standard &
Poor's and A.M. Best, respectively, at June 30, 2001.
The primary sources for the remainder of the Company's funds are collection
of principal and interest from the investment portfolio and capital
contributions from ALIC. The primary uses for the remainder of the Company's
funds are to purchase investments, pay costs associated with the maintenance of
the Company's investment portfolio and pay dividends to ALIC.
At June 30, 2001 the Moody's, Standard and Poor's and A.M. Best
claims-paying ratings for the Company were Aa2, AA+ and A+, respectively.
FORWARD-LOOKING STATEMENTS
This document contains "forward-looking statements" that anticipate results
based on management's plans that are subject to uncertainty. These statements
are made subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995.
Forward-looking statements do not relate strictly to historical or current
facts and may be identified by their use of words like "plans," "expects,"
"will," "anticipates," "estimates," "intends," "believes," "likely" and other
words with similar meanings. These statements may address, among other things,
our strategy for growth, product development, regulatory approvals, market
position, expenses, financial results and reserves. Forward-looking statements
are based on management's current expectations of future events. We cannot
guarantee that any forward-looking statement will be accurate. However, we
believe that our forward-looking statements are based on reasonable, current
expectations and assumptions. We assume no obligation to update any
forward-looking statements as a result of new information or future events or
developments.
11
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTH
AND SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
If the expectations or assumptions underlying our forward-looking
statements prove inaccurate or if risks or uncertainties arise, actual results
could differ materially from those communicated in our forward-looking
statements. In addition to the normal risks of business, the Company is subject
to significant risk factors, including those listed below which apply to it as
an insurance business.
o Changes in market interest rates can have adverse effects on the Company's
investment portfolio, investment income, product sales and results of
operations. Increasing market interest rates have an adverse impact on the
value of the investment portfolio by decreasing unrealized capital gains on
fixed income securities. Declining market interest rates could have an
adverse impact on the Company's investment income as the Company reinvests
proceeds from positive cash flows from operations and from maturing and
called investments into new investments that could be yielding less than
the portfolio's average rate. Changes in market rates of interest as
compared to rates offered on some of the Company's products could make
those products less attractive if competitive investment margins are not
maintained. This could lead to lower sales and/or changes in the level of
surrenders on these products. The Company seeks to limit its exposure in
this area by offering a diverse group of products, periodically reviewing
and revising crediting rates and providing surrender charges in the event
of early withdrawal.
o The impact of decreasing Separate Accounts balances as a result of
fluctuating market conditions could cause contract charges ceded by the
Company to decrease.
o In order to manage interest rate risk, from time to time the effective
duration of the assets of the investment portfolio is adjusted. Those
adjustments may have an impact on the value of the investment portfolio and
on investment income.
o Management believes the reserves for life-contingent contract benefits are
adequate to cover ultimate policy benefits, despite the underlying risks
and uncertainties associated with their determination when payments will
not occur until well into the future. The Company periodically reviews and
revises its estimates. If future experience differs from assumptions, it
may have a material impact on results of operations.
o Deferred annuities and interest-sensitive life insurance products receive
favorable policyholder taxation under current tax laws and regulations. Any
legislative or regulatory changes that adversely alter this treatment are
likely to negatively affect the demand for these products. Additionally,
the demand for life insurance products which are used to address a
customer's estate planning needs may be impacted to the extent any
legislative changes to the current estate tax laws occur.
o The Company distributes some of its products under agreements with other
members of the financial services industry that are not affiliated with the
Company. Termination of one or more of these agreements due to changes in
control or other factors of any of these entities could have a detrimental
effect on the Company's sales. This risk may be exacerbated by the
enactment of the Gramm-Leach-Bliley Act of 1999, which eliminates many
federal and state law barriers to affiliations among banks, securities
firms, insurers and other financial service providers.
o Financial strength ratings have become an increasingly important factor in
establishing the competitive position of insurance companies and,
generally, may be expected to have an effect on an insurance company's
sales. On an ongoing basis, rating agencies review the financial
performance and condition of insurers. A downgrade, while not expected,
could have a material adverse effect on the Company's or ALIC's business,
financial condition and results of operations.
o State insurance regulatory authorities require insurance companies to
maintain specified levels of statutory capital and surplus. In addition,
competitive pressures require the Company to maintain financial strength
ratings. These restrictions affect the Company's ability to pay shareholder
dividends or use its capital in other ways.
12
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTH
AND SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
o A number of enacted and pending legislative measures may lead to increased
consolidation and increased competition in the financial services industry.
o At the federal level, these measures include the recently enacted
Gramm-Leach-Bliley Act of 1999, which eliminates many federal and
state law barriers to affiliations among banks, securities firms,
insurers and other financial service providers.
o At the state level, these measures include legislation to permit
mutual insurance companies to convert to a hybrid structure known as a
mutual holding company, thereby allowing insurance companies owned by
their policyholders to become stock insurance companies owned (through
one or more intermediate holding companies) partially by their
policyholders and partially by stockholders. Also several large mutual
life insurers have used or are expected to use existing state laws and
regulations governing the conversion of mutual insurance companies
into stock insurance companies (demutualization).
o In addition, state insurance regulators are reexamining the regulatory
framework that currently governs the United States insurance business.
They are engaged in an effort to determine the proper role of the
state insurance regulation in the United States financial services
industry following the enactment of the Graham-Leach-Bliley Act. The
Company cannot predict whether any state or federal measures will be
adopted to change the nature or scope of the regulation of the
insurance business or what effect any such measures would have on the
Company.
13
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company and its Board of Directors know of no material legal proceedings
pending to which the Company is a party or which would materially affect the
Company. The Company is involved in pending and threatened litigation in the
normal course of its business in which claims for monetary damages are asserted.
Management, after consultation with legal counsel, does not anticipate the
ultimate liability arising from such pending or threatened litigation to have a
material effect on the financial condition of the Company.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-k
(a) Exhibits required by Item 601 of Regulation S-K
(2) None
(3) (i) Articles of Incorporation*
(ii) By-laws*
(4) Lincoln Benefit Life Company Flexible Premium Deferred
Annuity Contract and Application**
(10) Reinsurance Agreement between Lincoln Benefit Life Company
and Allstate Life Insurance Company*
(11) None
(15) None
(18) None
(19) None
(22) None
(23) (a) Consent of Independent Public Accountants***
(b) Consent of Attorneys***
(24) None
(27) Financial Data Schedule
(99) None
(b) Reports on 8-K
No reports on Form 8-K were filed during the second quarter of
2001.
* Incorporated herein by reference to the Registration Statement on Form N-4
for Lincoln Benefit Life Variable Annuity Account (File No. 333-50545,
811-07924) filed April 21, 1998.
** Incorporated herein by reference to the Registration Statement on Form N-4
for Lincoln Benefit Life Variable Annuity Account (File No. 333-50545,
811-07924) filed April 21, 1998. Incorporated herein by reference to the
Registration Statement on Form N-4 for Lincoln Benefit Life Variable
Annuity Account (File No. 333-50737, 811-07924) filed April 22, 1998.
Incorporated by reference to the Registration Statement on Form N-4 for
Lincoln Benefit Life Variable Annuity Account (File No. 333-82427,
811-07924) filed July 8, 1999.
*** Incorporated herein by reference to the Post-effective Amendment #3 to
Registration Statement on Form S-3 for Lincoln Benefit life Company (File
No. 333-59765) filed April 19, 2001. Incorporated herein by reference to
the Post-effective Amendment #3 to Registration Statement on Form S-3 for
Lincoln Benefit Life Company (File No. 333-59769) filed April 19, 2001.
Incorporated herein by reference to Post-effective Amendment #2 to the
Registration Statement on Form S-3 for Lincoln Benefit Life Company (File
No. 333-88045) filed April 19, 2001. Incorporated herein by reference to
Post-effective Amendment #1 to Registration Statement on Form S-3 for
Lincoln Benefit Life Company (File No. 333-66452) filed August 8, 2001.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on the 14th day of August, 2001.
LINCOLN BENEFIT LIFE COMPANY
(Registrant)
/s/ B. Eugene Wraith
- ----------------------- PRESIDENT, CHIEF OPERATING August 14, 2001
B. EUGENE WRAITH OFFICER AND DIRECTOR
(PRINCIPAL EXECUTIVE OFFICER)
/s/ James P. Zils
- ------------------------------ Treasurer August 14, 2001
James P. Zils
(Principal Financial Officer)
/s/ Samuel H. Pilch
- ----------------------------- Vice President & Controller August 14, 2001
Samuel H. Pilch
(Principal Accounting Officer)
15