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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
COMMISSION FILE NUMBERS 33-26322; 33-46827; 33-52254; 33-60290;
33-58303; 333-33863; 333-34192
MERRILL LYNCH LIFE INSURANCE COMPANY
(Exact name of Registrant as specified in its charter)
<Table>
ARKANSAS 91-1325756
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
</Table>
7 ROSZEL ROAD
PRINCETON, NJ 08540-6205
(Address of Principal Executive Offices)
(609) 627-3950
(Registrant's telephone number including area code)
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.
COMMON 250,000
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
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PART I Financial Information
Item 1. Financial Statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
BALANCE SHEETS
(Dollars in thousands) (Unaudited)
===============================================================================
June 30, December 31,
ASSETS 2002 2001
- ------ ------------ -------------
INVESTMENTS:
Fixed maturity securities, at estimated fair value
(amortized cost: 2002 - $2,018,179 ; 2001 - $2,009,129) $ 2,012,031 $ 2,007,123
Equity securities, at estimated fair value
(cost: 2002 - $157,146 ; 2001 - $167,959) 152,251 163,701
Trading account securities, at estimated fair value 22,627 23,636
Real estate held-for-sale 19,447 19,447
Limited partnerships, at cost 11,470 11,270
Policy loans on insurance contracts 1,169,158 1,194,478
-------------------- --------------------
Total Investments 3,386,984 3,419,655
CASH AND CASH EQUIVALENTS 83,171 130,429
ACCRUED INVESTMENT INCOME 72,575 69,884
DEFERRED POLICY ACQUISITION COSTS 459,030 470,938
REINSURANCE RECEIVABLES 7,300 9,428
RECEIVABLES FROM SECURITIES SOLD 3,778 2,317
OTHER ASSETS 35,751 41,912
SEPARATE ACCOUNTS ASSETS 10,169,431 11,305,453
-------------------- --------------------
TOTAL ASSETS $ 14,218,020 $ 15,450,016
==================== ====================
See accompanying notes to financial statements. (Continued)
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
BALANCE SHEETS
(Continued) (Dollars in thousands, except common stock par value and shares)
(Unaudited)
==============================================================================
June 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 2002 2001
- ------------------------------------ ------------- --------------
LIABILITIES:
POLICYHOLDER LIABILITIES AND ACCRUALS:
Policyholders' account balances $ 3,191,377 $ 3,255,791
Claims and claims settlement expenses 94,254 95,020
------------------ ------------------
Total policyholder liabilities and accruals 3,285,631 3,350,811
OTHER POLICYHOLDER FUNDS 8,082 14,239
LIABILITY FOR GUARANTY FUND ASSESSMENTS 7,237 8,449
FEDERAL INCOME TAXES - DEFERRED 17,456 13,931
FEDERAL INCOME TAXES - CURRENT 1,900 5,522
PAYABLES FOR SECURITIES PURCHASED 2,448 29,795
AFFILIATED PAYABLES - NET 7,431 3,736
UNEARNED POLICY CHARGE REVENUE 117,304 113,676
OTHER LIABILITIES 5,370 7,594
SEPARATE ACCOUNTS LIABILITIES 10,164,599 11,298,821
------------------ ------------------
Total Liabilities 13,617,458 14,846,574
------------------ ------------------
STOCKHOLDER'S EQUITY:
Common stock ($10 par value; authorized: 1,000,000 shares; issued and
outstanding: 250,000 shares) 2,500 2,500
Additional paid-in capital 347,324 347,324
Retained earnings 279,027 273,046
Accumulated other comprehensive loss (28,289) (19,428)
------------------ ------------------
Total Stockholder's Equity 600,562 603,442
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 14,218,020 $ 15,450,016
================== ==================
See accompanying notes to financial statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF EARNINGS
(Dollars in thousands) (Unaudited)
===============================================================================
Three Months Ended
June 30,
----------------------------------------------
2002 2001
-------------------- ----------------------
REVENUES:
Policy charge revenue $ 60,762 $ 64,248
Net investment income 52,425 56,344
Net realized investment gains (losses) (9,052) 748
-------------------- --------------------
Total Revenues 104,135 121,340
-------------------- --------------------
BENEFITS AND EXPENSES:
Interest credited to policyholders' account balances 35,867 37,999
Market value adjustment expense 511 504
Policy benefits (net of reinsurance recoveries: 2002 - $4,055;
2001 - $4,561) 12,540 10,567
Reinsurance premium ceded 6,080 6,295
Amortization of deferred policy acquisition costs 16,539 16,511
Insurance expenses and taxes 12,557 17,437
-------------------- --------------------
Total Benefits and Expenses 84,094 89,313
-------------------- --------------------
Earnings Before Federal Income Tax Provision (Benefit) 20,041 32,027
FEDERAL INCOME TAX PROVISION (BENEFIT):
Current (1,100) 19,437
Deferred 8,114 (7,849)
-------------------- --------------------
Total Federal Income Tax Provision (Benefit) 7,014 11,588
-------------------- --------------------
NET EARNINGS $ 13,027 $ 20,439
==================== ====================
See accompanying notes to financial statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF EARNINGS
(Dollars in thousands) (Unaudited)
===============================================================================
Six Months Ended
June 30,
----------------------------------------------
2002 2001
-------------------- ----------------------
REVENUES:
Policy charge revenue $ 121,470 $ 130,220
Net investment income 105,800 112,593
Net realized investment losses (6,131) (627)
-------------------- --------------------
Total Revenues 221,139 242,186
-------------------- --------------------
BENEFITS AND EXPENSES:
Interest credited to policyholders' account balances 71,811 77,615
Market value adjustment expense 1,167 957
Policy benefits (net of reinsurance recoveries: 2002 - $8,764;
2001 - $8,338) 23,163 16,043
Reinsurance premium ceded 12,026 12,608
Amortization of deferred policy acquisition costs 32,131 32,985
Insurance expenses and taxes 24,103 30,963
-------------------- --------------------
Total Benefits and Expenses 164,401 171,171
-------------------- --------------------
Earnings Before Federal Income Tax Provision 56,738 71,015
FEDERAL INCOME TAX PROVISION:
Current 11,562 20,479
Deferred 8,296 3,109
-------------------- --------------------
Total Federal Income Tax Provision 19,858 23,588
-------------------- --------------------
NET EARNINGS $ 36,880 $ 47,427
==================== ====================
See accompanying notes to financial statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands) (Unaudited)
===============================================================================
Three Months Ended
June 30,
-------------------------------------------
2002 2001
------------------- -------------------
NET EARNINGS $ 13,027 $ 20,439
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gains (losses) on available-for-sale securities:
Net unrealized holding gains (losses) arising during the period 12,431 (1,374)
Reclassification adjustment for (gains) losses included in net earnings 8,885 (830)
------------------- -------------------
Net unrealized gains (losses) on investment securities 21,316 (2,204)
Adjustments for:
Policyholder liabilities (18,815) 460
Deferred policy acquisition costs (5,296) 1,068
Deferred federal income taxes 978 236
------------------- -------------------
Total other comprehensive loss, net of taxes (1,817) (440)
------------------- -------------------
COMPREHENSIVE INCOME $ 11,210 $ 19,999
=================== ===================
See accompanying notes to financial statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands) (Unaudited)
===============================================================================
Six Months Ended
June 30,
---------------------------------------------
2002 2001
------------------- ---------------------
NET EARNINGS $ 36,880 $ 47,427
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gains (losses) on available-for-sale securities:
Net unrealized holding gains (losses) arising during the period (11,495) 35,976
Reclassification adjustment for losses included in net earnings 5,923 504
------------------- -------------------
Net unrealized gains (losses) on investment securities (5,572) 36,480
Adjustments for:
Policyholder liabilities (10,260) (8,857)
Deferred policy acquisition costs 2,200 (12,510)
Deferred federal income taxes 4,771 (5,290)
------------------- -------------------
Total other comprehensive income (loss), net of taxes (8,861) 9,823
------------------- -------------------
COMPREHENSIVE INCOME $ 28,019 $ 57,250
=================== ===================
See accompanying notes to financial statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF STOCKHOLDER'S EQUITY
(Dollars in thousands) (Unaudited)
===============================================================================
Accumulated
Additional other Total
Common paid-in Retained comprehensive stockholder's
stock capital earnings loss equity
------------ --------------- ------------- ---------------- ----------------
BALANCE, JANUARY 1, 2001 $ 2,500 $ 347,324 $ 194,808 $ (32,349) $ 512,283
Net earnings 78,238 78,238
Other comprehensive income, net of tax 12,921 12,921
----------- --------------- ------------- ---------------- ----------------
BALANCE, DECEMBER 31, 2001 2,500 347,324 273,046 (19,428) 603,442
Cash dividend paid to parent (30,899) (30,899)
Net earnings 36,880 36,880
Other comprehensive loss, net of tax (8,861) (8,861)
----------- --------------- ------------- ---------------- ----------------
BALANCE, JUNE 30, 2002 $ 2,500 $ 347,324 $ 279,027 $ (28,289) $ 600,562
========== =============== ============= ================ ================
See accompanying notes to financial statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF CASH FLOWS
(Dollars in thousands) (Unaudited)
===============================================================================
Six Months Ended
June 30,
---------------------------------------
2002 2001
----------------- -----------------
Cash Flows From Operating Activities:
Net earnings $ 36,880 $ 47,427
Noncash items included in earnings:
Amortization of deferred policy acquisition costs 32,131 32,985
Capitalization of policy acquisition costs (18,023) (33,008)
Amortization (accretion) of investments 834 (553)
Interest credited to policyholders' account balances 71,811 77,615
Provision for deferred Federal income tax 8,296 3,109
(Increase) decrease in operating assets:
Accrued investment income (2,691) (1,023)
Reinsurance receivables 2,128 (1,745)
Affiliated receivables - 667
Other 6,161 1,371
Increase (decrease) in operating liabilities:
Claims and claims settlement expenses (766) 7,214
Other policyholder funds (6,157) (6,792)
Liability for guaranty fund assessments (1,212) (28)
Affiliated payables 3,695 123
Federal income taxes - current (3,622) 4,735
Unearned policy charge revenue 3,628 7,511
Other (2,224) (21,802)
Other operating activities:
Net realized investment losses 6,131 627
----------------- -----------------
Net cash and cash equivalents provided by operating activities 137,000 118,433
----------------- -----------------
Cash Flows From Investing Activities:
Proceeds from (payments for):
Sales of available-for-sale securities 178,336 135,068
Maturities of available-for-sale securities 175,968 214,870
Purchases of available-for-sale securities (387,438) (172,698)
Trading account securities 96 (295)
Sales of limited partnerships - 619
Purchases of limited partnerships (200) (1,000)
Policy loans on insurance contracts 25,320 (1,367)
Recapture of investments in separate accounts 1,042 -
Investment in separate accounts 2 (1,001)
----------------- -----------------
Net cash and cash equivalents provided (used) by investing activities $ (6,874) $ 174,196
----------------- -----------------
See accompanying notes to financial statements. (Continued)
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF CASH FLOWS
(Continued) (Dollars in thousands) (Unaudited)
===============================================================================
Six Months Ended
June 30,
---------------------------------------
2002 2001
----------------- ------------------
Cash Flows From Financing Activities:
Proceeds from (payments for):
Dividend paid to parent $ (30,899) $ -
Policyholder deposits (excludes internal policy replacement deposits) 332,054 569,326
Policyholder withdrawals (including transfers to / from separate accounts) (478,539) (749,481)
----------------- ------------------
Net cash and cash equivalents used by financing activities (177,384) (180,155)
----------------- ------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (47,258) 112,474
CASH AND CASH EQUIVALENTS:
Beginning of year 130,429 92,730
----------------- ------------------
End of period $ 83,171 $ 205,204
================= ==================
Supplementary Disclosure of Cash Flow Information:
Cash paid for:
Federal income taxes $ 15,184 $ 15,744
Intercompany interest 56 651
See accompanying notes to financial statements.
MERRILL LYNCH LIFE INSURANCE COMPANY
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
===============================================================================
NOTE 1. BASIS OF PRESENTATION
Merrill Lynch Life Insurance Company (the "Company") is a wholly owned
subsidiary of Merrill Lynch Insurance Group, Inc. ("MLIG"). The Company is an
indirect wholly owned subsidiary of Merrill Lynch & Co., Inc. ("Merrill Lynch &
Co."). The Company sells non-participating life insurance and annuity products,
including variable life insurance, variable annuities, modified guaranteed
annuities, and immediate annuities. The Company is domiciled in the State of
Arkansas.
The interim financial statements for the three and six month periods are
unaudited. In the opinion of management, these unaudited financial statements
include all adjustments (consisting only of normal recurring accruals) necessary
for a fair presentation of the financial position and the results of operations
in accordance with accounting principles generally accepted in the United States
of America. These unaudited financial statements should be read in conjunction
with the audited financial statements included in the Company's Annual Report on
Form 10-K ("2001 10K") for the year ended December 31, 2001. The nature of the
Company's business is such that the results of any interim period are not
necessarily indicative of results for a full year. Certain reclassifications
have also been made to prior period financial statements, where appropriate, to
conform to the current period presentation.
NOTE 2. STOCKHOLDER'S EQUITY AND STATUTORY ACCOUNTING PRACTICES
During the first six months of 2002, the Company paid an ordinary cash dividend
of $30,899 to MLIG. The Company paid no cash dividends in 2001.
The Company's statutory financial statements are presented on the basis of
accounting practices prescribed or permitted by the Insurance Department of the
State of Arkansas. The State of Arkansas has adopted the National Association of
Insurance Commissioners' statutory accounting practices as the basis of its
statutory accounting practices.
Statutory capital and surplus at June 30, 2002 and December 31, 2001 were
$292,875 and $311,490, respectively. For the six month periods ended June 30,
2002 and 2001, statutory net income was $13,830 and $26,872, respectively.
NOTE 3. INVESTMENTS
The Company's investments in fixed maturity and equity securities are classified
as either available-for-sale or trading and are recorded at estimated fair
value. Unrealized gains and losses on available-for-sale securities are included
in stockholder's equity as a component of accumulated other comprehensive loss,
net of tax. Unrealized gains and losses on trading account securities are
included in net realized investment gains (losses). If management determines
that a decline in the value of a security is other-than-temporary, the carrying
value is adjusted to estimated fair value and the decline in value is recorded
as a net realized investment loss.
The Company has recorded certain adjustments to deferred policy acquisition
costs and policyholders' account balances in connection with unrealized holding
gains or losses on investments classified as available-for-sale. The Company
adjusts those assets and liabilities as if the unrealized holdings gains or
losses had actually been realized, with corresponding credits or charges
reported in accumulated other comprehensive loss, net of taxes. The components
of net unrealized gains (losses) included in accumulated other comprehensive
loss were as follows:
June 30, December 31,
2002 2001
------------------- ------------------
Assets:
Fixed maturity securities $ (6,148) $ (2,006)
Equity securities (4,895) (4,258)
Deferred policy acquisition costs 5,906 3,706
Separate Accounts assets (2,286) (1,493)
------------------- ------------------
(7,423) (4,051)
------------------- ------------------
Liabilities:
Policyholders' account balances 36,098 25,838
Federal income taxes - deferred (15,232) (10,461)
------------------- ------------------
20,866 15,377
------------------- ------------------
Stockholder's equity:
Accumulated other comprehensive loss $ (28,289) $ (19,428)
=================== ==================
Net realized investment gains (losses), including other-than-temporary
writedowns in carrying value, for the three and six months ended June 30 were as
follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ ------------------------------------
2002 2001 2002 2001
----------------- ---------------- ---------------- -----------------
Available-for-sale securities $ (8,258) $ 2 $ (5,255) $ 261
Trading account securities:
Net realized investment gains (losses) (11) (81) 119 (571)
Net unrealized holding gains (losses) (783) 827 (1,032) (317)
Investment in Separate Accounts - - 37 -
----------------- ---------------- ---------------- -----------------
Total net realized investment gains (losses) $ (9,052) $ 748 $ (6,131) $ (627)
================= ================ ================ =================
NOTE 4. SEGMENT INFORMATION
In reporting to management, the Company's operating results are categorized into
two business segments: Life Insurance and Annuities. The Company's Life
Insurance segment consists of variable life insurance products and
interest-sensitive life insurance products. The Company's Annuity segment
consists of variable annuities and interest sensitive annuities. The accounting
policies of the business segments are the same as those for the Company's
financial statements included herein. All revenue and expense transactions are
recorded at the product level and accumulated at the business segment level for
review by management. The "Other" category, presented in the following segment
financial information, represents net revenues and net earnings on assets that
do not support life or annuity contract owner liabilities.
The following table summarizes each business segment's contribution to
consolidated net revenues and net earnings for the three and six month periods
ended June 30:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------- --------------------------------------
2002 2001 2002 2001
------------------ ------------------ ------------------ ------------------
Net Revenues (a):
Annuities $ 39,722 $ 46,704 $ 87,109 $ 92,489
Life Insurance 30,453 34,745 62,304 70,469
Other (1,907) 1,892 (85) 1,613
------------------ ------------------ ------------------ ------------------
Total Net Revenues $ 68,268 $ 83,341 $ 149,328 $ 164,571
================== ================== ================== ==================
Net Earnings:
Annuities $ 6,651 $ 12,176 $ 19,666 $ 29,381
Life Insurance 7,615 7,033 17,269 16,998
Other (1,239) 1,230 (55) 1,048
------------------ ------------------ ------------------ ------------------
Total Net Earnings $ 13,027 $ 20,439 $ 36,880 $ 47,427
================== ================== ================== ==================
(a) Management considers investment income net of interest credited to
policyholders' account balances in evaluating results.
ITEM 2 MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
This Management's Narrative Analysis of the Results of Operations addresses
changes in revenues and expenses for the three and six month periods ended June
30, 2002 and 2001. This discussion should be read in conjunction with the
accompanying unaudited financial statements and notes thereto, in addition to
the 2001 Financial Statements and Notes to Financial Statements and the
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the 2001 10K.
In addition to providing historical information, the Company may make or publish
forward-looking statements about management expectations, strategic objectives,
business prospects, anticipated financial performance, and other similar
matters. A variety of factors, many of which are beyond the Company's control,
affect the operations, performance, business strategy, financial condition, and
results of the Company and could cause actual results and experience to differ
materially from the expectations expressed in these statements. These factors
include, but are not limited to, the factors listed in the Economic Environment
section below, as well as actions and initiatives taken by both current and
potential competitors and the effect of current, pending, and future legislation
and regulation. THE COMPANY UNDERTAKES NO RESPONSIBILITY TO UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS.
BUSINESS OVERVIEW
The Company's gross earnings are principally derived from two sources:
- - the charges imposed on variable life insurance and variable annuity
contracts, and
- - the net earnings from investment of fixed rate life insurance and
annuity contract owner deposits less interest credited to contract
owners, commonly known as interest spread
The costs associated with acquiring contract owner deposits (deferred policy
acquisition costs) are amortized over the period in which the Company
anticipates holding those funds. Deferred policy acquisition costs are
principally commissions and a portion of certain other expenses relating to
policy acquisition, underwriting and issuance that are primarily related to and
vary with the production of new business. Insurance expenses and taxes reported
in the statements of earnings are net of amounts deferred. In addition, the
Company incurs expenses associated with the maintenance of inforce contracts.
ECONOMIC ENVIRONMENT
The Company's financial position and/or results of operations are primarily
impacted by the following economic factors:
- - fluctuations in medium term interest rates
- - fluctuations in credit spreads
- - equity market performance
The Company defines medium term interest rates as the average interest rate on
U.S. Treasury securities with terms of 1 to 10 years. During the current three
and six month periods ended June 30, 2002, medium term interest rates decreased
approximately 80 basis points and 36 basis points, respectively, to yield, on
average, for the current six month period 3.30%. During the three and six month
periods ended June 30, 2001, medium term interest rates increased approximately
12 basis points and decreased approximately 36 basis points, respectively, to
yield, on average, for the six month period 4.56%.
The Company defines credit spreads according to the Merrill Lynch U.S. Corporate
Bond Index for BBB-A Rated bonds with three to five year maturities. During the
current three and six month periods ended June 30, 2002, credit spreads widened
approximately 13 basis points and 14 basis points, respectively, and ended the
current six month period at 192 basis points. During the three and six month
periods ended June 30, 2001, credit spreads contracted approximately 20 basis
points and 36 basis points, respectively, and ended the six month period at 151
basis points.
There are several standard indices published on a daily basis that measure
performance of selected components of the U.S. equity market. Examples include
the Dow Jones Industrial Average ("Dow"), NASDAQ Composite Index ("NASDAQ") and
the Standard & Poor's 500 Composite Stock Price Index ("S&P Index"). The
following table provides the increase (decrease) for each equity market index
for the current three and six month periods ended June 30, 2002 and 2001,
respectively:
2002 2001
-------------------------------------- --------------------------------------
Second Quarter Six Months Second Quarter Six Months
2002 2002 2001 2001
------------------ --------------- ------------------ ---------------
Dow -11.2 % -7.8 % 6.3 % -2.6 %
NASDAQ -20.7 % -25.0 % 17.4 % -12.5 %
S&P Index -13.7 % -13.8 % 5.5 % -7.3 %
The investment performance in the underlying mutual funds supporting the
Company's variable products do not replicate the returns on any specific U.S.
equity market index. However, investment performance will generally increase or
decrease with corresponding increases or decreases in the overall U.S. equity
market.
NEW BUSINESS
Life insurance and annuity premiums decreased $151.0 million (or 49%) to $158.6
million and $285.3 million (or 44%) to $356.0 million during the current three
and six month periods ended June 30, 2002, respectively, as compared to the same
periods in 2001. Life insurance and annuity premiums by type of product were as
follows:
($ In Millions) % Change
----------------------------------------- --------------------------------------
Second Quarter Six Months Second Quarter Six Months
2002 2002 2002-2001 2002-2001
------------------ ------------------ ------------------ ----------------
Variable Annuities:
B-Share $ 63.0 $ 136.9 -51 % -47 %
C-Share 41.0 102.4 -73 -68
L-Share 16.5 48.3 100 100
------------------ ------------------ ------------------ ----------------
120.5 287.6 -57 -50
------------------ ------------------ ------------------ ----------------
Variable Life Insurance 11.4 26.0 -42 -42
Modified Guaranteed Annuities 24.1 36.0 201 148
Other 2.6 6.4 63 25
------------------ ------------------ ------------------ ----------------
Total Direct Premiums $ 158.6 $ 356.0 -49 % -44 %
================== ================== ================== ================
During the current three and six month periods, variable annuity premiums
decreased $159.8 million (or 57%) and $289.2 million (or 50%), respectively, as
compared to the same periods in 2001. Management attributes the decrease in
variable annuity premiums to increasing customer demand for annuity products
that offer guarantee provisions, such as fixed rate products, variable products
with fixed account options, variable products with guaranteed minimum income
benefits, or variable products with guaranteed minimum account values. With the
exception of the Company's modified guaranteed annuity product, which offers a
fixed interest crediting rate, the Company currently does not offer these types
of guarantees in its products. During the first six months of 2002, sales of
annuity products with these types of guarantee features have recorded strong
sales within the Merrill Lynch & Co. distribution system. The Company is
currently developing certain of these guarantee provisions for placement in its
existing variable products and anticipates offering these features during the
fourth quarter of 2002.
Management believes that the increasing demand for annuity products with
guarantee provisions has been fueled by the increasing volatility and general
negative performance of the equity markets that has occurred over the past two
years. As such, future variable annuity sales could be negatively impacted if
this trend continues.
The Company's L-Share variable annuity product was introduced in the fourth
quarter 2001.
During the current three and six month periods, variable life insurance premiums
decreased $8.3 million (or 42%) and $18.9 million (or 42%), respectively, as
compared to the same periods in 2001. The decreases in variable life insurance
premiums are primarily due
to the Company discontinuing the manufacturing and marketing of its estate
planning life insurance products during the third quarter 2001. The Company
continues to issue a single premium variable life insurance product that was
introduced in 2001.
During the current three and six month periods, modified guaranteed annuity
premiums increased $16.1million (or 201%) and $21.5 million (or 148%),
respectively, as compared to the same periods in 2001. The increases are
primarily due to increasing demand for products with guaranty features, as noted
above.
Withdrawals
Policy and contract surrenders decreased $34.1 million (or 6%) to $555.6 million
during the first six months of 2002 as compared to the same period in 2001.
During the first six months of 2002, variable annuity surrenders decreased $32.7
million (or 8%) to $365.2 million and modified guaranteed annuity surrenders
decreased $24.1 million (or 26%) to $68.6 million as compared to the same period
in 2001. Management attributes the decrease in surrender activity to reductions
in the equity markets, whereby i) variable annuity contract owners have less
incentive to surrender contracts in which values have decreased below guaranteed
minimum death benefit provisions, and ii) modified guaranteed annuity contract
owners have less incentive to abdicate guaranteed income. Partially offsetting
the decreases in variable annuity and modified guaranteed annuity surrenders was
an increase in variable life surrenders, which increased $23.8 million (or 32%)
during the first six months of 2002.
Financial Condition
At June 30, 2002, the Company's assets were $14.2 billion, or $1.3 billion lower
than the $15.5 billion in assets at December 31, 2001 primarily due to a
decrease in separate accounts assets. Separate accounts assets decreased $1.1
billion (or 10%) to $10.2 billion primarily due to unfavorable investment
performance and an increase in net cash outflow. Changes in separate accounts
assets for the first and second quarter of 2002 were as follows:
(In Millions) 1Q02 2Q02 Total
--------------- -------------- ---------------
Investment performance - variable products $ 81.0 $ (874.8) $ (793.8)
Net cash outflow - variable products (129.7) (210.7) (340.4)
Net change in seed money (1.0) (0.8) (1.8)
--------------- -------------- ---------------
$ (49.7) $ (1,086.3) $ (1,136.0)
=============== ============== ===============
The continuing decline in overall credit quality among corporate bonds has
placed added pressure on the Company's fixed income portfolio. As of June 30,
2002 and December 31, 2001, approximately $111.7 million (or 6%) and $84
million (or 4%), respectively, of the Company's fixed maturity securities were
considered non-investment grade. The Company defines non-investment grade as
unsecured debt obligations that do not have a rating equivalent to Standard and
Poor's BBB- or higher (or similar rating agency). Non-investment grade
securities are speculative and are subject to significantly greater risks
related to the creditworthiness of the issuers and the liquidity of the market
for such securities. Current non-investment grade holdings are the result of
ratings downgrades on the Company's portfolio as the Company does not purchase
non-investment grade securities. Also, as of June 30, 2002, approximately
$242.8 million (or 12%) of the Company's fixed maturity securities were rated
BBB-, which is the lowest investment grade rating given by Standard and Poor's,
compared to $262.7 million (or 13%) of the Company's fixed maturity securities
as of December 31, 2001. The Company closely monitors such investments.
The Company has exposure to selected emerging markets that include securities
issued by sovereigns or corporations of Asia (excluding Japan), Latin America,
and Mexico. At June 30, 2002, the Company held $71.7 million in emerging market
securities with an approximate unrealized loss of $10.6 million.
During the first six months of 2002, the Company experienced contract owner
withdrawals that exceeded deposits by $386.1 million. The components of contract
owner transactions were as follows:
June 30,
(In Millions) 2002
--------------
Premiums collected $ 356.0
Internal tax-free exchanges (23.9)
--------------
Net contract owner deposits 332.1
Contract owner withdrawals 478.5
Net transfers to/from separate accounts 239.7
--------------
Net contract owner withdrawals 718.2
--------------
Net contract owner activity $ (386.1)
==============
LIQUIDITY
To fund all business activities, the Company maintains a high quality and liquid
investment portfolio. As of June 30, 2002, the Company's assets included $2.1
billion of cash, short-term investments and investment grade publicly traded
available-for-sale securities that could be liquidated if funds were required.
MANAGEMENT ESTIMATES
The Company amortizes deferred policy acquisition costs based on the expected
future gross profits for each group of contracts. In estimating future gross
profits, management makes assumptions regarding such factors as policy charge
revenue, investment performance, policy lapse rates, mortality, and expenses for
the expected life of each group of contracts. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates and evaluates the
recoverability of deferred policy acquisition costs. The impact of revisions to
estimates on cumulative amortization is recorded as a charge or credit to
current operations.
Results of Operations
For the three month periods ended June 30, 2002 and 2001, the Company reported
net earnings of $13.0 million and $20.4 million, respectively. For the six month
periods ended June 30, 2002 and 2001, the Company reported net earnings of $36.9
million and $47.4 million, respectively.
Policy charge revenue decreased $3.5 million (or 5%) and $8.8 million (or 7%)
during the current three and six month periods ended June 30, 2002,
respectively, as compared to the same periods in 2001. The decreases in policy
charge revenue are primarily attributable to the decrease in average variable
account balances. Average variable account balances decreased $1,163.8 million
(or 10%) and $1,045.2 million (or 9%) during the current three and six month
periods as compared to the same periods in 2001. During the same periods, asset
based policy charges decreased $2.0 million (or 5%) and $6.1 million (or 7%).
Asset based policy charges were favorably impacted by increases in rates charged
to non-proprietary fund investment managers for administrative services. As a
result of this increase, administrative service fee income was flat as compared
to the prior period despite reductions in average variable account balances. In
addition, non-asset based policy charge revenue decreased $1.5 million (or 6%)
and $2.7 million (or 6%) during the current three and six month periods ended
June 30, 2002, respectively, as compared to the same periods in 2001. The
decreases in non-asset based policy charge revenues are primarily due to
decreases in cost of insurance charges and deferred policy load amortization.
Net earnings derived from interest spread decreased $1.8 million (or 10%) and
$1.0 million (or 3%) during the current three and six month periods ended June
30, 2002, respectively, as compared to the same periods in 2001. The decreases
in interest spread are primarily a result of the reduction in invested assets
resulting from the decline in fixed rate contracts inforce. The current six
month period was favorably impacted by a $1.3 million increase in real estate
income.
Net realized investment losses increased $9.8 million and $5.5 million during
the current three and six month periods ended June 30, 2002, respectively, as
compared to the same periods in 2001. The following table provides the changes
in net realized investment gains (losses) by type for each respective period:
Three Months Six Months
Realized Gain (Loss) 2002 - 2001 2002 - 2001
------------------------------------------------------ ------------------ ------------------
($ in Millions)
Interest related gains $ 0.1 $ 0.5
Credit related losses (8.1) (5.7) (1)
Trading account losses (1.8) (0.3) (2)
------------------ ------------------
$ (9.8) $ (5.5)
================== ==================
(1) Credit related losses included book value writedowns and asset
sales of several large security holdings, primarily due to book
value writedowns of $9.2 million on investments in fixed income
securities issued by WorldCom Inc.
(2) The trading account is comprised of convertible debt and
convertible preferred equity securities. The valuations of these
securities will generally fluctuate in a direct relationship to
changes in the valuations of the underlying common equity.
The market value adjustment expense is attributable to the Company's modified
guaranteed annuity products. This contract provision results in a market value
adjustment to the cash surrender value of those contracts that are surrendered
before the expiration of their interest rate guarantee period. During the first
six months of 2002, the market value adjustment expense increased $0.2 million
(or 22%) as compared to the same period in 2001. The increase is primarily due
to the lower interest rate environment during 2002 as compared to 2001. The
market value adjustment expense has an inverse relationship to changes in
interest rates. During the current three month period, the market value
adjustment expense was relatively flat as compared to the same period in 2001.
Policy benefits increased $2.0 million (or 19%) and $7.1 million (or 44%) during
the current three and six month periods ended June 30, 2002, respectively, as
compared to the same periods in 2001. The increases in policy benefits are
primarily due to increased variable annuity death benefit expense incurred under
guaranteed minimum death benefit provisions.
Reinsurance premium ceded decreased $0.2 million (or 3%) and $0.6 million (or
5%) during the current three and six month periods ended June 30, 2002,
respectively, as compared to the same periods in 2001. The decreases are
attributable to the decrease in life insurance inforce.
Insurance expenses and taxes decreased $4.9 million (or 28%) and $6.9 million
(or 22%) during the current three and six month periods ended June 30, 2002, as
compared to the same periods in 2001. The following table provides the changes
in insurance expenses and taxes by type for each respective period:
Three Months Six Months
Insurance expenses and taxes - net of capitalization 2002 - 2001 2002 - 2001
--------------------------------------------------------------- ------------------ ------------------
($ in Millions)
Asset-based commissions $ (0.7) $ (0.8) (1)
General insurance expenses (2.7) (3.3) (2)
Taxes, licenses, and fees (1.5) (2.8) (3)
------------------ ------------------
$ (4.9) $ (6.9)
================== ==================
(1) Reflects the decrease in average variable account balances during 2002.
(2) Cost savings primarily resulting from the Company's consolidation of its
life and annuity policy administration service centers. The
consolidation was completed during the third quarter 2001.
(3) Net refunds received from guaranty fund associations received during the
first quarter 2002 were $1.1 million. Also, during the second quarter
2001, the Company paid a $1.1 million IRS remediation settlement.
The Company's effective federal income tax rate was 35% during the current three
and six month periods as compared to 36% and 33%, respectively, during the
equivalent periods in 2001. The changes in the effective federal income tax rate
during the respective periods are primarily due to certain permanent adjustments
recorded in 2001.
SEGMENT INFORMATION
The products that comprise the Life Insurance and Annuity segments generally
possess similar economic characteristics. As such, the financial condition and
results of operations of each business segment are generally consistent with the
Company's consolidated financial condition and results of operations presented
herein.
The decrease in other net revenues and other net earnings during the current
three month period ended June 30, 2002 is primarily due to book value writedowns
and trading account losses incurred during the second quarter 2002.
PART II Other Information
Item 1. Legal Proceedings.
Nothing to report.
Item 5. Other Information.
Nothing to report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
2.1 Merrill Lynch Life Insurance Company Board of Directors
Resolution in Connection with the Merger between Merrill Lynch
Life Insurance Company and Tandem Insurance Group, Inc.
(Incorporated by reference to Exhibit 2.1, filed September 5,
1991, as part of Post-Effective Amendment No. 4 to the
Registrant's registration statement on Form S-1, File No.
33-26322.)
2.2 Plan and Agreement of Merger between Merrill Lynch Life
Insurance Company and Tandem Insurance Group, Inc. (Incorporated
by reference to Exhibit 2.1a, filed September 5, 1991, as part
of Post-Effective Amendment No. 4 to the Registrant's
registration statement on Form S-1, File No. 33-26322.)
3.1 Articles of Amendment, Restatement and Redomestication of the
Articles of Incorporation of Merrill Lynch Life Insurance
Company. (Incorporated by reference to Exhibit 6(a) to
Post-Effective Amendment No. 10 to Merrill Lynch Life Variable
Annuity Separate Account A's registration statement on Form N-4,
File No. 33-43773, filed December 10, 1996.)
3.2 Amended and Restated By-Laws of Merrill Lynch Life Insurance
Company. (Incorporated by reference to Exhibit 6(b) to
Post-Effective Amendment No. 10 to Merrill Lynch Life Variable
Annuity Separate Account A's registration statement on Form N-4,
File No. 33-43773, filed December 10, 1996.)
4.1 Group Modified Guaranteed Annuity Contract, ML-AY-361.
(Incorporated by reference to Exhibit 4.1, filed February 23,
1989, as part of Pre-Effective Amendment No. 1 to the
Registrant's registration statement on Form S-1, File No.
33-26322.)
4.2 Individual Certificate, ML-AY-362. (Incorporated by reference to
Exhibit 4.2, filed February 23, 1989, as part of Pre-Effective
Amendment No. 1 to the Registrant's registration statement on
Form S-1, File No. 33-26322.)
4.2a Individual Certificate, ML-AY-362 KS. (Incorporated by reference
to Exhibit 4.2a, filed March 9, 1990, as part of Post-Effective
Amendment No. 1 to the Registrant's registration statement on
Form S-1, File No. 33-26322.)
4.2b Individual Certificate, ML-AY-378. (Incorporated by reference to
Exhibit 4.2b, filed March 9, 1990, as part of Post-Effective
Amendment No. 1 to the Registrant's registration statement on
Form S-1, File No. 33-26322.)
4.2c Modified Guaranteed Annuity Contract. (Incorporated by reference
to Exhibit 4(a), filed August 18, 1997, as part of the
Registrant's registration statement on Form S-3, File No.
333-33863.)
4.3 Individual Tax-Sheltered Annuity Certificate, ML-AY-372. (Incorporated
by reference to Exhibit 4.3, filed February 23, 1989, as part of
Pre-Effective Amendment No. 1 to the Registrant's registration statement
on Form S-1, File No. 33-26322.)
4.3a Individual Tax-Sheltered Annuity Certificate, ML-AY-372 KS.
(Incorporated by reference to Exhibit 4.3a, filed March 9, 1990, as part
of Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.4 Qualified Retirement Plan Certificate, ML-AY-373. (Incorporated by
reference to Exhibit 4.4 to the Registrant's registration statement on
Form S-1, File No. 33-26322, filed January 3, 1989.)
4.4a Qualified Retirement Plan Certificate, ML-AY-373 KS. (Incorporated by
reference to Exhibit 4.4a, filed March 9, 1990, as part of
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.5 Individual Retirement Annuity Certificate, ML-AY-374. (Incorporated by
reference to Exhibit 4.5 to the Registrant's registration statement on
Form S-1, File No. 33-26322, filed January 3, 1989.)
4.5a Individual Retirement Annuity Certificate, ML-AY-374 KS. (Incorporated
by reference to Exhibit 4.5a, filed March 9, 1990, as part of
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.5b Individual Retirement Annuity Certificate, ML-AY-375 KS. (Incorporated
by reference to Exhibit 4.5b, filed March 9, 1990, as part of
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.5c Individual Retirement Annuity Certificate, ML-AY-379. (Incorporated by
reference to Exhibit 4.5c, filed March 9, 1990, as part of
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.6 Individual Retirement Account Certificate, ML-AY-375. (Incorporated by
reference to Exhibit 4.6, filed February 23, 1989, as part of
Pre-Effective Amendment No. 1 to the Registrant's registration statement
on Form S-1, File No. 33-26322.)
4.6a Individual Retirement Account Certificate, ML-AY-380. (Incorporated by
reference to Exhibit 4.6a, filed March 9, 1990, as part of
Post-Effective
Amendment No. 1 to the Registrant's registration statement on Form S-1,
File No. 33-26322.)
4.7 Section 457 Deferred Compensation Plan Certificate, ML-AY-376.
(Incorporated by reference to Exhibit 4.7 to the Registrant's
registration statement on Form S-1, File No. 33-26322, filed January 3,
1989.)
4.7a Section 457 Deferred Compensation Plan Certificate, ML-AY-376 KS.
(Incorporated by reference to Exhibit 4.7a, filed March 9, 1990, as part
of Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.8 Tax-Sheltered Annuity Endorsement, ML-AY-366. (Incorporated by reference
to Exhibit 4.8 to the Registrant's registration statement on Form S-1,
File No. 33- 26322, filed January 3, 1989.)
4.8a Tax-Sheltered Annuity Endorsement, ML-AY-366 190. (Incorporated by
reference to Exhibit 4.8a, filed March 9, 1990, as part of
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.8b Tax-Sheltered Annuity Endorsement, ML-AY-366 1096. (Incorporated by
reference to Exhibit 4(h)(3), filed March 27, 1997, as part of
Post-Effective Amendment No. 2 to the Registrant's registration
statement on Form S-1, File No. 33-58303.)
4.9 Qualified Retirement Plan Endorsement, ML-AY-364. (Incorporated by
reference to Exhibit 4.9 to the Registrant's registration statement on
Form S-1, File No. 33-26322, filed January 3, 1989.)
4.10 Individual Retirement Annuity Endorsement, ML-AY-368. (Incorporated by
reference to Exhibit 4.10 to the Registrant's registration statement on
Form S-1, File No. 33-26322, filed January 3, 1989.)
4.10a Individual Retirement Annuity Endorsement, ML-AY-368 190. (Incorporated
by reference to Exhibit 4.10a, filed March 9, 1990, as part of
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.10b Individual Retirement Annuity Endorsement, ML009. (Incorporated by
reference to Exhibit 4(j)(3) to Post-Effective Amendment No. 1 to the
Registrant's registration statement on Form S-1, File No. 33-60290,
filed March 31, 1994.)
4.10c Individual Retirement Annuity Endorsement. (Incorporated by reference to
Exhibit 4(b) to Pre-Effective Amendment No. 1 to the Registrant's
registration statement on Form S-3, File No. 333-33863, filed October
31, 1997.)
4.11 Individual Retirement Account Endorsement, ML-AY-365. (Incorporated by
reference to Exhibit 4.11 to the Registrant's registration statement on
Form S-1, File No. 33-26322, filed January 3, 1989.)
4.11a Individual Retirement Account Endorsement, ML- AY-365 190. (Incorporated
by reference to Exhibit 4.11a, filed March 9, 1990, as part of
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.12 Section 457 Deferred Compensation Plan Endorsement, ML-AY-367.
(Incorporated by reference to Exhibit 4.12 to the Registrant's
registration statement on Form S-1, File No. 33-26322, filed January 3,
1989.)
4.12a Section 457 Deferred Compensation Plan Endorsement, ML-AY-367 190.
(Incorporated by reference to Exhibit 4.12a, filed March 9, 1990, as
part of Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
4.13 Qualified Plan Endorsement, ML-AY-369. (Incorporated by reference to
Exhibit 4.13 to the Registrant's registration statement on Form S-1,
File No. 33-26322, filed January 3, 1989.)
4.13a Qualified Plan Endorsement, ML-AY-448. (Incorporated by reference to
Exhibit 4.13a, filed March 9, 1990, as part of Post-Effective Amendment
No. 1 to the Registrant's registration statement on Form S-1, File No.
33-26322.)
4.13b Qualified Plan Endorsement. (Incorporated by reference to Exhibit 4(c),
filed October 31, 1997, as part of Pre-Effective Amendment No. 1 to the
Registrant's registration statement on Form S-3, File No. 333-33863.)
4.14 Application for Group Modified Guaranteed Annuity Contract.
(Incorporated by reference to Exhibit 4.14 to the Registrant's
registration statement on Form S-1, File No. 33-26322, filed January 3,
1989.)
4.15 Annuity Application for Individual Certificate Under Modified Guaranteed
Annuity Contract. (Incorporated by reference to Exhibit 4.15 to the
Registrant's registration statement on Form S-1, File No. 33-26322,
filed January 3, 1989.)
4.15a Application for Modified Guaranteed Annuity Contract. (Incorporated by
reference to Exhibit 4(d), filed August 18, 1997, as part of the
Registrant's registration statement on Form S-3, File No. 333-33863.)
4.16 Form of Company Name Change Endorsement. (Incorporated by reference to
Exhibit 4.16, filed September 5, 1991, as part of Post-Effective
Amendment No. 4 to the Registrant's registration statement on Form S-1,
File No. 33-26322.)
4.17 Group Modified Guaranteed Annuity Contract, ML-AY-361/94. (Incorporated
by reference to Exhibit 4(a)(2), filed December 7, 1994, as part of
Post-Effective Amendment No. 3 to the Registrant's registration
statement on Form S-1, File No. 33-60290.)
4.18 Individual Certificate, ML-AY-362/94. (Incorporated by reference to
Exhibit 4(b)(4), filed December 7, 1994, as part of Post-Effective
Amendment No. 3 to the Registrant's registration statement on Form S-1,
File No. 33-60290.)
4.19 Individual Tax-Sheltered Annuity Certificate, ML-AY-372/94.
(Incorporated by reference to Exhibit 4(c)(3), filed December 7, 1994,
as part of Post-Effective Amendment No. 3 to the Registrant's
registration statement on Form S-1, File No. 33-60290.)
4.20 Qualified Retirement Plan Certificate, ML-AY-373/94. (Incorporated by
reference to Exhibit 4(d)(3), filed December 7, 1994, as part of
Post-Effective Amendment No. 3 to the Registrant's registration
statement on Form S-1, File No. 33-60290.)
4.21 Individual Retirement Annuity Certificate, ML-AY-374/94. (Incorporated
by reference to Exhibit 4(e)(5), filed December 7, 1994, as part of
Post-Effective Amendment No. 3 to the Registrant's registration
statement on Form S-1, File No. 33-60290.)
4.22 Individual Retirement Account Certificate, ML-AY-375/94. (Incorporated
by reference to Exhibit 4(f)(3), filed December 7, 1994, as part of
Post-Effective Amendment No. 3 to the Registrant's registration
statement on Form S-1, File No. 33-60290.)
4.23 Section 457 Deferred Compensation Plan Certificate, ML-AY-376/94.
(Incorporated by reference to Exhibit 4(g)(3), filed December 7, 1994,
as part of Post-Effective Amendment No. 3 to the Registrant's
registration statement on Form S-1, File No. 33-60290.)
4.24 Qualified Plan Endorsement, ML-AY-448/94. (Incorporated by reference to
Exhibit 4(m)(3), filed December 7, 1994, as part of Post-Effective
Amendment No. 3 to the Registrant's registration statement on Form S-1,
File No. 33-60290.)
10.1 Management Services Agreement between Family Life Insurance Company and
Merrill Lynch Life Insurance Company. (Incorporated by reference to
Exhibit 10.1 to the Registrant's registration statement on Form S-1,
File No. 33-26322, filed January 3, 1989.)
10.2 General Agency Agreement between Merrill Lynch Life Insurance Company
and Merrill Lynch Life Agency, Inc. (Incorporated by reference to
Exhibit 10.2, filed
February 23, 1989, as part of Pre-Effective Amendment No. 1 to the
Registrant's registration statement on Form S-1, File No. 33-26322.)
10.3 Service Agreement among Merrill Lynch Insurance Group, Inc., Family Life
Insurance Company and Merrill Lynch Life Insurance Company.
(Incorporated by reference to Exhibit 10.3, filed March 13, 1991, as
part of Post-Effective Amendment No. 2 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
10.3a Amendment to Service Agreement among Merrill Lynch Insurance Group,
Inc., Family Life Insurance Company and Merrill Lynch Life Insurance
Company. (Incorporated by reference to Exhibit 10(c)(2) to
Post-Effective Amendment No. 1 to the Registrant's registration
statement on Form S-1, File No. 33-60290, filed March 31, 1994.)
10.4 Indemnity Reinsurance Agreement between Merrill Lynch Life Insurance
Company and Family Life Insurance Company. (Incorporated by reference to
Exhibit 10.4, filed March 13, 1991, as part of Post-Effective Amendment
No. 2 to the Registrant's registration statement on Form S-1, File No.
33-26322.)
10.5 Assumption Reinsurance Agreement between Merrill Lynch Life Insurance
Company, Tandem Insurance Group, Inc. and Royal Tandem Life Insurance
Company and Family Life Insurance Company. (Incorporated by reference to
Exhibit 10.6, filed April 24, 1991, as part of Post-Effective Amendment
No. 3 to the Registrant's registration statement on Form S-1, File No.
33-26322.)
10.6 Amended General Agency Agreement between Merrill Lynch Life Insurance
Company and Merrill Lynch Life Agency, Inc. (Incorporated by reference
to Exhibit 10(g) to the Registrant's registration statement on Form S-1,
File No. 33-46827, filed March 30, 1992.)
10.7 Indemnity Agreement between Merrill Lynch Life Insurance Company and
Merrill Lynch Life Agency, Inc. (Incorporated by reference to Exhibit
10(h) to the Registrant's registration statement on Form S-1, File No.
33-46827, filed March 30, 1992.)
10.8 Management Agreement between Merrill Lynch Life Insurance Company and
Merrill Lynch Asset Management, Inc. (Incorporated by reference to
Exhibit 10(i) to the Registrant's registration statement on Form S-1,
File No. 33-46827, filed March 30, 1992.)
10.9 Amendment No. 1 to Indemnity Reinsurance Agreement between Family Life
Insurance Company and Merrill Lynch Life Insurance Company.
(Incorporated by reference to Exhibit 10.5, filed April 24, 1991, as
part of Post-Effective Amendment No. 3 to the Registrant's registration
statement on Form S-1, File No. 33-26322.)
99.1 Certification by the Chief Executive Officer of the Registrant
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification by the Chief Financial Officer of the Registrant
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter.
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.
MERRILL LYNCH LIFE INSURANCE COMPANY
/s/ MATTHEW J. RIDER
-----------------------------------------
Matthew J. Rider
Senior Vice President,
Chief Financial Officer and Treasurer
Date: August 13, 2002
EXHIBIT INDEX
99.1 Certification by the Chief Executive Officer of the Registrant pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification by the Chief Financial Officer of the Registrant pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.