AS FILED WITH THE SEC ON OCTOBER 6, 2006
REGISTRATION NO. 333-103474
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 7
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PRUCO LIFE INSURANCE COMPANY
(Exact Name of Registrant)
ARIZONA
(State or other jurisdiction of incorporation or organization)
22-194455
(I.R.S. Employer Identification Number)
C/O PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-7333
(Address and telephone number of principal executive offices)
THOMAS C. CASTANO
SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4708
(Name, address, and telephone number of agent for service)
Copies to:
C. CHRISTOPHER SPRAGUE
VICE PRESIDENT, CORPORATE COUNSEL
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-6997
Approximate date of commencement of proposed sale to the public--November 20,
2006
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ]
If this Form is a registration statement pursuant to General Instruction I.D.
or a post-effective amendment thereto that shall become effective upon filing
with the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box [ ]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box [ ]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH AMOUNT PROPOSED PROPOSED AMOUNT OF
CLASS OF SECURITIES TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED* PRICE PER UNIT* OFFERING PRICE FEE**
- ------------------------- ------------ ---------------- ------------------ -------------
Market-value adjustment
annuity contracts
(or modified guaranteed
annuity contracts) $200,000,000 $200,000,000 $-0-
- --------
* Securities are not issued in predetermined units.
** Registration fee for these securities was paid at the time they were
originally registered on Form S-3 as filed by Pruco Life Insurance Company
on February 27, 2003.
Note:
Registrant is filing this Post-Effective Amendment No. 7 to the Registration
Statement for the purpose of including in the Registration Statement a
Prospectus supplement, which adds a new benefit entitled Highest Daily Lifetime
Five. The Part 1 that was filed as part of Post-Effective Amendment No. 6 with
the SEC on April 21, 2006 as supplemented May 1, 2006, June 9, 2006, August 4,
2006 and August 8, 2006 is hereby incorporated by reference. Other than as set
forth herein, this post-effective amendment to the registration statement does
not amend or delete any other part of the registration statement.
Pruco Life Insurance Company
Strategic Partners Annuity One 3
Strategic Partners Plus 3
Strategic Partners FlexElite
Supplement, dated November 20, 2006
To
Prospectuses, dated May 1, 2006
This supplement makes the following changes:
. adds the Highest Daily Lifetime Five Benefit to Strategic Partners
Annuity One 3, Strategic Partners Plus 3 and Strategic Partners FlexElite
of Pruco Life Insurance Company ("Pruco Life"); and
. for each of the above-referenced prospectuses, reflects certain changes
to the underlying mutual funds; and
. for each of the above-referenced prospectuses, sets forth the maximum
charge for the guaranteed minimum income benefit.
TABLE OF CONTENTS
As a new entry within the line item entitled "Section 5: What Is The Lifetime
Five Income Benefit?", we add a line item for Highest Daily Lifetime Five.
As a new entry at the end of the Table of Contents, we add a reference to
Appendix C, entitled "Asset Transfer Formula Under Highest Daily Lifetime Five
Benefit."
GLOSSARY
. We add a definition for "Benefit Fixed Rate Account", that reads as
follows: "An investment option offered as part of this contract that is
used only if you have elected the optional Highest Daily Lifetime Five
Benefit. Amounts allocated to the Benefit Fixed Rate Account earn a fixed
rate of interest, and are held within our general account. You may not
allocate purchase payments to the Benefit Fixed Rate Account. Rather,
contract value is transferred to the Benefit Fixed Rate Account only
under the asset transfer feature of the Highest Daily Lifetime Five
Benefit."
. We revise the first sentence of the definition of "Annual Income Amount"
to state: "Under the terms of the Lifetime Five Income Benefit and the
Highest Daily Lifetime Five Benefit, an amount that you can withdraw each
year as long as the annuitant lives."
. We revise the first sentence of the definition of "Excess Income/Excess
Withdrawal" to state: "Under the Lifetime Five Income Benefit, Spousal
Lifetime Five Income Benefit, and Highest Daily Lifetime Five Benefit,
Excess Income refers to cumulative withdrawals that exceed the Annual
Income Amount."
. We add a definition for "Highest Daily Lifetime Five Benefit" that reads
as follows: "An optional feature available for an additional charge that
guarantees your ability to withdraw amounts equal to a percentage of a
principal value called the Protected Withdrawal Value. Subject to our
rules regarding the timing and amount of withdrawals, we guarantee these
withdrawal amounts, regardless of the impact of market performance on
your contract value."
. We revise the definition of "Protected Withdrawal Value" to read as
follows: "Under the Lifetime Five Income Benefit, Spousal Lifetime Five
Income Benefit, and Highest Daily Lifetime Five Benefit, an amount that
we guarantee regardless of the investment performance of your contract
value. As discussed in Section 5, Protected Withdrawal Value is
determined one way with respect to the Lifetime Five Income Benefit and
the Spousal Lifetime Five Income Benefit, and another way for the Highest
Daily Lifetime Five Benefit."
SUMMARY
. We revise the last paragraph of the Section 3 portion of the Summary to
read as follows: "The Lifetime Five Income Benefit, Spousal Lifetime Five
Income Benefit, and Highest Daily Lifetime Five Benefit (discussed in
Section 5) and the Income Appreciator Benefit (discussed in Section 6)
each may provide an additional amount upon which your annuity payments
are based."
. We add the following as the last paragraph of the Section 5 portion of
the Summary, to read as follows: "Finally, we offer a benefit called the
Highest Daily Lifetime Five Benefit. Highest Daily Lifetime Five is
similar to our Lifetime Five and Spousal Lifetime Five benefits, in that
under each such benefit, there is a "protected withdrawal value" that
serves as the basis for withdrawals you can make. As we discuss in more
detail later, we guarantee this protected withdrawal value, even if your
contract value declines. Thus, as a participant in one of these benefits,
you are assured of a certain amount that you can withdraw, even if there
is a significant decline in the securities markets. Highest Daily
Lifetime Five Benefit differs from Lifetime Five and Spousal Lifetime
Five in that (a) the Protected Withdrawal Value is determined based on
the highest daily contract value and (b) we require you to participate in
an asset transfer program, under which your contract value may be
transferred periodically between the variable investment options and the
Benefit Fixed Rate Account (which is part of our general account). We
operate the asset transfer program under a formula, which is described in
the portion of Section 5 concerning the Highest Daily Lifetime Five
Benefit. In addition, in Appendix C, we set out the formula itself. As
discussed in Section 5, when you elect Highest Daily Lifetime Five, the
asset transfer formula is made a part of your annuity contract, and thus
may not be altered thereafter. However, we do reserve the right to amend
the formula for newly-issued annuity contracts that elect Highest Daily
Lifetime Five and for existing contracts that elect the benefit in the
future. As we discuss in more detail later in this prospectus, this
required asset transfer program helps us manage our financial exposure
under Highest Daily Lifetime Five, by moving assets out of the variable
investment options in the event of securities market declines. In
essence, we seek to preserve the value of these assets, by transferring
them to a more stable account. Of course, the formula also contemplates
the transfer of assets from the Benefit Fixed Rate Account to the
variable investment options in certain other scenarios. "
. We add the following as the last line item in the bullet within the
Section 8 portion of the Summary concerning insurance and administrative
costs:
"- 0.60% if you choose the Highest Daily Lifetime Five Benefit. This charge
is in addition to the charge for the applicable death benefit."
2
SUMMARY OF CONTRACT EXPENSES
. With respect to the Strategic Partners Annuity One 3 and Strategic
Partners Plus 3 prospectuses of Pruco Life, in the table entitled
Periodic Account Expenses, Insurance and Administrative Expenses with the
Indicated Benefits, we revise the line items pertaining to the death
benefit options, the GMIB option, Lifetime Five, and Spousal Lifetime
Five to read as follows, and add a line item for Highest Daily Lifetime
Five. In addition, we add a footnote (which appears immediately after
"Insurance And Administrative Expenses With The Indicated Benefits"):
Contract Contract
With Without
Credit Credit
-------- --------
Maximum charge for each of Lifetime Five and
Highest Daily Lifetime Five* 2.00% 2.00%
Maximum charge for Spousal Lifetime Five* 3.00% 3.00%
Lifetime Five Income Benefit (current charge) 0.60% 0.60%
Spousal Lifetime Five Income Benefit (current
charge) 0.75% 0.75%
Highest Daily Lifetime Five Income Benefit
(current charge) 0.60% 0.60%
Base Death Benefit 1.50% 1.40%
Guaranteed Minimum Death Benefit Option -
Roll-Up or Step-Up 1.75% 1.65%
Guaranteed Minimum Death Benefit Option -
Greater of Roll-Up or Step-Up 1.85% 1.75%
Highest Daily Value Death Benefit 2.00% 1.90%
Maximum Annual Guaranteed Minimum Income Benefit
Charge and Charge Upon Certain Withdrawals -
as a percentage of average GMIB Protected
Value* 1.00% 1.00%
Annual Guaranteed Minimum Income Benefit Charge
and Charge Upon Certain Withdrawals (for
contracts sold on or after January 20, 2004 or
upon subsequent state approval) - as a
percentage of average GMIB Protected Value
(current charge) 0.50% 0.50%
3
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* The charge for the Lifetime Five Income Benefit (and, if available under
your contract, Spousal Lifetime Five and Highest Daily Lifetime Five) is
imposed based on the value of assets in the variable investment options
only. We reserve the right to increase the charge for Lifetime Five and
Highest Daily Lifetime Five to a maximum of 2% (3% for Spousal Lifetime
Five) upon a step-up or for a new election of each such benefit. However, we
have no present intention of increasing the charges for those benefits to
that maximum level. Similarly, we reserve the right to increase the charge
for GMIB to a maximum of 1% upon a reset of the GMIB Protected Value.
. With respect to the Strategic Partners FlexElite prospectus of Pruco Life
(version of contract sold on or after May 1, 2003 or upon subsequent
state approval), in the table entitled Periodic Account Expenses,
Insurance and Administrative Expenses with the Indicated Benefits, we
revise the line items pertaining to the death benefit options, the GMIB
option, Lifetime Five, and Spousal Lifetime Five to read as follows, and
add a line item for Highest Daily Lifetime Five. In addition, we add a
footnote (which appears immediately after "Insurance And Administrative
Expenses With The Indicated Benefits"):
Maximum charge for each of Lifetime Five and Highest Daily Lifetime Five* 2.00%
Maximum charge for Spousal Lifetime Five* 3.00%
Lifetime Five Income Benefit (current charge) 0.60%
Spousal Lifetime Five Income Benefit (current charge) 0.75%
Highest Daily Lifetime Five Income Benefit (current charge) 0.60%
Base Death Benefit 1.65%
Guaranteed Minimum Death Benefit Option - Roll-Up or Step-Up 1.90%
Guaranteed Minimum Death Benefit Option - Greater of Roll-Up or Step-Up 2.00%
Highest Daily Value Death Benefit 2.15%
Maximum Annual Guaranteed Minimum Income Benefit Charge and Charge Upon
Certain Withdrawals - as a percentage of average GMIB Protected Value 1.00%
Annual Guaranteed Minimum Income Benefit Charge and Charge Upon Certain
Withdrawals - (for contracts sold on or after May 1, 2003, or upon
subsequent state approval) as a percentage of average GMIB Protected
Value (current charge) 0.50%
4
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*The charge for the Lifetime Five Income Benefit (and, if available under your
contract, Spousal Lifetime Five and Highest Daily Lifetime Five) is imposed
based on the value of assets in the variable investment options only. We
reserve the right to increase the charge for Lifetime Five, Spousal Lifetime
Five, and Highest Daily Lifetime Five to a maximum of 2% (3% for Spousal
Lifetime Five) upon a step-up or for a new election of each such benefit.
However, we have no present intention of increasing the charges for those
benefits to that maximum level. Similarly, we reserve the right to increase the
charge for GMIB to a maximum of 1% upon a reset of the GMIB Protected Value.
In Section 2 of each prospectus, we make the following change to the chart
setting forth a brief description of each variable investment option, to
reflect a subadviser name change:
. SP Small Cap Value Portfolio, AST Small Cap Value Portfolio, and
Prudential Series Fund Equity Portfolio. Salomon Brothers Asset
Management will change its name to ClearBridge Advisers LLC, effective in
December 2006.
In section 2 of each prospectus, we revise the investment objectives/policies
section, and portfolio adviser/sub-adviser section for two Portfolios to read
as follows. These new descriptions reflect the addition of sub-advisers as well
as revisions to non-fundamental investment policies:
. SP LSV International Value Portfolio:
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
------ ------------------------------------------ ---------------------
International SP International Value Portfolio (formerly LSV Asset Management,
Equity SP LSV International Value Portfolio): Thornburg Investment
seeks capital growth. The Portfolio Management, Inc.
normally invests at least 80% of the
Portfolio's investable assets (net assets
plus borrowings made for investment
purposes) in the equity securities of
companies in developed countries outside
the United States that are represented in
the MSCI EAFE Index.
. SP William Blair International Growth Portfolio
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
------ ------------------------------------------ ---------------
International SP International Growth Portfolio Marsico Capital
Equity (formerly, SP William Blair International Management LLC,
Growth Portfolio): seeks long-term capital William Blair &
appreciation. The Portfolio invests Company, LLC
primarily in equity-related securities of
foreign issuers. The Portfolio invests
primarily in the common stock of large and
medium-sized foreign companies, although
it may also invest in companies of all
sizes. Under normal circumstances, the
Portfolio invests at least 65% of its
total assets in common stock of foreign
companies operating or based in at least
five different countries, which may
include countries with emerging markets.
The Portfolio looks primarily for stocks
of companies whose earnings are growing at
a faster rate than other companies or
which offer attractive growth potential.
SECTION 5: WHAT IS THE LIFETIME FIVE INCOME BENEFIT?
We add the following new section to the end of the above-referenced section of
each prospectus for Pruco Life's Strategic Partners Annuity One 3, Strategic
Partners Plus 3, and Strategic Partners FlexElite:
HIGHEST DAILY LIFETIME FIVE BENEFIT (HIGHEST DAILY LIFETIME FIVE)
The Highest Daily Lifetime Five Benefit described below is only being offered
in those jurisdictions where we have received regulatory approval, and will be
offered subsequently in other jurisdictions when we receive regulatory approval
in those jurisdictions. Certain terms and conditions may differ among
jurisdictions once approved. Highest Daily Lifetime Five is offered as an
alternative to Lifetime Five and Spousal Lifetime Five. Currently, if you elect
Highest Daily Lifetime Five and subsequently terminate the benefit, you will
not be able to re-elect Highest Daily Lifetime Five, and will have a waiting
period until you can elect Spousal Lifetime Five or Lifetime Five.
Specifically, you will be permitted to elect Lifetime Five or Spousal Lifetime
Five only on an anniversary of the contract date that is at least 90 calendar
days from the date that Highest Daily Lifetime Five was terminated. We reserve
the right to further limit the election frequency in the future. The income
benefit under Highest Daily Lifetime Five currently is based on a single
"designated life" who is at least 55 years old on the date that the benefit is
acquired. The Highest Daily Lifetime Five Benefit is not available if you elect
any other optional living benefit, although you may elect any optional death
benefit (other than the Highest Daily Value Death Benefit). As long as your
Highest Daily Lifetime Five Benefit is in effect, you must allocate your
contract value in accordance with the then-permitted and available investment
option(s) with this program.
5
We offer a benefit that guarantees until the death of the single designated
life the ability to withdraw an annual amount (the "Highest Daily Life Income
Benefit") equal to a percentage of an initial principal value (the "Protected
Withdrawal Value") regardless of the impact of market performance on the
contract value, subject to our program rules regarding the timing and amount of
withdrawals. The benefit may be appropriate if you intend to make periodic
withdrawals from your contract, and wish to ensure that market performance will
not affect your ability to receive annual payments. You are not required to
make withdrawals as part of the program -- the guarantees are not lost if you
withdraw less than the maximum allowable amount each year under the rules of
the benefit. We discuss Highest Daily Lifetime Five in greater detail
immediately below. In addition, please see the Glossary section of this
prospectus for definitions of some of the key terms used with this benefit. As
discussed below, we require that you participate in our asset transfer program
in order to participate in Highest Daily Lifetime Five, and in the Appendices
to this prospectus, we set forth the formula under which we make those asset
transfers.
As discussed below, a key component of Highest Daily Lifetime Five is the
Protected Withdrawal Value, which is an amount that is distinct from contract
value. Protected Withdrawal Value is used to determine the Highest Daily Annual
Income Amount-- which is amount that you can take out annually as a withdrawal
for your entire life. Because each of the Protected Withdrawal Value and
Highest Daily Annual Income Amount is determined in a way that is not solely
related to contract value, it is possible for the contract value to fall to
zero, even though the Highest Daily Annual Income Amount remains. You are
guaranteed to be able to withdraw the Highest Daily Annual Income Amount for
the rest of your life, provided that you have not made "excess withdrawals."
Excess withdrawals, as discussed below, will reduce your Highest Daily Annual
Income Amount. Thus, you could experience a scenario in which your contract
value was zero, and, due to your excess withdrawals, your Highest Daily Annual
Income Amount also was reduced to zero. In that scenario, no further amount
would be payable under Highest Daily Lifetime Five.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is used to determine the amount of the annual
payments under the Highest Daily Life Income Benefit. The Protected Withdrawal
Value initially is equal to the contract value on the date that you elect
Highest Daily Lifetime Five. On each business day thereafter, until the earlier
of the first withdrawal or ten years after the date of your election of the
benefit, we recalculate the Protected Withdrawal
6
Value. Specifically, on each such business day (the "Current Business Day"),
the Protected Withdrawal Value is equal to the greater of:
. The Protected Withdrawal Value for the immediately preceding business day
(the "Prior Business Day"), appreciated at the daily equivalent of 5%
annually during the calendar day(s) between the Prior Business Day and
the Current Business Day (i.e., one day for successive business days, but
more than one calendar day for business days that are separated by
weekends and/or holidays), plus the amount of any purchase payment
(including any associated credit) made on the Current Business Day; and
. The contract value.
We cease these daily calculations of the Protected Withdrawal Value when you
make your first withdrawal. However, as discussed below, subsequent purchase
payments (and any associated credits for Strategic Partners Annuity One 3 and
Strategic Partners Plus 3 only) will increase the amount we guarantee to pay
annually under the Highest Daily Life Income Benefit (the "Highest Daily Annual
Income Amount"), while "excess" withdrawals (as described below) may decrease
the Highest Daily Annual Income Amount.
KEY FEATURE - HIGHEST DAILY ANNUAL INCOME AMOUNT UNDER HIGHEST DAILY LIFETIME
FIVE BENEFIT
The initial Highest Daily Annual Income Amount is equal to 5% of the Protected
Withdrawal Value. Under the Highest Daily Lifetime Five benefit, if your
cumulative withdrawals in a contract year are less than or equal to the Highest
Daily Annual Income Amount, they will not reduce your Highest Daily Annual
Income Amount in subsequent contract years, but any such withdrawals will
reduce the Highest Daily Annual Income Amount on a dollar-for-dollar basis in
that contract year. If your cumulative withdrawals are in excess of the Highest
Daily Annual Income Amount ("Excess Income"), your Highest Daily Annual Income
Amount in subsequent years will be reduced (except with regard to required
minimum distributions) by the result of the ratio of the Excess Income to the
contract value immediately prior to such withdrawal (see examples of this
calculation below). Reductions include the actual amount of the withdrawal,
including any CDSC that may apply. A purchase payment that you make will
increase the then-existing Highest Daily Annual Income Amount by an amount
equal to 5% of the purchase payment (including, with respect to Strategic
Partners Annuity One 3 and Strategic Partners Plus 3 only, the amount of any
associated credits).
An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as
part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto
Step-Up feature can result in a larger Highest Daily Annual Income Amount if
your contract value increases subsequent to your first withdrawal. We begin
examining contract values for purposes of this feature starting with the
contract anniversary immediately after your first withdrawal under the benefit.
Specifically, upon the first such contract anniversary after your first
withdrawal, we identify the contract value on the business days corresponding
to the end of each quarter that (i) is based on your contract year, rather than
a calendar year (ii) is subsequent to the first withdrawal and (iii) falls
within the immediately preceding contract year. If the end of any such quarter
falls on a holiday or a weekend, we use the next business day. We multiply each
of those quarterly contract values by 5%, adjust each such quarterly value for
subsequent withdrawals and purchase payments, and then select the highest of
those values. If the highest of those values exceeds the existing Highest Daily
Annual Income Amount, we replace the existing amount with the new, higher
amount. Otherwise, we leave the existing Highest Daily Annual Income Amount
intact. In later years (i.e., after the first contract anniversary after the
first withdrawal), we determine whether an automatic step-up should occur on
each contract anniversary, by performing a similar examination of the
7
contract values on the end of the four immediately preceding quarters. If, on
the date that we implement a Highest Quarterly Auto Step-Up to your Highest
Daily Annual Income Amount, the charge for Highest Daily Lifetime Five has
changed, you may be subject to the new charge at the time of such step-up.
Prior to increasing your charge for Highest Daily Lifetime Five upon a step-up,
we would notify you, and give you the opportunity to cancel the automatic
step-up feature.
The Highest Daily Lifetime Five program does not affect your ability to make
withdrawals under your contract, or limit your ability to request withdrawals
that exceed the Highest Daily Annual Income Amount. Under Highest Daily
Lifetime Five, if your cumulative withdrawals in a contract year are less than
or equal to the Highest Daily Annual Income Amount, they will not reduce your
Highest Daily Annual Income Amount in subsequent contract years, but any such
withdrawals will reduce the Highest Daily Annual Income Amount on a
dollar-for-dollar basis in that contract year.
If, cumulatively, you withdraw an amount less than the Highest Daily Annual
Income Amount in any contract year, you cannot carry-over the unused portion of
the Highest Daily Annual Income Amount to subsequent contract years.
Examples of dollar-for-dollar and proportional reductions, and the Highest
Quarterly Step-Up are set forth below. The values depicted here are purely
hypothetical, and do not reflect the charges for the Highest Daily Lifetime
Five Benefit or any other fees and charges. Please assume the following for all
three examples:
. The contract is purchased on December 1, 2006
. On May 2, 2007, the client elects Highest Daily Lifetime Five and takes
the first withdrawal under the benefit on the same day.
Dollar-for-dollar reductions
On May 2, 2007, the Protected Withdrawal Value is $120,000, resulting in a
Highest Daily Annual Income Amount of $6,000 (5% of $120,000). Assuming $2,500
is withdrawn from the contract on this date, the remaining Highest Daily Annual
Income Amount for that contract year (up to and including December 1, 2007) is
$3,500. This is the result of a dollar-for-dollar reduction of the Highest
Daily Annual Income Amount -- $6,000 less $2,500 = $3,500.
Proportional reductions
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on August 6, 2007 and the contract value at the time of this withdrawal
is $110,000. The first $3,500 of this withdrawal reduces the Highest Daily
Annual Income Amount for that contract year to $0. The remaining withdrawal
amount ($1,500) reduces the Highest Daily Annual Income Amount in future
contract years on a proportional basis based on the ratio of the excess
withdrawal to the contract value immediately prior to the excess withdrawal.
(Note that if there were other withdrawals in that contract year, each
withdrawal would result in another proportional reduction to the Highest Daily
Annual Income Amount).
Here is the calculation:
Contract value before withdrawal $110,000.00
Less amount of "non" excess withdrawal -$ 3,500.00
Contract value immediately before excess
withdrawal of $1,500 $106,500.00
Excess withdrawal amount, $ 1,500.00
divided by contract value immediately before
excess withdrawal $106,500.00
Ratio 1.41%
Highest Daily Annual Income Amount $ 6,000.00
Less ratio of 1.41% -$ 84.51
Highest Daily Annual Income Amount for future
contract years $ 5,915.49
8
Highest Quarterly Step
On each contract anniversary date, the Highest Daily Annual Income Amount is
stepped-up if 5% of the highest quarterly value since your first withdrawal (or
last contract anniversary in subsequent years), adjusted for excess withdrawals
and additional purchase payments, is greater than the Highest Daily Annual
Income Amount, also adjusted for excess withdrawals and additional purchase
payments.
Continuing the same example as above, the Highest Daily Annual Income Amount
for this contract year is $6,000. However, the excess withdrawal on August 6th
reduces this amount to $5,915.49 for future years (see above). For the next
contract year, the Highest Daily Annual Income Amount will be stepped-up if 5%
of the highest quarterly contract value, adjusted for withdrawals, is greater
than $5,915.49. Here are the calculations for determining the quarterly values.
Only the June 1 value is being adjusted for excess withdrawals, as the
September 1 and December 1 valuation dates occur after the excess withdrawal on
August 6.
Highest Quarterly
Value (adjusted with Adjusted Annual Income
withdrawal and Amount (5% of the
Date* Account value premium)** Highest Quarterly Value)
- ----- ------------- -------------------- ------------------------
June 1, 2007 $118,000.00 $118,000.00 $5,900.00
August 6, 2007 $120,000.00 $112,885.55 $5,644.28
September 1, 2007 $112,000.00 $112,885.55 $5,644.28
December 1, 2007 $119,000.00 $119,000.00 $5,950.00
- --------
* In this example, the contract anniversary date is December 1. The quarterly
valuation dates are every three months thereafter - March 1, June 1,
September 1, and December 1. In this example, we do not use the March 1 date
as the first withdrawal took place after March 1. The contract anniversary
date of December 1 is considered the fourth and final quarterly valuation
date for the year.
** In this example, the first quarterly value after the first withdrawal is
$118,000 on June 1, yielding an adjusted Highest Daily Annual Income Amount
of $5,900.00. This amount is adjusted on August 6 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The contract value of $118,000 on June 1 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Highest Daily Annual
Income Amount for the contract year), resulting in an adjusted contract
value of $114,500 before the excess withdrawal.
. This amount ($114,500) is further reduced by 1.41% (this is the ratio in
the above example which is the excess withdrawal divided by the contract
value immediately preceding the excess withdrawal) resulting in a Highest
Quarterly Value of $112,885.55.
The adjusted Highest Daily Annual Income Amount is carried forward to the next
quarterly anniversary date of September 1. At this time, we compare this amount
to 5% of the contract value on September 1. Since the June 1 adjusted Highest
Daily Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of
$112,000), we continue to carry $5,644.28 forward to the next and final
9
quarterly anniversary date of December 1. The contract value on December 1 is
$119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28,
the adjusted Highest Daily Annual Income Amount is reset to $5,950.00
In this example, 5% of the December 1 value yields the highest amount of $
5,950.00. Since this amount is higher than the current year's Highest Daily
Annual Income Amount of $5,915.49 adjusted for excess withdrawals, the Highest
Daily Annual Income Amount for the next contract year, starting on December 2,
2007 and continuing through December 1, 2008, will be stepped-up to $5,950.00.
BENEFITS UNDER HIGHEST DAILY LIFETIME FIVE
. To the extent that your contract value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Highest Daily
Annual Income Amount and amounts are still payable under the Highest
Daily Life Income Benefit, we will make an additional payment, if any,
for that contract year equal to the remaining Highest Daily Annual Income
Amount for the contract year. Thus, in that scenario, the remaining
Highest Daily Annual Income Amount would be payable even though your
contract value was reduced to zero. In subsequent contract years we make
payments that equal the Highest Daily Annual Income Amount as described
in this section. We will make payments until the death of the single
designated life. To the extent that cumulative withdrawals in the current
contract year that reduced your contract value to zero are more than the
Highest Daily Annual Income Amount, the Highest Daily Lifetime Five
Benefit terminates, and no additional payments will be made.
. If annuity payments are to begin under the terms of your contract, or if
you decide to begin receiving annuity payments and there is a Highest
Daily Annual Income Amount due in subsequent contract years, you can
elect one of the following two options:
(1) Apply your contract value to any annuity option available; or
(2) Request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Highest Daily Annual Income
Amount. We will make payments until the death of the single designated
life.
We must receive your request in a form acceptable to us at our office.
In the absence of an election when mandatory annuity payments are to begin, we
will make annual annuity payments in the form of a single life fixed annuity
with ten payments certain, by applying the greater of the annuity rates then
currently available or the annuity rates guaranteed in your contract. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1) The present value of the future Highest Daily Annual Income Amount
payments. Such present value will be calculated using the greater of the
single life fixed annuity rates then currently available or the single
life fixed annuity rates guaranteed in your contract; and
(2) The contract value.
. If no withdrawal was ever taken, we will determine the Protected
Withdrawal Value and calculate the Highest Daily Annual Income Amount as
if you made your first withdrawal on the date the annuity payments are to
begin.
10
OTHER IMPORTANT CONSIDERATIONS
. Withdrawals under the Highest Daily Lifetime Five benefit are subject to
all of the terms and conditions of the contract, including any CDSC. We
take withdrawals pro rata from your variable investment options and fixed
investment options.
. Withdrawals made while the Highest Daily Lifetime Five program is in
effect will be treated, for tax purposes, in the same way as any other
withdrawals under the contract. The Highest Daily Lifetime Five program
does not directly affect the contract value or surrender value, but any
withdrawal will decrease the contract value by the amount of the
withdrawal (plus any applicable CDSC). If you surrender your contract,
you will receive the current surrender value.
. You can make withdrawals from your contract while your contract value is
greater than zero without purchasing the Highest Daily Lifetime Five
Benefit. The Highest Daily Lifetime Five Benefit provides a guarantee
that if your contract value declines due to market performance, you will
be able to receive your Highest Daily Annual Income Amount in the form of
periodic benefit payments.
. You must allocate your contract value in accordance with the then
available investment option(s) that we may permit in order to elect and
maintain the Highest Daily Lifetime Five Benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
For Highest Daily Lifetime Five, there must be either a single owner who is the
same as the annuitant, or if the contract is entity-owned, there must be a
single natural person annuitant. In either case, the annuitant must be at least
55 years old.
Any change of the annuitant under the contract will result in cancellation of
Highest Daily Lifetime Five. Similarly, any change of owner will result in
cancellation of Highest Daily Lifetime Five, except if (a) the new owner has
the same taxpayer identification number as the previous owner, (b) both the new
owner and previous owner are entities, or (c) the previous owner is a natural
person and the new owner is an entity.
Highest Daily Lifetime Five can be elected at the time that you purchase your
contract. We also offer existing owners (i.e., those who have already acquired
their contract) the option to elect Highest Daily Lifetime Five, subject to our
eligibility rules and restrictions.
Currently, if you terminate the Highest Daily Lifetime Five Benefit, you will
(a) not be permitted to re-elect the benefit and (b) will be allowed to elect
the Spousal Lifetime Five Benefit or the Lifetime Five Income Benefit on any
anniversary of the contract date that is at least 90 calendar days from the
date the Highest Daily Lifetime Five Benefit was terminated. We reserve the
right to further limit the election frequency in the future. Before making any
such change to the election frequency, we will provide prior notice to owners
who have an effective Highest Daily Lifetime Five Benefit.
TERMINATION OF THE BENEFIT
You may terminate the benefit at any time by notifying us. If you terminate the
benefit, any guarantee provided by the benefit will terminate as of the date
the termination is effective, and certain restrictions on re-election will
apply as described above. We reserve the right to further limit the frequency
election in the future. The benefit terminates: (i) upon your termination of
the benefit, (ii) upon your surrender of the contract, (iii) upon your election
to begin receiving annuity payments; (iv) upon the death of the designated
life, (v) if both the contract value and Highest Daily Annual Income Amount
equal zero, or (vi) if you fail to meet our requirements for issuing the
benefit.
11
Upon termination of Highest Daily Lifetime Five, we cease deducting the charge
for the benefit. With regard to your investment allocations, upon termination
we will: (i) leave intact amounts that are held in the variable investment
options, and (ii) transfer all amounts held in the Benefit Fixed Rate Account
(as described below) to your variable investment options, based on your
existing allocation instructions or (in the absence of such existing
instructions) pro rata (i.e. in the same proportion as the current balances in
your variable investment options).
ASSET TRANSFER COMPONENT OF HIGHEST DAILY LIFETIME FIVE
As indicated above, we limit the sub-accounts to which you may allocate
contract value if you elect Highest Daily Lifetime Five. For purposes of this
benefit, we refer to those permitted sub-accounts as the "Permitted
Sub-accounts". A list of the Permitted Sub-accounts appears in the application
form that you must submit to us in order to elect this benefit. As a
requirement of participating in Highest Daily Lifetime Five, we require that
you participate in our specialized asset transfer program, under which we may
transfer contract value between the Permitted Sub-accounts and a fixed interest
rate account that is part of our general account (the "Benefit Fixed Rate
Account"). The Benefit Fixed Rate Account is available only with this benefit,
and thus you may not allocate purchase payments to that Account.
Under the asset transfer component of Highest Daily Lifetime Five, we monitor
your contract value daily and, if necessary, systematically transfer amounts
between the Permitted Sub-accounts you have chosen and the Benefit Fixed Rate
Account. Any transfer would be made in accordance with a formula, which is set
forth in the schedule supplement to the endorsement for this benefit (and also
appears in the Appendices to this prospectus). Speaking generally, the formula,
which we apply each business day, operates as follows. The formula starts by
identifying your Protected Withdrawal Value for that day and then multiplies
that figure by 5%, to produce a projected (i.e., hypothetical) Highest Daily
Annual Income Amount. Then, using our actuarial tables, based on paying you the
projected Highest Daily Annual Income Amount each year for the rest of your
life, we produce an estimate of the total amount of our obligation. In the
formula, we refer to that value as the "Target Value" or "L". If you have
already made a withdrawal, your projected Highest Daily Annual Income Amount
(and thus your Target Value) would take into account any automatic step-up
implemented according to the step-up formula described above. Next, the formula
subtracts from the Target Value the amount held within the Benefit Fixed Rate
Account on that day, and divides that difference by the amount held within the
Permitted Sub-accounts. That ratio, which essentially isolates the amount of
your Target Value that is not offset by amounts held within the Benefit Fixed
Rate Account, is called the "Target Ratio" or "r". If the Target Ratio exceeds
a certain percentage (currently 83%), it means essentially that too much Target
Value is not offset by assets within the Benefit Fixed Rate Account, and
therefore we will transfer an amount from your Permitted Sub-accounts to the
Benefit Fixed Rate Account. Conversely, if the Target Ratio falls below a
certain percentage (currently 77%), then a transfer from the Benefit Fixed Rate
Account to the Permitted Sub-accounts would occur.
As you can glean from the formula, a downturn in the securities markets (i.e.,
a reduction in the amount held within the Permitted Sub-accounts) may cause us
to transfer some of your variable contract value to the Benefit Fixed Rate
Account, because such a reduction will tend to increase the Target Ratio.
Moreover, certain market return scenarios involving "flat" returns over a
period of time also could result in the transfer of money to the Benefit Fixed
Rate Account. In deciding how much to transfer, we use another formula, which
essentially seeks to re-balance amounts held in the Permitted Sub-accounts and
the Benefit Fixed Rate Account so that the
12
Target Ratio meets a target, which currently is equal to 80%. Once you elect
Highest Daily Lifetime Five, the ratios we use will be fixed. For newly issued
contracts that elect Highest Daily Lifetime Five and existing contracts that
elect Highest Daily Lifetime Five, we reserve the right to change the ratios.
While you are not notified when your contract reaches a reallocation trigger,
you will receive a confirmation statement indicating the transfer of a portion
of your contract value either to or from the Benefit Fixed Rate Account. The
formula by which the reallocation triggers operate is designed primarily to
mitigate the financial risks that we incur in providing the guarantee under
Highest Daily Lifetime Five.
Depending on the results of the calculation relative to the reallocation
triggers, we may:
. Not make any transfer; or
. If a portion of your contract value was previously allocated to the
Benefit Fixed Rate Account, transfer all or a portion of those amounts to
the Permitted Sub-accounts, based on your existing allocation
instructions (e.g., asset allocation) or (in the absence of such existing
instructions) pro rata. Amounts taken out of the Benefit Fixed Rate
Account will be withdrawn for this purpose on a last-in, first-out basis
(an amount renewed into a new guarantee period under the Benefit Fixed
Rate Account will be deemed a new investment for purposes of this
last-in, first-out rule); or
. Transfer all or a portion of your contract value in the Permitted
Sub-accounts pro-rata to the Benefit Fixed Rate Account. The interest
that you earn on such transferred amount will be equal to the annual rate
that we have set for that day, and we will credit the daily equivalent of
that annual interest until the earlier of one year from the date of the
transfer or the date that such amount in the Benefit Fixed Rate Account
is transferred back to the Permitted Sub-accounts.
If a significant amount of your contract value is systematically transferred to
the Benefit Fixed Rate Account during periods of market declines or low
interest rates, less of your contract value may be available to participate in
the investment experience of the Permitted Sub-accounts if there is a
subsequent market recovery. Under the reallocation formula that we employ, it
is possible that a significant portion of your contract value may be allocated
to the Benefit Fixed Rate Account.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS/ARRANGEMENTS
If you purchase a contract as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or
employer plan under Code Section 401(a), the minimum distribution rules under
the Code require that you begin receiving periodic amounts from your contract
beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for
which the participant is not a greater than 5 percent owner of the employer,
this required beginning date can generally be deferred to retirement, if later.
Roth IRAs are not subject to these rules during the owner's lifetime. The
amount required under the Code may exceed the Highest Daily Annual Income
Amount, which will cause us to increase the Highest Daily Annual Income Amount
in any contract year that required minimum distributions due from your contract
are greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
13
SECTION 8 (subsection entitled "Insurance and Administrative Charges")
We replace the first two sentences of the first paragraph concerning the
charges for Lifetime Five and Spousal Lifetime Five with the following: "We
impose an additional charge of 0.60% annually if you choose the Lifetime Five
Income Benefit or the Highest Daily Lifetime Five Benefit, and an additional
charge of 0.75% annually if you choose the Spousal Lifetime Five Income
Benefit."
APPENDIX B: Selecting The Variable Annuity That's Right For You
In the product comparison chart, we revise the line item (and accompanying
footnote) concerning Living Benefits to reflect that Highest Daily Lifetime
Five is available under Strategic Partners FlexElite 2, Strategic Partners
Annuity One 3 and Strategic Partners Plus 3.
We add the following as Appendix C:
Appendix C
Asset Transfer Formula Under Highest Daily Lifetime Five Benefit
We set out below the current formula under which we may transfer amounts
between the variable investment options and the Benefit Fixed Rate Account.
Upon your election of Highest Daily Lifetime Five, we will not alter the asset
transfer formula that applies to your contract. However, as discussed in
Section 5, we reserve the right to modify this formula with respect to those
who elect Highest Daily Lifetime Five in the future.
Terms and Definitions referenced in the calculation formula:
. C\\u\\ - the upper target is established on the effective date of the
Highest Daily Lifetime Five benefit (the "Effective Date") and is not
changed for the life of the guarantee. Currently, it is 83%.
. C\\t\\ - the target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 80%.
. C\\l\\ - the lower target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 77%.
. L - the target value as of the current business day.
. r - the target ratio.
. a - the factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of the
guarantee. The factors that we use currently are derived from the a2000
Individual Annuity Mortality Table with an assumed interest rate of 3%.
Each number in the table "a" factors (which appears below) represents a
factor, which when multiplied by the Highest Daily Annual Income Amount,
projects our total liability for the purpose of asset transfers under the
guarantee.
. Q - age based factors used in calculating the target value. These factors
are established on the Effective Date and are not changed for the life of
the guarantee. The factor is currently set equal to 1.
. V - the total value of all Permitted Sub-accounts in the annuity.
. F - the total value of all Benefit Fixed Rate Account allocations.
. I - the income value prior to the first withdrawal. The income value is
equal to what the Highest Daily Annual Income Amount would be if the
first withdrawal were taken on the date of calculation. After the first
withdrawal the income value equals the greater of the Highest Daily
Annual Income Amount, the
14
quarterly step-up amount times the annual income percentage, and the
contract value times the annual income percentage.
. T - the amount of a transfer into or out of the Benefit Fixed Rate
Account.
. I% - annual income amount percentage. This factor is established on the
Effective Date and is not changed for the life of the guarantee.
Currently, this percentage is equal to 5%.
Target Value Calculation:
On each business day, a target value (L) is calculated, according to the
following formula. If the variable contract value (V) is equal to zero, no
calculation is necessary.
L = I * Q * a
Transfer Calculation:
The following formula, which is set on the Effective Date and is not changed
for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - F) / V.
. If r (greater than) C\\u\\, assets in the Permitted Sub-accounts are
transferred to Benefit Fixed Rate Account.
. If r (less than) C\\l\\, and there are currently assets in the Benefit
Fixed Rate Account (F (greater than) 0), assets in the Benefit Fixed Rate
Account are transferred to the Permitted Sub-accounts.
The following formula, which is set on the Effective Date and is not changed
for the life of the guarantee, determines the transfer amount:
T ={Min(V, [L - F - V * Ct] / (1-Ct))} T(greater than)0, Money moving from
the Permitted Sub-accounts to the
Benefit Fixed Rate Account
T ={Min(F, [L - F - V * Ct] / (1-Ct))} T(less than)0, Money moving from the
Benefit Fixed Rate Account to the
Permitted Sub-accounts]
Example:
Male age 65 contributes $100,000 into the Permitted Sub accounts and the value
drops to $92,300 during year one, end of day one. A table of values for "a"
appears below.
Target Value Calculation:
L = I * Q * a
= 5000.67 * 1 * 15.34
= 76,710.28
Target Ratio:
r = (L - F) / V
= (76,710.28 - 0) / 92,300.00
= 83.11%
15
Since r (greater than) Cu (because 83.11% (greater than) 83%) a transfer into
the Benefit Fixed rate Account occurs.
T = { Min ( V, [ L - F - V * Ct] / ( 1 - Ct))}
= { Min ( 92,300.00, [ 76,710.28 - 0 - 92,300.00 * 0.80] / ( 1 - 0.80))}
= { Min ( 92,300.00, 14,351.40 )}
= 14,351.40
Age 65 "a" Factors for Liability Calculations
(in Years and Months since Benefit Effective Date)*
Months
------
Years 1 2 3 4 5 6 7 8 9 10 11 12
----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1 15.34 15.31 15.27 15.23 15.20 15.16 15.13 15.09 15.05 15.02 14.98 14.95
2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51
3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07
4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63
5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19
6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75
7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30
8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86
9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42
10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98
11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54
12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11
13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68
14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26
15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84
16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44
17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04
18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65
19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27
20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91
21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55
22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22
23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89
24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58
25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29
26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01
27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75
28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51
29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28
30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06
31 4.04 4.02 4.00 3.98 3.97 3.95 3.93 3.91 3.90 3.88 3.86 3.84
32 3.83 3.81 3.79 3.78 3.76 3.74 3.72 3.71 3.69 3.67 3.66 3.64
33 3.62 3.61 3.59 3.57 3.55 3.54 3.52 3.50 3.49 3.47 3.45 3.44
16
Months
------
Years 1 2 3 4 5 6 7 8 9 10 11 12
----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
34 3.42 3.40 3.39 3.37 3.35 3.34 3.32 3.30 3.29 3.27 3.25 3.24
35 3.22 3.20 3.18 3.17 3.15 3.13 3.12 3.10 3.08 3.07 3.05 3.03
36 3.02 3.00 2.98 2.96 2.95 2.93 2.91 2.90 2.88 2.86 2.85 2.83
37 2.81 2.79 2.78 2.76 2.74 2.73 2.71 2.69 2.68 2.66 2.64 2.62
38 2.61 2.59 2.57 2.56 2.54 2.52 2.51 2.49 2.47 2.45 2.44 2.42
39 2.40 2.39 2.37 2.35 2.34 2.32 2.30 2.29 2.27 2.25 2.24 2.22
40 2.20 2.19 2.17 2.15 2.14 2.12 2.11 2.09 2.07 2.06 2.04 2.02
41 2.01 1.84 1.67 1.51 1.34 1.17 1.00 0.84 0.67 0.50 0.33 0.17
- --------
* The values set forth in this table are applied to all ages.
This prospectus supplement is intended to amend the prospectus for the annuity
you own, and is not intended to be a prospectus or offer for any annuity listed
here that you do not own.
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees
Pruco Life registered $200 million of interests in the market value adjusted
annuity contracts described in this registration statement. Pruco Life has paid
$16,180 to the SEC for the registration fees required under the Securities Act
of 1933.
Federal Taxes
Pruco Life estimates the federal tax effect associated with the deferred
acquisition costs attributable to receipt of $30 million of purchase payments
over a two year period to be approximately $118,400.
State Taxes
Pruco Life estimates that approximately $6,400 in premium taxes will be owed
upon receipt of purchase payments under the contracts, and that additional
premium taxes in the approximate amount of $64,000 would be owed if $32 million
of purchase payments were applied to annuity options.
Printing Costs
Pruco Life estimates that the costs of printing prospectuses for the amount of
securities registered herein will be approximately $200,000.
Legal Costs
This registration statement was prepared by Prudential attorneys whose time is
allocated to Pruco Life.
Accounting Costs
PricewaterhouseCoopersLLP, the independent registered public accounting firm
that audits Pruco Life's financials, charges approximately $10,000 in
connection with each filing of this registration statement with the Commission.
Premium Paid to Indemnify Officers
Officers and Directors of Pruco Life are indemnified under a policy that also
covers officers and directors of other entities controlled by Prudential
Financial, Inc. A portion of the cost of that policy is attributed to Pruco
Life.
II-1
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant, in conjunction with certain of its affiliates, maintains
insurance on behalf of any person who is or was a trustee, director, officer,
employee, or agent of the Registrant, or who is or was serving at the request
of the Registrant as a trustee, director, officer, employee or agent of such
other affiliated trust or corporation, against any liability asserted against
and incurred by him or her arising out of his or her position with such trust
or corporation.
Arizona, the state of organization of Pruco Life Insurance Company ("Pruco"),
permits entities organized under its jurisdiction to indemnify directors and
officers with certain limitations. The relevant provisions of Arizona law
permitting indemnification can be found in Section 10-850 et. seq. of the
Arizona Statutes Annotated. The text of Pruco's By-law, Article VIII, which
relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
ITEM 16. EXHIBITS
(A) EXHIBITS
(1) Form of a Distribution Agreement between Prudential Investment
Management Services, Inc., "PIMS" (Principal Underwriter) and Pruco
Life Insurance Company (Depositor). (Note 2)
(3) (i) Articles of Incorporation of Pruco Life Insurance Company, as
amended through October 19, 1993 (Note 6)
(ii) By-Laws of Pruco Life Insurance Company, as amended through May
6, 1997 (Note 7)
(4) (a) Strategic Partners Variable Annuity Contract VBON-2000 (Note 3)
(b) Strategic Partners Variable Annuity Contract VDCA-2000 (Note 3)
(c) Strategic Partners MVA Endorsement ORD 112805 (Note 5)
(d) Strategic Partners Application ORD 99730 (Note 5)
II-2
(e) Strategic Partners FlexElite Variable Annuity Contract VFLX-2003
(Note 4)
(f) Strategic Partners FlexElite Application (Note 8)
(g) Strategic Partners SPAO and FlexElite GMIB Endorsement ORD
112963 (Note 9)
(h) Strategic Partners SPAO Application (Note 10)
(i) Strategic Partners FlexElite Application (Note 10)
(j) Strategic Partners SPAO and FlexElite GMIB Endorsement
Supplement ORD 112963 (Note 10)
(k) Periodic Value Death Benefit Endorsement (HDV) (Note 11)
(l) Schedule Supplement Periodic Value Death Benefit (HDV) (Note 11)
(m) Guaranteed Minimum Payments Benefit Endorsement (Lifetime 5)
(Note 11)
(n) Schedule Supplement Guaranteed Minimum Payments Benefit
(Lifetime 5) (Note 11)
(o) Strategic Partners SPAO and FlexElite Joint and Survivor Guaranteed
Minimum Payments Benefit Schedule (Spousal Lifetime Five) (Note
12)
(p) Highest Daily Lifetime Five Benefit Rider (Note 1)
(5) Opinion of Counsel as to the legality of the securities being registered.
(Note 14)
(23) Written Consent of PricewaterhouseCoopers LLP, Independent Registered
Public Accounting Firm (Note 1)
(24) Powers of Attorney:
(a) James J. Avery, Jr., Helen M. Galt, Bernard J. Jacob, Ronald P.
Joelson, and David R. Odenath, Jr. (Note 13)
(b) Scott D. Kaplan, Tucker I. Marr (Note 1)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post Effective Amendment No. 4 on Form
S-1, Registration No. 33-61143, filed April 15, 1999, on behalf the
Pruco Life Insurance Company.
(Note 3) Incorporated by reference to the initial registration on Form N-4,
Registration No. 333-37728, filed May 24, 2000 on behalf of the Pruco
Life Flexible Premium Variable Annuity Account.
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(Note 4) Incorporated by reference to Post-Effective Amendment No. 1 to
Form N-4, Registration No. 333-75702, filed February 14, 2003 on
behalf of Pruco Life Flexible Premium Variable Annuity Account.
(Note 5) Incorporated by reference to initial Form S-3 Registration
Statement No. 333-103474 filed February 27, 2003 on behalf of
Pruco Life Insurance Company.
(Note 6) Incorporated by reference to the initial registration on Form S-6,
Registration No. 333-07451, filed July 2, 1999 on behalf of the
Pruco Life Variable Appreciable Account.
(Note 7) Incorporated by reference to Form 10-Q as filed August 15, 1997
on behalf of Pruco Life Insurance Company.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 2 to
Form N-4, Registration No. 333-75702, filed April 23, 2003 on
behalf of Pruco Life Flexible Premium Variable Annuity Account.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 11 to
Form N-4, Registration No. 333-37728, filed November 14, 2003
on behalf of Pruco Life Flexible Premium Variable Annuity
Account.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 3 to
Form S-3, Registration No. 333-103474, filed April 12, 2004 on
behalf of Pruco Life Insurance Company.
(Note 11) Incorporated by reference to Post-Effective Amendment No. 5 to
Form N-4, Registration No. 333-75702, filed January 20, 2005 on
behalf of Pruco Life Flexible Premium Variable Annuity Account.
(Note 12) Incorporated by reference to Post-Effective Amendment No. 6 to
Form S-3, Registration No. 333-103474, filed February 7, 2006 on
behalf of Pruco Life Insurance Company.
(Note 13) Incorporated by reference to Post-Effective Amendment No. 13 to
Form S-3, Registration No. 33-61143, filed April 19, 2006 on
behalf of Pruco Life Insurance Company.
(Note 14) Incorporated by reference to Post-Effective Amendment No. 6 to
Form S-3, Registration No. 333-103474, filed April 21, 2006 on
behalf of Pruco Life Insurance Company.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a)(3) of the
Securities Act of 1933;
(ii)To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
registration statement.
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
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(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this post-effective
amendment to be signed on its behalf on this 6th day of October, 2006.
PRUCO LIFE INSURANCE COMPANY
(Registrant)
Attest: /s/ THOMAS C. CASTANO By: /s/ SCOTT D. KAPLAN
--------------------- --------------------------------
THOMAS C. CASTANO SCOTT D. KAPLAN
SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE AND TITLE
/s/* October 6, 2006
- -----------------------------------
JAMES J. AVERY JR
VICE CHAIRMAN AND DIRECTOR
/s/* *By: /s/ THOMAS C. CASTANO
- ----------------------------------- ---------------------
SCOTT D. KAPLAN THOMAS C. CASTANO
PRESIDENT AND DIRECTOR (ATTORNEY-IN-FACT)
/s/*
- -----------------------------------
TUCKER I. MARR
VICE PRESIDENT, PRINCIPAL FINANCIAL
OFFICER
/s/*
- -----------------------------------
BERNARD J. JACOB
DIRECTOR
/s/*
- -----------------------------------
HELEN M. GALT
DIRECTOR
/s/*
- -----------------------------------
RONALD P. JOELSON.
DIRECTOR
/s/*
- -----------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
EXHIBIT INDEX
(4)(p) Highest Daily Lifetime Five Rider
(23) Written Consent of PricewaterhouseCoopers LLP, Independent
Registered Public Accounting Firm
(24)(p) Powers of Attorney: Scott D. Kaplan, Tucker I. Marr