Form: 10-Q

Quarterly report [Sections 13 or 15(d)]

Documents

10-Q: Quarterly report [Sections 13 or 15(d)]

Published on




===============================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------

FORM 10-Q

--------------------


(Mark One)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the period ended June 30, 1997

OR

_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934


Commission file number 333-18117-01
------------


PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
------------------------------------------------------
(Exact name of Registrant as specified in its charter)


NEW JERSEY 22-2426091
- - --------------------------------------------- ------------------------
(State or other jurisdiction, (IRS Employer
incorporation or organization) Identification No.)


213 WASHINGTON STREET, NEWARK, NEW JERSEY 07102
---------------------------------------------------
(Address of principal executive offices) (Zip Code)


(201) 802-3780
----------------------------------------------------
(Registrant's Telephone Number, including area code)


Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE

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
--- ---

State the aggregate market value of the voting stock held by non-affiliates
of the registrant: NONE

Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of June 30, 1997. Common stock, par value of $5 per
share: 400,000 shares outstanding


================================================================================



PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

INDEX TO FINANCIAL STATEMENTS

INDEX

PAGE NO.
--------
COVER PAGE 1

INDEX 2

PART I - FINANCIAL STATEMENTS

ITEM 1. PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

FINANCIAL STATEMENTS:

STATEMENTS OF FINANCIAL POSITION - JUNE 30, 1997 (UNAUDITED)
AND DECEMBER 31, 1996 3

STATEMENTS OF OPERATIONS (UNAUDITED) - THREE AND SIX MONTHS ENDED
JUNE 30, 1997 AND 1996 4

STATEMENTS OF CHANGES IN EQUITY - SIX MONTHS ENDED
JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996 5

STATEMENTS OF CASH FLOWS (UNAUDITED) - SIX MONTHS ENDED
JUNE 30, 1997 AND 1996 6

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) 7


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 8


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS 9

ITEM 2. CHANGES IN SECURITIES 9

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 9

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9

ITEM 5. OTHER INFORMATION 9

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9

SIGNATURE PAGE 11


2





PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF FINANCIAL POSITION
JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996



JUNE 30, DECEMBER 31,
1997 1996
---------- ------------
(000'S)

ASSETS
Fixed maturities
Available for sale $ 543,458 $ 555,898
Policy loans 120,238 113,918
Short term investments 5,000 17,002
---------- ----------
Total invested assets 668,696 686,818
---------- ----------
Cash 4,902 3,928
Deferred policy acquisition costs 105,284 106,965
Premiums due 360 401
Accrued investment income 13,663 12,908
Receivable from affiliates 175 --
Other assets 33,947 1,335
Separate Account assets 986,828 883,261
---------- ----------
TOTAL ASSETS $1,813,855 $1,695,616
========== ==========

LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Future policy benefits and other policyholders' liabilities $ 104,211 $ 100,663
Policyholders' account balances 373,223 375,448
Federal income tax payable 6,899 1,970
Deferred federal income tax payable 24,527 24,175
Payable to affiliate 6,778 6,059
Other liabilities 12,493 11,990
Separate Account liabilities 983,964 880,065
---------- ----------
TOTAL LIABILITIES 1,512,095 1,400,370
---------- ----------
CONTINGENCIES

STOCKHOLDER'S EQUITY
Common Stock, $5 par value;
400,000 shares,
authorized; issued and outstanding
at June 30, 1997 and December 31, 1996 2,000 2,000
Paid-in-capital 125,000 125,000
Net unrealized investment (losses) gains (570) 2,032
Retained earnings 175,330 166,214
---------- ----------
TOTAL STOCKHOLDER'S EQUITY 301,760 295,246
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,813,855 $1,695,616
========== ==========





SEE NOTES TO THE FINANCIAL STATEMENTS


3




PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)


SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -------------------------
1997 1996 1997 1996
------------ --------- ---------- ----------
(000'S)

REVENUES

Premiums $ 390 $ 852 $ 130 $ 496
Policy charges and fee income 26,791 27,270 12,641 12,543
Net investment income 21,476 21,463 10,303 10,876
Realized investment gains (losses) 446 106 117 (841)
Other income 1,928 2,007 1,512 1,113
------- ------- ------- -------
TOTAL REVENUES 51,031 51,698 24,703 24,187
------- ------- ------- -------
BENEFITS AND EXPENSES

Policyholders' benefits 15,334 13,417 (2,898) 5,586
Interest credited to policyholders' account balances 9,485 9,893 4,705 5,338
Other operating costs and expenses 12,083 10,552 4,359 6,783
------- ------- ------- -------

TOTAL BENEFITS AND EXPENSES 36,902 33,862 6,166 17,707
------- ------- ------- -------
INCOME BEFORE INCOME TAX PROVISION 14,129 17,836 18,537 6,480

Income tax provision 5,013 6,242 6,427 2,268
------- ------- ------- -------
NET INCOME $ 9,116 $11,594 $12,110 $ 4,212
======= ======= ======= =======








SEE NOTES TO THE FINANCIAL STATEMENTS


4





PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CHANGES IN EQUITY
JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996


NET
UNREALIZED TOTAL
PAID-IN- INVESTMENT RETAINED STOCKHOLDER'S
COMMON STOCK CAPITAL (LOSSES)GAINS EARNINGS EQUITY
------------ -------- ------------ --------- -------------

BALANCE, JANUARY 1, 1996 $2,000 $125,000 $6,588 $134,427 $268,015

Net income -- -- -- 31,787 31,787

Change in net unrealized investment
(losses) gains during year -- -- (4,556) -- (4,556)
------ -------- ------ -------- --------
BALANCE, DECEMBER 31, 1996 2,000 125,000 2,032 166,214 295,246

Net income -- -- -- 9,116 9,116

Change in net unrealized investment
(losses) gains during period -- -- (2,602) -- (2,602)
------ -------- ------ -------- ---------
BALANCE, JUNE 30, 1997 $2,000 $125,000 $ (570) $175,330 $301,760
====== ======== ====== ======== ========









SEE NOTES TO THE FINANCIAL STATEMENTS


5




PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)


SIX MONTHS ENDED
JUNE 30,
----------------------------------
1997 1996
----------- ----------
(000'S)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,116 $ 11,594
Adjustments to reconcile net income to net cash from
operating activities:
Increase in future policy benefits and other policyholders'
liabilities 3,548 4,855
General account policy fee income (2,912) (2,902)
Interest credited to policyholders' account balances 9,485 9,893
Net decrease (increase) in Separate Accounts 332 (1,035)
Net realized investment gains (446) (106)
Policy loans (6,320) (7,287)
Amortization and other non-cash items (45) 5,002
Change in:
Accrued investment income (755) (261)
Premiums due 41 (39)
Receivable from affiliates (175) 2,460
Deferred policy acquisition costs 1,681 (4,469)
Other assets (32,612) 178
Payable to affiliate 719 (3,023)
Federal income tax payable 4,929 6,021
Deferred federal income tax payable 352 2,184
Other liabilities 503 46,963
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES (12,559) 70,028
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 392,572 584,415
Payments for the purchase of:
Fixed maturities:
Available for sale (382,243) (619,171)
Net payments of short term investments 12,002 (26,112)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES 22,331 (60,868)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 43,261 8,940
Withdrawals (net of transfers to/from separate accounts) (52,059) (18,085)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES (8,798) (9,145)
--------- ---------
Net increase in Cash 974 15
Cash, beginning of year 3,928 --
--------- ---------
CASH, END OF PERIOD $ 4,902 $ 15
========= =========












SEE NOTES TO THE FINANCIAL STATEMENTS


6





NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
JUNE 30, 1997
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES

A. GENERAL

Pruco Life Insurance Company of New Jersey (the Company), a stock life insurance
company domiciled in the state of New Jersey, is an indirect subsidiary of The
Prudential Insurance Company of America (Prudential), a mutual life insurance
company, and a direct subsidiary of Pruco Life Insurance Company (Pruco Life), a
stock life insurance company domiciled in the state of Arizona. The Company
markets individual life insurance and deferred annuities through Prudential's
sales force.

B. BASIS OF PRESENTATION

The accompanying unaudited financial statements of the Company have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the other information and disclosures required by generally accepted
accounting principles. These statements should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 1996
included in the Company's Annual Report on Form 10K for that year.

The accompanying financial statements have not been audited by independent
accountants in accordance with generally accepted auditing standards, but in the
opinion of management such financial statements include all adjustments,
consisting only of normal recurring accruals, necessary to summarize fairly the
Company's financial position and results of operations. The results of
operations for the six months ended June 30, 1997 may not be indicative of the
results that may be expected for the year ending December 31, 1997.

2. CONTINGENCIES

Several actions have been brought against the Company on behalf of those persons
who purchased life insurance policies based on complaints about sales practices
engaged in by Prudential, the Company and agents appointed by Prudential and the
Company. Prudential has agreed to indemnify the Company for any and all losses
resulting from such litigation.


7




ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Pruco Life Insurance Company of New Jersey (the Company) is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
The Company is an indirect subsidiary of The Prudential Insurance Company of
America (Prudential), and a direct subsidiary of Pruco Life Insurance Company
(Pruco Life). Pruco Life is a stock life insurance company domiciled in the
state of Arizona. The Company markets individual insurance and annuities through
Prudential's sales force.

The Company's assets were $1.8 billion at June 30, 1997 compared to $1.7 billion
at December 31, 1996. The Company recorded net income of $9.1 million for the
period ended June 30, 1997, a decrease of $2.5 million in comparison to the
$11.6 million earned in the same period in 1996.

1. RESULTS OF OPERATIONS

1997 versus 1996

Premiums decreased by $.5 million to $.4 million for the six months ended June
30, 1997 from $.9 for the same period in 1996. This decrease is primarily
attributable to the loss of annuity premiums. As annuity products mature, the
policy becomes non-premium paying and converts to a pay out status.

Realized investment gains increased by $.3 million from $.1 million for the
period ended June 30,1996 to $.4 million for the same period in 1997. This
increase is a result of current market conditions.

Policyholders' benefits for the period ended June 30, 1997 were $15.3 million
compared to $13.4 million for the same period in 1996. This increase of $1.9
million is attributable to increased mortality costs associated with the aging
book of business.

Other operating costs and expenses increased $1.5 million from $10.6 million for
the six months ended June 30, 1996 to $12.1 million for the same period in 1997.
This is primarily due to an increase in costs associated with increased sales
activity of Discovery Preferred and Discovery Select products, along with
technological advancements made in annuity processing, customer service, and
product development areas.

2. LIQUIDITY

For an insurance company, cash needs, for the purpose of paying current
benefits, making policy loans, and paying expenses, are met primarily from
premiums and investment income. Benefits and expenses incurred for the six
months ended June 30, 1997, and 1996, were $36.9 million, and $33.9 million,
respectively. Cash flows are anticipated to be sufficient to meet the Company's
liquidity needs for the foreseeable future.

3. CAPITAL RESOURCES

The primary components of the Company's total assets of $1.8 billion at June 30,
1997 are as follows (as a percentage of total assets): fixed income securities
30.0%, separate account assets (fixed income and equity securities) 54.4%,
policy loans 6.6%, and other assets 9.0%.


8






PART II

ITEM 1 LEGAL PROCEEDING

Pruco Life Insurance Company of New Jersey is not involved in any litigation
that is expected to have a material effect.

ITEM 2 CHANGES IN SECURITIES

Not Applicable

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

ITEM 5 OTHER INFORMATION

Not Applicable

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a) (1) and (2) financial Statements of registrant are listed on pages 3-6
hereof and are filed as part of this Report.

(a) (3) Exhibits

Regulation S-K

2. Not Applicable

3. Documents Incorporated by Reference

(i) The Articles of Incorporation of Pruco Life Insurance Company of New
Jersey, as amended March 11, 1983 are incorporated herein by reference to
Post-Effective Amendment No. 26 to Form S-6, Registration No. 2-89780,
filed April 28, 1997 on behalf of the Pruco Life Insurance Company of New
Jersey; (ii) Bylaws of Pruco Life Insurance Company of New Jersey, as
amended May 5, 1997 are appended to this form in accordance with EDGAR
instructions.

4. Exhibits

Market-Value Adjustment Annuity Contract, incorporated by reference to
Registrant's Form S-1 Registration Statement, Registration No. 33-18053,
filed December 17, 1996.

10. None.

11. Not Applicable.

15. Not Applicable.

18. None.

19. Not Applicable.

20. Not Applicable.


9




22. None.

23. None.

24. Not Applicable.

25. Not Applicable.

27. Exhibit 27, Financial Data Schedule appended to this form in accordance
with EDGAR instructions.

99. None


10



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 of the
undersigned, thereunto duly authorized.

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Registrant)

SIGNATURE TITLE DATE
- - --------- ----- -----
/s/ ESTHER H. MILNES
- - ------------------------ President and Director August 14, 1997
Esther H. Milnes

/s/ LINDA S. DOUGHERTY
- - ------------------------ Vice President and Comptroller August 14, 1997
Linda S. Dougherty and Chief Accounting Officer


11







EXHIBIT INDEX



Exhibit No.
- - -----------

3(ii) By-Laws of Pruco Life Insurance Company of New Jersey, May 5, 1997

27 Financial Data Schedule