POS AM: Post-effective amendment to a registration statement that is not immediately effective upon filing
Published on
AS FILED WITH THE SEC ON APRIL 19, 2006
REGISTRATION NO. 33-61143
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 12 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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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)
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THOMAS C. CASTANO
ASSISTANT 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
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973)802569976
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Approximate date of commencement of proposed sale to the public--Immediately
upon effectiveness
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
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* Securities are not issued in predetermined units
** Registration fee for these securities in the amount of $172,413.79 was paid
at the time the securities were originally registered on Form S-1 as filed
by Pruco Life Insurance Company on July 19, 1995.
Prudential Investment Management Services LLC, the principal underwriter of
these contracts under a "best efforts" arrangement, will be reimbursed by
Pruco Life Insurance Company for its costs and expenses incurred in
connection with the sale of these contracts.
STRATEGIC PARTNERS(SM)
SELECT
VARIABLE ANNUITY
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PROSPECTUS: MAY 1, 2006
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE) AND THE PRUCO LIFE FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT. PRUCO LIFE OFFERS SEVERAL DIFFERENT ANNUITIES WHICH
YOUR REPRESENTATIVE MAY BE AUTHORIZED TO OFFER TO YOU. EACH ANNUITY HAS
DIFFERENT FEATURES AND BENEFITS THAT MAY BE APPROPRIATE FOR YOU BASED ON YOUR
FINANCIAL SITUATION, YOUR AGE AND HOW YOU INTEND TO USE THE ANNUITY. THE
DIFFERENT FEATURES AND BENEFITS INCLUDE VARIATIONS IN DEATH BENEFIT PROTECTION
AND THE ABILITY TO ACCESS YOUR ANNUITY'S CONTRACT VALUE. THE FEES AND CHARGES
UNDER THE ANNUITY CONTRACT AND THE COMPENSATION PAID TO YOUR REPRESENTATIVE MAY
ALSO BE DIFFERENT AMONG EACH ANNUITY. IF YOU ARE PURCHASING THE CONTRACT AS A
REPLACEMENT FOR EXISTING VARIABLE ANNUITY OR VARIABLE LIFE COVERAGE, YOU SHOULD
CONSIDER, AMONG OTHER THINGS, ANY SURRENDER OR PENALTY CHARGES YOU MAY INCUR
WHEN REPLACING YOUR EXISTING COVERAGE. PRUCO LIFE IS A WHOLLY-OWNED SUBSIDIARY
OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA.
THE FUNDS
Strategic Partners Select offers a wide variety of investment choices, including
variable investment options that invest in underlying mutual funds. Currently,
portfolios within the following underlying mutual funds are being offered: The
Prudential Series Fund, American Skandia Trust, Gartmore Variable Insurance
Trust, and Janus Aspen Series (see next page for list of each portfolio
currently offered).
PLEASE READ THIS PROSPECTUS
Please read this prospectus before purchasing a Strategic Partners Select
variable annuity contract and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information about
the mutual funds. When you invest in a variable investment option that is funded
by a mutual fund, you should read the mutual fund prospectus and keep it for
future reference. The Risk Factors section relating to the market value
adjustment option appears in the Summary.
TO LEARN MORE ABOUT STRATEGIC PARTNERS SELECT
To learn more about the Strategic Partners Select variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2006. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life also files other reports
with the SEC. All of these filings can be reviewed and copied at the SEC's
offices, and can also be obtained from the SEC's Public Reference Section, 100 F
Street, N.E., Washington, D.C. 20549. (See SEC file numbers 333-52754 and
33-61143.) You may obtain information on the operation of the Public Reference
Room by calling the SEC at (202) 551-8090. The SEC also maintains a Web site
(http://www.sec.gov) that contains the Strategic Partners Select SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. The Table of Contents of the SAI is set forth in
Section 9 of this prospectus.
For a free copy of the SAI, call us at (888) PRU-2888, or write to us at
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS SELECT IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ORD01009
THE PRUDENTIAL SERIES FUND
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP AIM Core Equity Portfolio
SP Davis Value Portfolio
SP LSV International Value Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small Cap Growth Portfolio
SP Small-Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
SP T. Rowe Price Large-Cap Growth Portfolio
SP William Blair International Growth Portfolio
AMERICAN SKANDIA TRUST
AST Advanced Strategies Portfolio
AST Aggressive Asset Allocation Portfolio
AST AllianceBernstein Core Value Portfolio
AST AllianceBernstein Growth & Income Portfolio
AST AllianceBernstein Managed Index 500 Portfolio
AST American Century Income & Growth Portfolio
AST American Century Strategic Balanced Portfolio
AST Balanced Asset Allocation Portfolio
AST Capital Growth Asset Allocation Portfolio
AST Cohen & Steers Realty Portfolio
AST Conservative Asset Allocation Portfolio
AST DeAM Large-Cap Value Portfolio
AST DeAM Small-Cap Growth Portfolio
AST DeAM Small-Cap Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target Portfolio
AST Global Allocation Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST Goldman Sachs Mid-Cap Growth Portfolio
AST High Yield Portfolio
AST JPMorgan International Equity Portfolio
AST Large-Cap Value Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST Marsico Capital Growth Portfolio
AST MFS Global Equity Portfolio
AST MFS Growth Portfolio
AST Mid Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Preservation Asset Allocation Portfolio
AST Small-Cap Value Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST T. Rowe Price Natural Resources Portfolio
GARTMORE VARIABLE INSURANCE TRUST
GVIT Developing Markets Fund
JANUS ASPEN SERIES
Large Cap Growth Portfolio -- Service Shares
2
CONTENTS
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3
CONTENTS CONTINUED
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4
PART I SUMMARY
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STRATEGIC PARTNERS SELECT PROSPECTUS
5
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
GLOSSARY
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WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract adjusted by
any market value adjustment and minus any charge we impose for premium taxes and
withdrawal charge.
ANNUITANT
The person whose life determines how long the contract lasts and the amount of
income payments that will be paid.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit when the sole
or last surviving annuitant dies.
BUSINESS DAY
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
CASH VALUE
This is the total value of your contract adjusted by any market value
adjustment, minus any withdrawal charge(s) or administrative charge.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirement for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACT OWNER, OWNER OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the current contract value as of the date that proof of death is
received, or a potentially greater amount related to market appreciation. See
Section 4, "What Is The Death Benefit?"
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
A feature available for an additional charge, which guarantees that the death
benefit that the beneficiary receives will be no less than a certain GMDB
protected value.
6
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
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INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INTEREST CELL
The segment of the interest-rate option that is established whenever you
allocate or transfer money into an interest-rate option.
INTEREST-RATE OPTION
An investment option that offers a fixed-rate of interest for a one-year period
(fixed-rate option) or a seven-year period (market value adjustment option).
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. A joint owner must be a natural person.
MARKET VALUE ADJUSTMENT
An adjustment to your contract value or withdrawal proceeds that is based on the
relationship between interest you are currently earning within the market value
adjustment option and prevailing interest rates. This adjustment may be positive
or negative.
MARKET VALUE ADJUSTMENT OPTION
This investment option offers a specified guarantee period and pays a fixed rate
of interest. We impose a market value adjustment on withdrawals that you make
from this option prior to the end of a guarantee period.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The phone number is (888)
PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The Separate Account is set apart from all of the general assets of
Pruco Life.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Select variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
Section 8, "What Are The Tax Considerations Associated With The Strategic
Partners Select Contract?"
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life that invests in a particular mutual fund is referred to in your
contract as a subaccount.
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PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
SUMMARY OF SECTIONS 1-9
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FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS SELECT VARIABLE ANNUITY?
This variable annuity contract, offered by Pruco Life, is a contract between
you, as the owner, and us, the insurance company, Pruco Life Insurance Company
(Pruco Life,we or us). The contract allows you to invest on a tax-deferred basis
in one or more variable investment options. There are also two interest-rate
options which are available in most states, the fixed-rate option and the market
value adjustment option. The contract is intended for retirement savings or
other long-term investment purposes and provides for a death benefit and
guaranteed income options.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including the Prudential Money Market Portfolio variable investment option.
The interest-rate options offer an interest rate that is guaranteed. While
your money is in the fixed-rate option or if your money remains in the market
value adjustment option for a full seven-year period, your principal amount is
guaranteed and the minimum interest amount that your money will earn is dictated
by applicable state law. Payments allocated to the fixed-rate option become part
of Pruco Life's general assets. Payments allocated to the market value
adjustment option are held as a separate pool of assets, but the income, gains
or losses resulting from these assets are not credited or charged against the
contracts. As a result, the strength of our guarantees under these interest-rate
options are based on the overall financial strength of Pruco Life.
You can invest your money in any or all of the variable investment options
and the interest-rate options. You are allowed 12 transfers each contract year
among the investment options, without a charge. There are certain restrictions
on transfers involving the interest-rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, any
earnings grow on a tax-deferred basis and are generally only taxed as income
when you make a withdrawal. The income phase starts when you begin receiving
regular payments from your contract. The amount of money you are able to
accumulate in your contract during the accumulation phase will help determine
the amount you will receive during the income phase. Other factors will affect
the amount of your payments such as age, gender and the payout option you
select.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners Select, you may
cancel your contract within 10 days after receiving it (or whatever time period
is required by applicable law). This time period is referred to as the "Free
Look" period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in several variable investment options. The variable
investment options are classified according to their investment style, and a
brief description of each portfolio's investment objective and key policies is
set forth in Section 2, to assist you in determining which portfolios may be of
interest to you.
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the investment
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also allocate your money to fixed interest rate options or a market
value adjustment option.
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PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
SECTION 4
WHAT IS THE DEATH BENEFIT?
If the sole or last surviving annuitant dies during the accumulation phase, the
designated person(s) or the beneficiary will receive, at a minimum, the current
value of the contract.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS SELECT ANNUITY CONTRACT?
You can purchase this contract, unless we agree otherwise and subject to our
rules, with a minimum initial purchase payment of $10,000. You must get our
prior approval for any initial and additional purchase payment of $1,000,000 or
more, unless we are prohibited under applicable state law from insisting on such
prior approval. Generally, you can make additional purchase payments of $500 or
more at any time during the accumulation phase of the contract. Your
representative can help you fill out the proper forms.
You may purchase this contract only if the annuitant and co-annuitant are age
85 or younger (69 for qualified contracts unless a minimum distribution option
is elected, in which case the annuitant and co-annuitant may be age 80 or
younger) on the contract date. Certain age limits apply to certain features and
benefits described herein.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT CONTRACT?
The contract has insurance features and investment features, and there are costs
related to each.
Each year we deduct a $30 contract maintenance charge if your contract value
is less than $50,000. For insurance and administrative costs, we also deduct an
annual charge of 1.52% of the average daily value of all assets allocated to the
variable investment options. This charge is not assessed against amounts
allocated to the interest-rate investment options.
There are a few states/jurisdictions that assess a premium tax on us when you
begin receiving regular income payments from your annuity. In those states, we
deduct a charge designed to approximate this tax, which can range from 0-3.5% of
your contract value.
There are also expenses associated with the mutual funds. For 2006, the fees
of these funds ranged from 0.38% to 1.67% annually. For certain funds, expenses
are reduced pursuant to expense waivers and comparable arrangements. In general,
these expense waivers and comparable arrangements are not guaranteed, and may be
terminated at any time.
During the accumulation phase, if you withdraw money less than seven years
after the contract date, you may have to pay a withdrawal charge on all or part
of the withdrawal. This charge ranges from 1-7%.
For more information, including details about other possible charges under
the contract, see "Summary Of Contract Expenses" and Section 6, "What Are The
Expenses Associated With The Strategic Partners Select Contract?"
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. Each year, you may withdraw up to 10%
of your total purchase payments without charge. Withdrawals greater than 10% of
your purchase payments will be subject to a withdrawal charge. We may impose a
withdrawal charge ranging from 1-7%, which decreases 1% each year. Thereafter,
there is no charge for a withdrawal. A market value adjustment may also apply.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase,
9
SUMMARY OF SECTIONS 1-9 CONTINUED
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PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
earnings are withdrawn first and are taxed as ordinary income. If you are
younger than age 59 1/2 when you take money out, you may be charged a 10%
federal tax penalty on the earnings in addition to ordinary taxation. A portion
of the payments you receive during the income phase is considered a partial
return of your original investment and therefore will not be taxable as income.
Generally, all amounts withdrawn from an Individual Retirement Annuity (IRA)
contract (excluding Roth IRAs) are taxable and subject to the 10% penalty if
withdrawn prior to age 59 1/2.
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company (Pruco Life), a
subsidiary of The Prudential Insurance Company of America, and sold by
registered representatives of affiliated and unaffiliated broker/dealers.
RISK FACTORS
There are various risks associated with an investment in the market value
adjustment option that we summarize below.
ISSUER RISK. The market value adjustment option, fixed interest rate option,
and the contract's other insurance features are available under a contract
issued by Pruco Life, and thus are backed by the financial strength of that
company. If Pruco Life were to experience significant financial adversity, it is
possible that Pruco Life's ability to pay interest and principal under the
market value adjustment option and fixed interest rate option and to fulfill its
insurance guarantees could be impaired.
RISKS RELATED TO CHANGING INTEREST RATES. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life
holds to support the market value adjustment option. Nonetheless, the market
value adjustment formula reflects the effect that prevailing interest rates have
on those bonds and other instruments. If you need to withdraw your money prior
to the end of a guarantee period and during a period in which prevailing
interest rates have risen above their level when you made your purchase, you
will experience a "negative" market value adjustment. When we impose this market
value adjustment, it could result in the loss of both the interest you have
earned and a portion of your purchase payments. Thus, before you commit to a
particular guarantee period, you should consider carefully whether you have the
ability to remain invested throughout the guarantee period. In addition, we
cannot, of course, assure you that the market value adjustment option will
perform better than another investment that you might have made.
RISKS RELATED TO THE WITHDRAWAL CHARGE. We may impose withdrawal charges on
amounts withdrawn from the market value adjustment option. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
10
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
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THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS SELECT. THE FOLLOWING TABLES DESCRIBE THE FEES AND
EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT.
THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME
THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE
BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see Section 6, "What Are The Expenses Associated With The
Strategic Partners Select Contract?" The individual fund prospectuses contain
detailed expense information about the underlying mutual funds.
CONTRACTOWNER TRANSACTION EXPENSES
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WITHDRAWAL CHARGE(1)
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1: AS OF THE BEGINNING OF THE CONTRACT YEAR, YOU MAY WITHDRAW UP TO 10% OF THE
TOTAL PURCHASE PAYMENTS PLUS ANY CHARGE-FREE AMOUNT CARRIED OVER FROM THE
PREVIOUS CONTRACT YEAR WITHOUT CHARGE. THERE IS NO WITHDRAWAL CHARGE ON ANY
WITHDRAWALS MADE UNDER THE CRITICAL CARE OPTION (SEE SECTION 6) OR ON ANY AMOUNT
USED TO PROVIDE INCOME UNDER THE LIFE ANNUITY WITH 120 PAYMENTS (10 YEARS)
CERTAIN OPTION. (SEE SECTION 3). WITHDRAWAL CHARGES ARE WAIVED WHEN A DEATH
BENEFIT IS PAID DUE TO THE DEATH OF AN ANNUITANT.
2: YOU WILL NOT BE CHARGED FOR TRANSFERS MADE IN CONNECTION WITH DOLLAR COST
AVERAGING AND AUTO-REBALANCING.
3: THIS FEE IS NOT CHARGED IF THE VALUE OF YOUR CONTRACT IS $50,000 OR MORE, OR
IF THE WITHDRAWALS ARE MADE UNDER THE CRITICAL CARE ACCESS OPTION. THIS IS A
SINGLE FEE THAT WE ASSESS (A) ANNUALLY OR (B) UPON A FULL WITHDRAWAL MADE ON A
DATE OTHER THAN A CONTRACT ANNIVERSARY.
11
SUMMARY OF CONTRACT EXPENSES CONTINUED
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PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2005. Fund expenses
are not fixed or guaranteed by the Strategic Partners Select contract, and may
vary from year to year.
* See, "Underlying Mutual Fund Portfolio Annual Expenses" for more detail on the
expenses of the underlying mutual funds.
12
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PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
13
SUMMARY OF CONTRACT EXPENSES CONTINUED
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PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
1. As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Some of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the contract under which they compensate us for providing ongoing
services in lieu of the Series Fund and/or Trust providing such services.
Amounts paid by a Portfolio under those arrangements are included under "Other
Expenses."
2. The total actual operating expenses for certain of the Portfolios listed
above for the year ended December 31, 2005 were less than the amounts shown in
the table above, due to fee waivers, reimbursement of expenses, and expense
offset arrangements ("Arrangements"). These Arrangements are voluntary and may
be terminated at any time. In addition, the Arrangements may be modified
periodically. For more information regarding the Arrangements, please see the
prospectus and statement of additional information for the Portfolios.
3. Effective December 5, 2005, GE Asset Management was removed as sub-adviser to
a portion of the Portfolio. Salomon Brothers Asset Management, Inc. (an existing
co-sub-adviser to the Portfolio) assumed responsibility for the assets
previously managed by GE Asset Management.
4. Effective December 5, 2005, LSV Asset Management, Marsico Capital Management,
LLC, T. Rowe Price Associates, Inc., and William Blair & Company, LLC became the
sub-advisers of the Portfolio. Prior to December 5, 2005, Jennison Associates
LLC served as sub-adviser to the Portfolio.
5. Effective December 5, 2005, the Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in the Portfolio.
6. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund. The total expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC. The 0.05% advisory fee is included in the amount of
each investment advisory fee set forth in the table above.
7. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets, then named "SP Goldman Sachs Small
Cap Value Portfolio."
8. Effective December 5, 2005, T. Rowe Price Associates replaced Alliance
Capital Management, L.P. as sub-adviser of the Portfolio, then named "SP
AllianceBernstein Large-Cap Growth Portfolio."
9. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
10. Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's investment managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004.
11. Effective December 5, 2005, this Portfolio was added as a new asset
allocation portfolio.
12. Effective March 20, 2006, Pacific Investment Management Company LLC began
managing a portion of the Portfolio's assets, then named "AST Goldman Sachs High
Yield Portfolio."
13. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets.
14. Effective December 5, 2005, J.P. Morgan Investment Management, Inc. began
managing a portion of the Portfolio's assets, then named "AST Hotchkis and Wiley
Large-Cap Value Portfolio."
15. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
16. Effective December 5, 2005, EARNEST Partners, LLC and Wedge Capital
Management, LLP replaced GAMCO Investors, Inc. as sub-advisers to the Portfolio,
then named "AST Gabelli All-Cap Value Portfolio."
17. Effective March 20, 2006, Integrity Asset Management was removed as a
sub-adviser to a portion of the Portfolio's assets. Dreman Value Management LLC
was added as a sub-adviser and assumed responsibility for the assets previously
managed by Integrity Asset Management.
18. Effective January 1, 2006, the management fee was lowered to the base fee
described above. Beginning January 1, 2007, the management fee may be adjusted,
on a quarterly basis, upward or downward depending on the Fund's performance
relative to its benchmark, the MSCI Emerging Market Free Index. As a result,
beginning January 1, 2007, if the management fee were calculated taking into
account all base fee breakpoints and performance fee adjustments, the management
fee could range from 0.85% at its lowest to 1.15% at its highest.
19. Because the 12b-1 fee is charged as an ongoing fee, over time the fee will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
14
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
EXPENSE EXAMPLES
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THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1: IF YOU WITHDRAW YOUR ASSETS
Example 1 assumes that:
- - You invest $10,000 in Strategic Partners Select;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - You withdraw all your assets at the end of the time period indicated;
- - Your investment has a 5% return each year; and
- - The mutual fund's total operating expenses remain the same each year.
EXAMPLE 2: IF YOU DO NOT WITHDRAW YOUR ASSETS
Example 2 assumes that:
- - You invest $10,000 in Strategic Partners Select;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - You DO NOT WITHDRAW any of your assets at the end of the time period
indicated;
- - Your investment has a 5% return each year; and
- - The mutual fund's total operating expenses remain the same each year.
NOTES FOR EXPENSE EXAMPLES:
- -----------------------------------
THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Note that withdrawal charges (which
are reflected in Example 1 are
assessed in connection with some
annuity options, but not others).
The values shown in the 10 year
column are the same for Example 1
and 2. This is because after 10
years, we would no longer deduct
withdrawal charges when you make a
withdrawal or when you begin the
income phase of your contract.
If your contract value is less than
$50,000, on your contract
anniversary (or upon a surrender),
we deduct a $30 fee. The examples
use an average annual contract fee,
which we calculated based on our
estimate of the total contract fees
we expect to collect in 2006. Your
actual fees will vary based on the
amount of your contract and your
specific allocation(s).
Premium taxes are not reflected in
the examples. We deduct a charge to
approximate premium taxes that may
be imposed on us in your state.
This charge is generally deducted
from the amount applied to an
annuity payout option.
The table of accumulation unit
values appears in the appendix to
this prospectus.
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PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
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PART II SECTIONS 1-9
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STRATEGIC PARTNERS SELECT PROSPECTUS
17
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
1:
WHAT IS THE STRATEGIC PARTNERS SELECT
VARIABLE ANNUITY?
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THE STRATEGIC PARTNERS SELECT VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, THE INSURANCE COMPANY, PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE,
WE OR US).
Under our contract or agreement, in exchange for your payment to us, we
promise to pay you a guaranteed income stream that can begin any time after the
first contract anniversary. (Maryland residents must wait until the end of the
seventh contract year.) Your annuity is in the accumulation phase until you
decide to begin receiving annuity payments. The date you begin receiving annuity
payments is the annuity date. On the annuity date, your contract switches to the
income phase.
This annuity contract benefits from tax deferral when it is sold outside a
tax-favored plan (generally called a non-qualified annuity). Tax deferral means
that you are not taxed on earnings or appreciation on the assets in your
contract until you withdraw money from your contract.
If you purchase the annuity contract in a tax-favored plan such as an IRA,
that plan generally provides tax deferral even without investing in an annuity
contract. In other words, you need not purchase this contract to gain the
preferential tax treatment provided by your retirement plan. Therefore, before
purchasing an annuity in a tax-favored plan, you should consider whether its
features and benefits beyond tax deferral, including the death benefit and
income benefits, meet your needs and goals. You should consider the relative
features, benefits and costs of this annuity compared with any other investment
that you may use in connection with your retirement plan or arrangement.
Strategic Partners Select is a variable annuity contract. This means that
during the accumulation phase, you can allocate your assets among the variable
investment options as well as guaranteed interest-rate options. (If you live in
Maryland, Oregon or Washington, the market value adjustment option is not
available to you.) If you select a variable investment option, the amount of
money you are able to accumulate in your contract during the accumulation phase
depends upon the investment performance of the underlying mutual fund associated
with that variable investment option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your contract value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As mentioned above, Strategic Partners Select also offers interest-rate
options: a fixed-rate option and a market value adjustment option. The
fixed-rate option offers an interest rate that is guaranteed by us for one year
and will not be less than the minimum interest rate dictated by applicable state
law. The market value adjustment option guarantees a stated interest rate,
generally higher than the fixed-rate option. However, in order to get the full
benefit of the stated interest rate, assets in this option must be held for a
seven-year period.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant(s) is the person upon whose death during the accumulation
phase, the death benefit is payable. The annuitant is the person who receives
the annuity payments when the income phase begins. The annuitant is also the
person whose life is used to determine the amount of these payments and how long
(if applicable) the payments will continue once the annuity phase begins. On or
after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
SHORT TERM CANCELLATION RIGHT
OR "FREE LOOK"
If you change your mind about owning Strategic Partners Select, you may cancel
your contract within 10 days after receiving it (or whatever period is required
by applicable law). You can request a refund by returning the contract either to
the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive, depending on applicable state law:
- - Your full purchase payment, less any applicable federal and state income tax
withholding; or
- - The amount your contract is worth as of the day we receive your request, less
any applicable federal and state income tax withholding. This amount may be
more or less than your original payment. We impose neither a withdrawal
charge nor any market value adjustment if you cancel your contract under this
provision.
To the extent dictated by state law, we will include in your refund the
amount of any fees and charges that we deducted.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
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THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY OF
THE VARIABLE INVESTMENT OPTIONS, AND FIXED INTEREST-RATE OPTIONS.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risks that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain important
information about the mutual funds. When you invest in a variable investment
option that is funded by a mutual fund, you should read the mutual fund
prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective and a short,
summary description of their key policies to assist you in determining which
portfolios may be of interest to you. There is no guarantee that any portfolio
will meet its investment objective. The name of the adviser/sub-adviser for each
portfolio appears next to the description.
The Jennison Portfolio, Prudential Equity Portfolio, Prudential Global
Portfolio, Prudential Money Market Portfolio, Prudential Stock Index Portfolio,
Prudential Value Portfolio, and each "SP" Portfolio of the Prudential Series
Fund, are managed by an indirect, wholly-owned subsidiary of Prudential
Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach.
Under the manager-of-managers approach, PI has the ability to assign
sub-advisers to manage specific portions of a portfolio, and the portion managed
by a sub-adviser may vary from 0% to 100% of the portfolio's assets. The
sub-advisers that manage some or all of a Prudential Series Fund portfolio are
listed on the following chart.
The portfolios of the American Skandia Trust are co-managed by PI and
American Skandia Investment Services, Incorporated, also under a manager-of-
managers approach. American Skandia Investment Services, Incorporated is an
indirect, wholly-owned subsidiary of Prudential Financial, Inc.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
Pruco Life has entered into agreements with certain underlying portfolios
and/or the investment adviser or distributor of such portfolios. Pruco Life may
provide administrative and support services to such portfolios pursuant to the
terms of these agreements and under which it receives a fee of up to 0.55%
annually (as of May 1, 2006) of the average assets allocated to the portfolio
under the contract. These agreements, including the fees paid and services
provided, can vary for each underlying mutual fund whose portfolios are offered
as sub-accounts.
In addition, the investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the contract.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker/dealer firms' registered
representatives and creating marketing material discussing the contract and the
available options.
As detailed in the Prudential Series Fund prospectus, although the Prudential
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Prudential Money Market
Portfolio may be so low that, when separate account and contract charges are
deducted, you experience a negative return.
20
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
Upon the introduction of the American Skandia Trust Asset Allocation
Portfolios on December 5, 2005, we ceased offering the Prudential Series Fund
Asset Allocation Portfolios to new purchasers and to existing contract owners
who had not previously invested in those Portfolios. However, a contract owner
who had contract value allocated to a Prudential Series Fund Asset Allocation
Portfolio prior to December 5, 2005 may continue to allocate purchase payments
to that Portfolio after that date. In addition, after December 5, 2005, we
ceased offering the Prudential Series Fund SP Large Cap Value Portfolio to new
purchasers and to existing contract owners who had not previously invested in
that Portfolio. However, a contract owner who had contract value allocated to
the SP Large Cap Value Portfolio prior to December 5, 2005 may continue to
allocate purchase payments to that Portfolio after that date.
21
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
22
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
24
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
25
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
26
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
27
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
28
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
29
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
30
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
31
2:
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
32
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
33
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
34
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
35
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
INTEREST-RATE OPTIONS
We offer two interest-rate options: a one-year fixed-rate option, and a market
value adjustment option (not available in Maryland, Oregon or Washington). We
set a one year guaranteed annual interest rate for the one-year fixed-rate
option. For the market value adjustment option, we set a seven-year guaranteed
interest rate. The market value adjustment option is registered separately from
the variable investment options, and the amount of market value adjustment
option securities registered is stated in that registration statement.
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. An interest cell with
a new interest rate period is established every time you allocate or transfer
money into a interest-rate option. You may have money allocated in more than one
interest rate period at the same time. This could result in your money earning
interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than the minimum interest rate dictated by applicable state
law.
At the maturity of an interest cell for a fixed-rate or market value
adjustment option, you may elect to transfer the amount in the cell to any other
option available on that date. If you do not make a transfer election during the
30-day period following the interest cell's maturity date, then we will transfer
the amount in the cell to a new interest cell with the same time to maturity as
the old cell. However, if at that time we do not offer a guarantee period of the
same duration as that which matured, you will then receive the current interest
rate applicable to the shortest guarantee period then offered.
Payments that you apply to the interest-rate option become part of Pruco
Life's general assets. Payments that you apply to the market value adjustment
option are held as a separate pool of assets, but the income, gains or losses
resulting from these assets are not credited or charged against the contracts.
As a result, the strength of the interest-rate option guarantees is based on the
overall financial strength of Pruco Life. If Pruco Life suffered a material
financial set back, the ability of Pruco Life to meet its financial obligations
could be affected.
MARKET VALUE ADJUSTMENT
If you transfer or withdraw assets or annuitize from the market value adjustment
option before an interest rate period is over, the assets will be subject to a
market value adjustment. The market value adjustment may increase or decrease
the amount being withdrawn or transferred and may be substantial. The
adjustment, whether up or down will never be greater than 40%. The amount of the
market value adjustment is based on the difference between the:
1) Guaranteed interest rate for the amount you are withdrawing or transferring;
and
2) Current interest rate that is in effect on the date of the withdrawal or
transfer.
The amount of time left in the interest rate period is also a factor. You
will find a detailed description of how the market value adjustment is
calculated in Section 9, under "Market Value Adjustment Formula." (For contracts
issued in Pennsylvania, the description is also in Section 9, under "Market
Value Adjustment Formula.")
Other things you should know about the market value adjustment include the
following:
- - We determine the market value adjustment according to a mathematical formula,
which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we also
provide hypothetical examples of how the formula works.
- - A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
- - In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the contract value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above. The laws of certain states may prohibit us from imposing a
market value adjustment on the annuity date.
36
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the interest-rate options. In general, your transfer
request may be made by telephone, electronically, or otherwise in paper form to
the Prudential Annuity Service Center. We have procedures in place to confirm
that instructions received by telephone or electronically are genuine. We will
not be liable for following telephone or electronic instructions that we
reasonably believe to be genuine. Your transfer request will take effect at the
end of the business day on which it was received in good order by us, or by
certain entities that we have specifically designated. Our business day
generally closes at 4:00 p.m. Eastern time. Our business day may close earlier,
for example if regular trading on the New York Stock Exchange closes early.
Transfer requests received after the close of the business day will take effect
at the end of the next business day.
YOU GENERALLY CAN MAKE TRANSFERS OUT OF THE ONE-YEAR FIXED-RATE OPTION ONLY
DURING THE 30-DAY PERIOD FOLLOWING THE END OF AN INTEREST RATE PERIOD. ANY
AMOUNT TRANSFERRED FROM A MARKET VALUE ADJUSTMENT OPTION IS SUBJECT TO A MARKET
VALUE ADJUSTMENT, UNLESS THE TRANSFER IS MADE DURING THE 30-DAY PERIOD FOLLOWING
THE MATURITY OF THE INTEREST CELL.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. If you make more
than 12 transfers in one contract year, you will be charged $25 for each
additional transfer. (Dollar Cost Averaging and Auto-Rebalancing transfers do
not count toward the 12 free transfers per year.) Nor do transfers made during
the 30-day period immediately following the end of an interest cell count
against the 12 free transfers.
For purposes of the 12 free transfers per year that we allow, we will treat
multiple transfers that are submitted on the same business day as a single
transfer.
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing," (ii)
will treat multiple transfer requests submitted on the same business day as a
single transfer, and (iii) do not count any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to
short-term fluctuations in markets, sometimes called "market timing," can make
it very difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In furtherance of our general
authority to restrict transfers as described above, and without limiting other
actions
37
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
we may take in the future, we have adopted the following specific restrictions:
- - With respect to each variable investment option (other than the Prudential
Money Market Portfolio), we track amounts exceeding a certain dollar
threshold that were transferred into the option. If you transfer such amount
into a particular variable investment option, and within 30 calendar days
thereafter transfer (the "Transfer Out") all or a portion of that amount into
another variable investment option, then upon the Transfer Out, the former
variable investment option becomes restricted (the "Restricted Option").
Specifically, we will not permit subsequent transfers into the Restricted
Option for 90 calendar days after the Transfer Out if the Restricted Option
invests in a non-international fund, or 180 calendar days after the Transfer
Out if the Restricted Option invests in an international fund. For purposes
of this rule, we do not (i) count transfers made in connection with one of
our systematic programs, such as asset allocation and automated withdrawals
and (ii) categorize as a transfer the first transfer that you make after the
contract date, if you make that transfer within 30 calendar days after the
contract date. Even if an amount becomes restricted under the foregoing
rules, you are still free to redeem the amount from your contract at any
time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable investment
option on the business day subsequent to the business day on which the
exchange request was received. Before implementing such a practice, we would
issue a separate written notice to contract owners that explains the practice
in detail. In addition, if we do implement a delayed exchange policy, we will
apply the policy on a uniform basis to all contracts in the relevant class.
- - We may impose specific restrictions on financial transactions (including
transfer requests) for certain portfolios based on the portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or
future restriction that is imposed by any portfolio available under this
contract.
- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract owners
who own variable life insurance or variable annuity contracts (regardless of
jurisdiction) that do not impose the above-referenced transfer restrictions,
might make more numerous and frequent transfers than contract owners who are
subject to such limitations. Because contract owners who are not subject to
the same transfer restrictions may have the same underlying mutual fund
portfolios available to them, unfavorable consequences associated with such
frequent trading within the underlying mutual fund (e.g., greater portfolio
turnover, higher transaction costs, or performance or tax issues) may affect
all contract owners. Apart from jurisdiction-specific and contract
differences in transfer restrictions, we will apply these rules uniformly,
and will not waive a transfer restriction for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature allows you to systematically transfer
either a fixed dollar amount or a percentage out of any variable investment
option or the one-year fixed-rate option and into any other variable investment
option(s). You can transfer money to more than one variable investment option.
The investment option used for the transfers is designated as the DCA account.
You can have these automatic transfers made from the DCA account monthly,
quarterly, semiannually or annually. By allocating amounts on a regular schedule
instead of allocating the total amount at one particular time, you may be less
susceptible to the impact of market fluctuations. Of course, there is no
38
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
guarantee that dollar cost averaging will ensure a profit or protect against a
loss in declining markets.
Transfers will be made automatically on the schedule you choose until the
entire amount you chose to have transferred has been transferred or until you
tell us to discontinue the transfers. You can allocate subsequent purchase
payments to be transferred at any time.
Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. This dollar cost averaging feature
is available only during the contract accumulation phase, and is offered without
charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentages or to subsequent allocation percentages you
select. We will rebalance only the variable investment options that you have
designated. The interest-rate options and the DCA account cannot participate in
this feature.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually or annually. The rebalancing will occur on the last calendar day of
the period you have chosen, provided that the New York Stock Exchange is open on
that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of Auto-Rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
SCHEDULED TRANSACTIONS
Scheduled transactions include transfers under dollar cost averaging, the asset
allocation program, auto-rebalancing, systematic withdrawals, systematic
investments, required minimum distributions, substantially equal periodic
payments under Section 72(t) of the Internal Revenue Code of 1986, as amended
(Code), and annuity payments. Scheduled transactions are processed and valued as
of the date they are scheduled, unless the scheduled day is not a business day.
In that case, the transaction will be processed and valued on the next business
day, unless (with respect to required minimum distributions, substantially equal
periodic payments under
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
Section 72(t) of the Code, and annuity payments only), the next business day
falls in the subsequent calendar year, in which case the transaction will be
processed and valued on the prior business day.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners.
This voting procedure is sometimes referred to as "mirror voting" because, as
indicated in the immediately preceding sentence, we mirror the votes that are
actually cast, rather than decide on our own how to vote. In addition, because
all the shares of a given mutual fund held within our separate account are
legally owned by us, we intend to vote all of such shares when that underlying
fund seeks a vote of its shareholders. As such, all such shares will be counted
towards whether there is a quorum at the underlying fund's shareholder meeting
and towards the ultimate outcome of the vote. Thus, under "mirror voting," it is
possible that the votes of a small percentage of contract owners who actually
vote will determine the ultimate outcome. We may change the way your voting
instructions are calculated if it is required or permitted by federal or state
regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
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PAYMENT PROVISIONS
We can begin making annuity payments any time after the first contract
anniversary. (Maryland residents must wait until after the seventh anniversary.)
Annuity payments must begin no later than the annuitant's 90th birthday. Upon
annuitization, any value in an interest cell of the market value adjustment
option may be subject to a market value adjustment.
We make the income plans described below available at any time before the
annuity date. These plans are called annuity options. During the income phase,
all of the "annuity options" under this contract are fixed annuity options. This
means that your participation in the variable investment options ends on the
annuity date. If an annuity option is not selected by the annuity date, the
Interest Payment Option (Option 3, described below) will automatically be
selected. However, if your contract is held as an IRA and an annuity option is
not selected by the annuity date or prior to the annuitant's 90th birthday, a
lump sum payment of the contract value will be made to you on the annuitant's
90th birthday. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION
CANNOT BE CHANGED AND YOU CANNOT MAKE WITHDRAWALS.
Depending upon the annuity option you choose, you may incur a withdrawal
charge when the income phase begins. Currently, if permitted by state law, we
deduct any applicable withdrawal charge if you choose Option 1, Option 3, or
certain other annuity options that we may make available. We do not deduct a
withdrawal charge if you choose Option 2. For information about Withdrawal
Charges, see Section 6, "What Are The Expenses Associated With Strategic
Partners Select Contract?"
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option
we will automatically select for you, unless prohibited by applicable law. If
the life income annuity option is prohibited by applicable law, then we will pay
you a lump sum in lieu of this option.
OPTION 3
INTEREST PAYMENT OPTION
Under this option, we will credit interest on the adjusted contract value until
you request payment of all or part of the adjusted contract value. We can make
interest payments on a monthly, quarterly, semiannual, or annual basis or allow
the interest to accrue on your contract assets. Under this option, we will pay
you interest at an effective rate of at least 3% a year. This option is not
available if your contract is held in an IRA.
Under this option, all gain in the annuity will be taxable as of the annuity
date, however, you can withdraw part or all of the contract value that we are
holding at any time.
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WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
CONTINUED
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
minimum distribution requirements when selecting your annuity option.
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years) (fixed
period annuities) or for the duration of the life of the annuitant (and possibly
co-annuitant) (life annuities). There are certain assumptions that are common to
both fixed period annuities and life annuities. In each type of annuity, we
assume that the value you apply at the outset toward your annuity payments earns
interest throughout the payout period. The guaranteed minimum rate is 3%. If our
current annuity purchase rates on the annuity date are more favorable to you
than the guaranteed rates, we will make payments based on those more favorable
rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Generally speaking, in determining the amount of each annuity payment under a
fixed period annuity, we start with the adjusted contract value, add interest
assumed to be earned over the fixed period, and divide the sum by the number of
payments you have requested. The life expectancy of the annuitant and
co-annuitant are relevant to this calculation only in that we will not allow you
to select a fixed period that exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or
co-annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life
expectancy assumptions. This table anticipates longevity of an insured
population based on historical experience and reflecting anticipated
experience for the year 2000.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
4:
WHAT IS THE
DEATH BENEFIT?
- --------------------------------------------------------------------------------
THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
PLEASE NOTE, THAT NO DEATH BENEFIT IS PAYABLE UPON THE DEATH OF THE OWNER OR
JOINT OWNER. A DEATH BENEFIT IS ONLY PAYABLE UPON THE DEATH OF THE ANNUITANT OR
CO-ANNUITANT (AS APPLICABLE).
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death benefit
upon the death of the annuitant or co-annuitant. The beneficiary is named at the
time the contract is issued, unless you change it at a later date. Unless an
irrevocable beneficiary has been named, you can change the beneficiary at any
time before the annuitant or last surviving annuitant dies. For entity-owned
contracts, we pay a death benefit upon the death of the annuitant.
CALCULATION OF THE DEATH BENEFIT
If the annuitant (or the last surviving annuitant, if there are co-annuitants)
dies during the accumulation phase, we will, upon receiving appropriate proof of
death and any other needed documentation in good order ("due proof of death"),
pay a death benefit to the beneficiary designated by the contract owner. We
require due proof of death to be submitted promptly.
If the annuitant (older co-annuitant) is under age 80 on the contract date
and prior to his or her 80th birthday, the annuitant (last surviving annuitant)
dies, the beneficiary will receive the greater of the following (as of the time
we receive due proof of death):
- - Current contract value (as of the time we receive appropriate proof of
death). We impose no negative market value adjustment on contract value held
within the market value adjustment option when a death benefit is paid.
- - Guaranteed Minimum Death Benefit--The Guaranteed Minimum Death Benefit (GMDB)
is the greater of:
1) The step-up value which equals the highest value of the contract on any
contract anniversary date--that is, on each contract anniversary, the new
step-up value becomes the higher of the previous step-up value and the
current contract value. Between anniversary dates, the step-up value is only
increased by additional invested purchase payments and reduced proportionally
by withdrawals; or
2) The "roll-up value" which is the total of all invested purchase payments
compounded daily at an effective annual rate of 5%, subject to a cap of 200%
of all invested purchase payments. Both the roll-up and the cap are reduced
proportionally by withdrawals.
On or after the annuitant's (or older co-annuitant's) 80th birthday, if the
annuitant (or last surviving annuitant) dies, the beneficiary will receive the
greater of: 1) the current contract value as of the date that due proof of death
is received, and 2) the Guaranteed Minimum Death Benefit as of age 80, increased
by additional invested purchase payments, and reduced proportionally by
withdrawals. For this purpose, an annuitant is deemed to reach age 80 on the
contract anniversary on or following the annuitant's actual 80th birthday.
If the annuitant (or older co-annuitant) is age 80 or older on the contract
date, upon the annuitant's (last surviving annuitant's) death, the beneficiary
will receive as of the date that due proof of death is received, the greater of:
1) current contract value as of the date that due proof of death is received;
and 2) the total invested purchase payments reduced proportionally by
withdrawals.
Here is an example of a proportional reduction:
The current contract value is $100,000 and step-up value is $80,000. The
owner makes a withdrawal that reduces the contract value by 50% (including the
effect of any withdrawal charges). The new step-up value is $40,000, or 50% of
what it was before the withdrawal.
This death benefit is payable only in the event of the death of the sole or
last surviving annuitant and will not be paid upon the death of an owner who is
not the annuitant.
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4:
WHAT IS THE DEATH BENEFIT? CONTINUED
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
Certain terms of this death benefit are limited in Oregon.
DEATH OF OWNER OR JOINT OWNER
If the owner and the annuitant are not the same person and the owner dies during
the accumulation phase, the subsequent owner generally receives the cash value
subject to tax requirements concerning distributions.
If the contract has an owner and joint owner who are spouses at the time of
the owner's or joint owner's death during the accumulation phase, the contract
will continue and the surviving spouse will become the sole owner of the
contract, entitled to any rights and privileges granted by us under the
contract. However, the surviving spouse may, within 60 days of providing due
proof of death take the cash value under one of the payout options listed below.
If the contract has an owner and joint owner who are not spouses at the time
of the owner's or joint owner's death during the accumulation phase, the
surviving owner will be required to take the cash value under one of the payout
options listed below.
The payout options are:
Choice 1. Lump sum.
Choice 2. Payment of the entire contract value within 5 years of the date of
death.
Choice 3. Payment under an annuity or settlement option over the lifetime of
the survivor or over a period not extending beyond the life
expectancy of the surviving owner with distribution beginning
within one year of the date of death.
This contract is subject to special tax rules that govern the required
distributions upon the death of the owner or joint owner. See Section 8, "What
Are The Tax Considerations Associated With The Strategic Partners Select
Contract?"
44
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
5:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
SELECT CONTRACT?
- --------------------------------------------------------------------------------
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase the
contract. Unless we agree otherwise and subject to our rules, the minimum
initial purchase payment is $10,000. You must get our prior approval for any
initial and additional purchase payment of $1,000,000 or more, unless we are
prohibited under applicable state law from insisting on such prior approval.
With some restrictions, you can make additional purchase payments by means other
than electronic fund transfer of no less than $500 at any time during the
accumulation phase. However, we impose a minimum of $100 with respect to
additional purchase payments made through electronic fund transfers.
For qualified contracts, you may purchase the contract only if the annuitant
is 69 or younger on the contract date (age 80 or younger if a minimum
distribution option has been selected). For non-qualified contracts, you may
purchase this contract only if the annuitant, or co-annuitant is 85 or younger
on the contract date.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment among the
variable or fixed interest rate options, or the market value adjustment option
based on the percentages you choose. The percentage of your allocation to a
particular investment option can range in whole percentages from 0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our business
day generally closes at 4:00 p.m. Eastern time. Our business day may close
earlier, for example if regular trading on the New York Stock Exchange closes
early. Subsequent purchase payments received in good order after the close of
the business day will be credited on the following business day.
At our discretion, we may give initial and subsequent purchase payments (as
well as withdrawals and transfers) received in good order by certain
broker/dealers prior to the close of a business day the same treatment as they
would have received had they been received at the same time at the Prudential
Annuity Service Center. For more detail, talk to your registered representative.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. A variable
accumulation unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) Adding up the total amount of money allocated to a specific investment
option;
2) Subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3) Dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. The number of accumulation units credited to your
contract is determined by dividing the amount of the purchase payment allocated
to an investment option by the unit price of the accumulation unit for that
investment option. We calculate the unit price for each investment option after
the New York Stock Exchange closes each day and then credit your contract. The
value of the accumulation units can increase, decrease, or remain the same from
day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments. However, we do
guarantee a minimum interest rate of 3% a year on that portion of the contract
value allocated to the fixed-rate option and to the market value adjustment
option if held for the full seven-year period.
45
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS SELECT CONTRACT?
- --------------------------------------------------------------------------------
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGES
Each day we make a deduction for insurance and administrative charges. The
insurance charges have two parts:
1) Mortality and expense risk charge
2) Administrative expense charge
1) MORTALITY AND EXPENSE RISK CHARGE
The mortality risk charge is for assuming the risk that the annuitant(s) will
live longer than expected based on our life expectancy tables. When this
happens, we pay a greater number of annuity payments. We also incur the risk
that the death benefit amount exceeds the contract value. The expense risk
charge is for assuming the risk that the current charges will be insufficient in
the future to cover the cost of administering the contract.
The mortality and expense risk charge is equal, on an annual basis, to 1.37%
of the daily value of the contract invested in the variable investment options.
This charge is not assessed against amounts allocated to the interest-rate
options.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We do, however, expect to profit from this charge.
The mortality and expense risk charge cannot be increased. Any profits made from
this charge may be used by us to pay for the costs of distributing the
contracts.
2) ADMINISTRATIVE EXPENSE CHARGE
This charge is for the expenses associated with the administration of the
contract. The administration of the contract includes preparing and issuing the
contract, establishing and maintaining contract records, issuing confirmations
and annual reports, personnel costs, legal and accounting fees, filing fees, and
systems costs.
This charge is equal, on an annual basis, to 0.15% of the daily value of the
contract invested in the variable investment options. This charge is not
assessed against amounts allocated to the interest-rate options.
ANNUAL CONTRACT FEE
During the accumulation phase, if your contract value is less than $50,000, we
will deduct $30 per contract year (this fee may differ in certain states). This
annual contract fee is used for administrative expenses and cannot be increased.
The $30 charge will be deducted proportionately from each of the contract's
investment options. This same charge will also be deducted when you surrender
your contract if your contract value is less than $50,000.
WITHDRAWAL CHARGE
During the accumulation phase, you can make withdrawals from your contract. When
you make a withdrawal, money will be taken first from your purchase payments for
purposes of determining withdrawal charges. When your purchase payments have
been used up, then we will take the money from
46
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
your earnings. You will not have to pay any withdrawal charge when you withdraw
your earnings.
The withdrawal charge is for the payment of the expenses involved in selling
and distributing the contracts, including sales commissions, printing of
prospectuses, sales administration, preparation of sales literature and other
promotional activities. If the contract is sold under circumstances that reduce
the sales expenses, we may reduce or eliminate the withdrawal charge. For
example, a large group of individuals purchasing contracts or an individual who
already has a relationship with us may receive such a reduction. We will not
permit a reduction or elimination of charges where it would be unfairly
discriminatory.
You can withdraw up to 10% of your total purchase payments each contract year
without paying a withdrawal charge. This amount is referred to as the
"charge-free amount." If any of the charge-free amount is not used during a
contract year, it will be carried over to the next contract year. During the
first seven contract years, if your withdrawal of purchase payments is more than
the charge-free amount, a withdrawal charge will be applied proportionately to
all of the variable investment options as well as the interest-rate options.
This charge is based on your contract date.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn.
PERCENTAGE OF APPLICABLE WITHDRAWAL CHARGES
- ------------------------------------------------------------
Note: There is no withdrawal charge on any withdrawals made under the
Critical Care Access Option or on any amount used to provide income under the
Life Annuity with 120 payments (10 years) certain option. There will be a
reduction in the withdrawal charge for contracts issued to annuitants whose age
is 84 and older.
If a withdrawal is taken from a market value adjustment guarantee period
prior to the expiration of the rate guarantee period, we will make a market
value adjustment to the withdrawal amount. We will then apply a withdrawal
charge to the adjusted amount.
Withdrawal charges will never be greater than permitted by applicable law.
WAIVER OF WITHDRAWAL CHARGE FOR CRITICAL CARE
Except as restricted by applicable state law, we will waive all withdrawal
charges upon receipt of proof that the sole or last surviving annuitant is
terminally ill, or has been confined to an eligible nursing home or eligible
hospital continuously for at least three months after the contract date. We will
also waive the contract maintenance charge if you surrender your contract in
accordance with the above noted conditions. This waiver is not available if the
owner has assigned ownership of the contract to someone else.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and local premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may make
a deduction from the value of the contract to pay some or all of these taxes. It
is our current practice not to deduct a charge for state premium taxes until
annuity payments begin. In the states that impose a premium tax on us, the
current rates range up to 3.5%. It is also our current practice not to deduct a
charge for the federal tax associated with deferred acquisition costs paid by us
that are based on premium received. However, we reserve the right to charge the
contract owner in the future for any such tax associated with deferred
acquisition costs and any federal, state or local income, excise, business or
any other type of tax measured by the amount of premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost
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6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT CONTRACT?
CONTINUED
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
Averaging and Auto-Rebalancing), we will deduct a transfer fee of $25 for each
additional transfer. We will deduct the transfer fee pro-rata from the
investment options from which the transfer is made. The transfer fee is deducted
before the market value adjustment, if any, is calculated.
COMPANY TAXES
We pay company income taxes on the taxable corporate earnings created by this
separate account product. While we may consider company income taxes when
pricing our products, we do not currently include such income taxes in the tax
charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividend received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract. We reserve the right to
change these tax practices.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2006, the fees of these funds ranged from 0.38%
to 1.67% annually. For certain funds, expenses are reduced pursuant to expense
waivers and comparable arrangements. In general, these expense waivers and
comparable arrangements are not guaranteed, and may be terminated at any time.
For additional information about these fund fees, please consult the
prospectuses for the funds.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
7:
HOW CAN I
ACCESS MY MONEY?
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YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR COMPLETE); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
YOU CAN MAKE WITHDRAWALS ONLY DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees. We will calculate the value of your
contract, and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal will be made
proportionately from all of the affected investment options and interest-rate
options you have selected. You will need our consent to make a partial
withdrawal if the requested withdrawal is less than $250.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a properly completed withdrawal request. We will deduct applicable
charges, and apply a market value adjustment, if any, from the assets in your
contract.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8 OF THIS
PROSPECTUS.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or
proportionally from all investment options. Market value adjustments may apply.
Withdrawal charges may be deducted if the withdrawals in any contract year are
more than the charge-free amount. The minimum automated withdrawal amount you
can make generally is $100. An assignment of the contract terminates any
automated withdrawal program that you had in effect.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, MARKET VALUE ADJUSTMENTS AND
CERTAIN RESTRICTIONS MAY APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE
EXPLANATION, SEE SECTION 8.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers from the variable investment options for any period
when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or process any transfer made
from the interest-rate options promptly upon request.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS SELECT CONTRACT?
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The tax considerations associated with the Strategic Partners Select contract
vary depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan (including contracts held by a
non-natural person, such as a trust, acting as an agent for a natural person),
or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA account, which can hold other permissible assets other than the annuity. The
terms and administration of the trust or custodial account in accordance with
the laws and regulations for IRAs, as applicable, are the responsibility of the
applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract, should be
treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for these benefits could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal. Also, if you
elect the interest payment option that we may offer, that election will be
treated, for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
you receive by a fraction, the numerator of which is your purchase payments
(less any amounts previously received tax-free) and the denominator of which is
the total expected payments under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.); or
- - The amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information).
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of any gains in the
contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example, we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: The beneficiary is taxed on earnings in the contract.
- - Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
- - Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with three exemptions unless
you designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, the Treasury Department may promulgate guidelines under which a variable
annuity will not be treated as an annuity for tax purposes if persons with
ownership rights have excessive control over the investments underlying such
variable annuity. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this prospectus. We will take any action, including modifications to your
contract or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional Information for further
information on these diversification and investor control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if a periodic
payment option is selected by your designated beneficiary and if such payments
begin within 1 year of your death, the value of the contract may be distributed
over the beneficiary's life or a period not exceeding the beneficiary's life
expectancy. Your designated beneficiary is the person to whom benefit rights
under the contract pass by reason of death, and must be a natural person in
order to elect a periodic payment option based on life expectancy or a period
exceeding five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
that portion of the contract may be continued with your spouse as the owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
owners and you will be given notice to the extent feasible under the
circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a) and 408(b) of the Code and Roth Individual Retirement Accounts
(Roth IRAs) under Section 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement," attached to this
prospectus, contains information about eligibility, contribution limits, tax
particulars, and other IRA information. In addition to this information (some of
which is summarized below), the IRS requires that you have a "free look" after
making an initial contribution to the contract. During this time, you can cancel
the contract by notifying us in writing, and we will refund all of the purchase
payments under the contract (or, if provided by applicable state law, the amount
your contract is worth, if greater) less any applicable federal and state income
tax withholding.
Contributions Limits/Rollovers. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA, or if you
are age 50 or older by making a single contribution consisting of your IRA
contributions and catch-up contributions attributable to a prior year and the
current year during the period from January 1 to April 15 of the current year.
You must make a minimum initial payment of $10,000 to purchase a contract. This
minimum is greater than the maximum amount of any annual contribution allowed by
law you may make to an IRA. For 2006, the limit is $4,000, increasing to $5,000
in 2008. After 2008, the contribution amount will be indexed for inflation. The
tax law also provides for a catch-up provision for individuals who are age 50
and above, allowing these individuals an additional $1,000 contribution each
year. The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan into another
Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
- - You cannot sell, assign or pledge the contract, other than to Pruco Life;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which required minimum distributions must begin cannot be later
than April 1st of the calendar year after the calendar year you turn age
70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements."
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty";
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements:
(1) the distribution must be made (a) after the owner of the IRA attains age
59 1/2; (b) after the owner's death; (c) due to the owner's disability; or
(d) for a qualified first time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the
year that is at least five tax years after the first year for which a
contribution was made to any Roth IRA established for the owner or five years
after a rollover, transfer, or conversion was made from a traditional IRA to
a Roth IRA. Distributions from a Roth IRA that are not qualified
distributions will be treated as made first from contributions and then from
earnings, and earnings will be taxed generally in the same manner as
distributions from a traditional IRA; and
- - If eligible (including meeting income limitations and earnings requirements),
you may make contributions to a Roth IRA after attaining age 70 1/2, and
distributions are not required to begin upon attaining such age or at any
time thereafter.
The "IRA Disclosure Statement" attached to this prospectus contains some
additional information on Roth IRAs.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase the contract for a Roth IRA in connection with a "rollover" or
"conversion" of amounts of a traditional IRA, conduit IRA, or another Roth IRA,
or if you are age 50 or older by making a single contribution consisting of your
IRA contributions and catch-up contributions attributable to the prior year and
the current year during the period from January 1 to April 15 of the current
year. The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000) who are not married filing a separate
return, and who receive certain qualifying distributions from such non-Roth
IRAs, to directly rollover or make, within 60 days, a "rollover" of all or any
part of the amount of such distribution to a Roth IRA which they establish. This
conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law. In addition, as
of January 1, 2006, an individual receiving an eligible rollover distribution
from a designated Roth account under an employer plan may roll over the
distribution to a Roth IRA even if the individual is not eligible to make
regular or conversion contributions to a Roth IRA. If you are considering
rolling over funds from your Roth account under an employer plan, please contact
your
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
financial professional prior to purchase to confirm whether such rollovers are
being accepted.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. Roth IRAs are not subject to these rules
during the owner's lifetime. The amount of the payment must at least equal the
minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% tax penalty on the amount of any minimum distribution not made in a
timely manner.
Effective in 2006, in accordance with recent changes in laws and regulations,
required minimum distributions will be calculated based on the sum of the
contract value and the actuarial value of any additional death benefits and
benefits from optional riders that you have purchased under the contract. As a
result, the required minimum distributions may be larger than if the calculation
were based on the contract value only, which may in turn result in an earlier
(but not before the required beginning date) distribution of amounts under the
contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the minimum distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs. Similar rules apply if you inherit more than one Roth IRA from the same
owner.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with three
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should
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PART II
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consult with your tax advisor to find out more information on your potential
liability if you fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under Section 6, "What Are The Expenses Associated With
The Strategic Partners Select Contract?"
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 9.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement," attached to this prospectus.
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9:
OTHER
INFORMATION
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PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company (Pruco Life) is a stock life insurance company,
organized on December 23, 1971 under the laws of the State of Arizona. It is
licensed to sell life insurance and annuities in the District of Columbia, Guam,
and in all states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company
of America (Prudential), a New Jersey stock life insurance company doing
business since October 13, 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life's ultimate parent, Prudential Financial
exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential,
nor any other related company has any legal responsibility to pay amounts that
Pruco Life may owe under the contract.
Pruco Life publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about Pruco Life that is
annually audited by independent accountants. Pruco Life's annual report for the
year ended December 31, 2005, together with subsequent periodic reports that
Pruco Life files with the SEC, are incorporated by reference into this
prospectus. You can obtain copies, at no cost, of any and all of this
information, including the Pruco Life annual report that is not ordinarily
mailed to contract owners, the more current reports and any subsequently filed
documents at no cost by contacting us at the address or telephone number listed
on the cover. The SEC file number for Pruco Life is 811-07325. You may read and
copy any filings made by Pruco Life with the SEC at the SEC's Public Reference
Room at 100 F Street N.E., Washington, D.C. 20549. You can obtain information on
the operation of the Public Reference Room by calling (202) 551-8090. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at www.sec.gov.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account (separate account), to hold the assets that are associated with
the variable annuity contracts. The separate account was established under
Arizona law on June 16, 1995, and is registered with the SEC under the
Investment Company Act of 1940, as a unit investment trust, which is a type of
investment company. The assets of the separate account are held in the name of
Pruco Life and legally belong to us. These assets are kept separate from all of
our other assets and may not be charged with liabilities arising out of any
other business we may conduct. More detailed information about Pruco Life,
including its audited consolidated financial statements, is provided in the
Statement of Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), a wholly-owned subsidiary
of Prudential Financial, Inc., is the distributor and principal underwriter of
the securities offered through this prospectus. PIMS acts as the distributor of
a number of annuity contracts and life insurance products we offer.
PIMS's principal business address is 100 Mulberry Street, Newark, New Jersey
07102-4077. PIMS is registered as a broker/dealer under the Securities Exchange
Act of 1934 (Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. (NASD).
The contract is offered on a continuous basis. PIMS enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, PIMS may offer the
contract directly to potential purchasers.
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her
57
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firm. Commissions are generally based on a percentage of purchase payments made,
up to a maximum of 8%. Alternative compensation schedules are available that
provide a lower initial commission plus ongoing annual compensation based on all
or a portion of contract value. We may also provide compensation to the
distributing firm for providing ongoing service to you in relation to the
contract. Commissions and other compensation paid in relation to the contract do
not result in any additional charge to you or to the separate account.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life and/or the contract on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PIMS may enter into compensation arrangements with
certain broker/dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide to us or our affiliates. These services may include, but are not
limited to: educating customers of the firm on the contract's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered representatives
and make them more knowledgeable about the contract; providing a dedicated
marketing coordinator; providing priority sales desk support; and providing
expedited marketing compliance approval to PIMS. A list of firms that PIMS paid
pursuant to such arrangements is provided in the Statement of Additional
Information which is available upon request.
To the extent permitted by NASD rules and other applicable laws and
regulations, PIMS may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be offered
to all firms and the terms of such arrangements may differ between firms.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PIMS and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon the sale of the
contract.
LITIGATION
Pruco Life is subject to legal and regulatory actions in the ordinary course of
our businesses, including class action lawsuits. Our pending legal and
regulatory actions include proceedings specific to us and proceedings generally
applicable to business practices in the industries in which we operate. In our
insurance operations, we are subject to class action lawsuits and individual
lawsuits involving a variety of issues, including sales practices, underwriting
practices, claims payment and procedures, additional premium charges for
premiums paid on a periodic basis, denial or delay of benefits, return of
premiums or excessive premium charges and breaching fiduciary duties to
customers. In our annuities operations, we are subject to litigation involving
class action lawsuits and other litigation alleging, among other things, that we
made improper or inadequate disclosures in connection with the sale of annuity
products or charged excessive or impermissible fees on these products,
recommended unsuitable products to customers, mishandled customer accounts or
breached fiduciary duties to customers. In some of our pending legal and
regulatory actions, parties are seeking large and/or indeterminate amounts,
including punitive or exemplary damages. The following is such a pending
proceeding:
Stewart v. Prudential, et al. is a lawsuit brought in the Circuit Court of
the First Judicial District of Hinds County, Mississippi by the beneficiaries of
an alleged life
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insurance policy against Pruco Life and Prudential. The complaint alleges that
the Prudential defendants acted in bad faith when they failed to pay a death
benefit on an alleged contract of insurance that was never delivered. In
February 2006, the jury awarded the plaintiffs $1.4 million in compensatory
damages and $35 million in punitive damages. Pruco Life plans to appeal the
verdict.
Pruco Life's litigation and regulatory matters are subject to many
uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of
Pruco Life in a particular quarterly or annual period could be materially
affected by an ultimate unfavorable resolution of litigation and regulatory
matters. Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. We
will not be bound by the assignment until we receive written notice. We will not
be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event. If
you assign the contract, that assignment will result in the termination of any
automated withdrawal program that had been in effect. If the new owner wants to
re-institute an automated withdrawal program, then he/she needs to submit the
forms that we require, in good order.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life, the co-issuer
of the Strategic Partners Select contract, are included in the Statement of
Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Payments Made to Promote Sale of Our Products
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - Financial Statements
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling (877) 778-5008.
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MARKET VALUE
ADJUSTMENT FORMULA
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MARKET VALUE ADJUSTMENT FORMULA
With respect to residents of states, other than Pennsylvania, in which Strategic
Partners Select is being offered. With respect to contracts issued in
Pennsylvania, see page 55.
THE ADJUSTMENT INVOLVES THREE AMOUNTS
The Market Value Adjustment, which is applied to withdrawals and transfers made
at any time other than the 30-day period following the end of an interest rate
period, involves three amounts:
1) The number of whole months remaining in the existing interest rate period.
2) The guaranteed interest rate.
3) The interest rate that Pruco Life declares for a duration of one year longer
than the number of whole years remaining on the existing cell being withdrawn
from.
STATED AS A FORMULA, THE MARKET VALUE IS EQUAL TO:
(M/12) X (R-C)
not to exceed +0.40 or be less than -0.40; where,
The Market Value Adjustment is then equal to the Market Value Factor multiplied
by the amount subject to a Market Value Adjustment.
STEP BY STEP
The steps below explain how a market value adjustment is calculated.
STEP 1: Divide the number of whole months left in the existing interest rate
period (not to be less than one) by 12.
STEP 2: Determine the interest rate Pruco Life declares on the date the request
for withdrawal or transfer is received for a duration of years equal to the
whole number of years determined in Step 1, plus 1 additional year. Subtract
this interest rate from the guaranteed interest rate. The result could be
negative.
STEP 3: Multiply the results of Step 1 and Step 2. Again, the result could be
negative. If the result is less than -0.4, use the value -0.4. If the result is
in between -0.4 and 0.4, use the actual value. If the result is more than 0.4,
use the value 0.4.
STEP 4: Multiply the result of Step 3 (which is the Market Value Factor) by the
value of the amount subject to a Market Value Adjustment. The result is the
Market Value Adjustment.
STEP 5: The result of Step 4 is added to the interest cell. If the Market Value
Adjustment is positive, the interest cell will go up in value. If the Market
Value Adjustment is negative, the interest cell will go down in value.
Depending upon when the withdrawal request is made, a withdrawal charge may
apply.
The following example will illustrate the application of a market value
adjustment and the determination of the withdrawal charge:
Suppose a contractowner made two invested purchase payments, the first in the
amount of $10,000 on December 1, 2000, all of which was allocated to the Equity
Subaccount, and the second in the amount of $5,000 on October 1, 2002, all of
which was allocated to the MVA Option with a guaranteed interest rate of 8%
(0.08) for 7 years. A request for withdrawal of $8,500 is made on February 1,
2005 (the contract owner does not provide any withdrawal instructions). On that
date the amount in the Equity Subaccount is equal to $12,000 and the amount in
the interest cell with a maturity date of September 30, 2009 is $5,985.23, so
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that the contract fund on that date is equal to $17,985.23.
On February 1, 2005, the interest rates declared by Pruco Life for the
duration of 5 years (4 whole years remaining until September 30, 2009, plus 1
year) is 11%.
The following computations would be made:
1) Calculate the Contract Fund value as of the effective date of the
transaction. This would be $17,985.23.
2) Calculate the charge-free amount (the amount of the withdrawal that is not
subject to a withdrawal charge).
The charge-free amount in the fifth Contract year is 10% of $15,000 (total
purchase payments) plus $5,500 (the charge-free amount available in the
fourth Contract year) for a total of $7,000.
3) Since the withdrawal request is in the fifth Contract year, a 3% withdrawal
charge rate applies to any portion of the withdrawal which is not
charge-free.
The Contract provides that the Contract Fund will be reduced by an amount
which, when reduced by the withdrawal charge, will equal the amount
requested. Therefore, in order to produce the amount needed to complete the
withdrawal request ($1,500), we must "gross-up" that amount, before applying
the withdrawal charge rate. This is done by dividing by 1 minus the
withdrawal charge rate.
-----------------------------------------------------------
$1,500.00 / (1-.03) =
$1,500.00 / 0.97 = $1,546.39 grossed-up amount
Please note that a 3% withdrawal charge on this grossed-up amount reduces it
to $1,500, the balance needed to complete the request.
4) The Market Value Factor is determined as described in steps 1 through 5,
above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the
existing cell) minus 0.11 (11% is the interest-rate that would be offered for
an interest cell with a duration of the remaining whole years plus 1), which
is -0.03, multiplied by 4.58333 (55 months remaining until September 30,
2009, divided by 12) or -0.13750. Thus, there will be a negative Market Value
Adjustment of approximately 14% of the amount in the interest cell that is
subject to the adjustment.
5) The total amount to be withdrawn, $8,546.39, (sum of the surrender charge,
$46.39, and the requested withdrawal amount of $8,500) is apportioned over
all accounts making up the Contract Fund following the Market Value
Adjustments, if any, associated with the MVA option.
6) The adjusted value of the interest cell, $5,162.26, reduced by the withdrawal
of $2,570.68 leaves $2,591.58. This amount must be "unadjusted" by dividing
it by 0.86250 (1 plus the Market Value Adjustment of -0.13750) to determine
the amount remaining in the interest cell to which the guaranteed
interest-rate of 8% will continue to be credited until September 30, 2009 or
a subsequent withdrawal. That amount is $3,004.73.
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MARKET VALUE ADJUSTMENT FORMULA CONTINUED
- --------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT FORMULA WITH RESPECT TO CONTRACTS ISSUED IN PENNSYLVANIA
ONLY
THE ADJUSTMENT INVOLVES THREE AMOUNTS
The Market Value Adjustment, which is applied to withdrawals and transfers made
at any time other than the 30-day period following the end of an interest rate
period, involves three amounts:
1) The number of whole months remaining in the existing interest rate period.
2) The guaranteed interest rate.
3) The interpolated value of the interest rates that Pruco Life declares for the
number of whole years remaining and the duration 1 year longer than the
number of whole years remaining in the existing interest rate period.
STATED AS A FORMULA, THE MARKET VALUE IS EQUAL TO:
(M/12) X (R-C)
not to exceed +0.40 or be less than -0.40; where,
The Market Value Adjustment is then equal to the Market Value Factor multiplied
by the amount subject to a Market Value Adjustment.
STEP BY STEP
The steps below explain how a market value adjustment is calculated.
STEP 1: Divide the number of whole months left in the existing interest rate
period (not to be less than one) by 12.
STEP 2: Interpolate the interest rates Pruco Life declares on the date the
request for withdrawal or transfer is received for the duration of years equal
to the whole number of years determined in Step 1, plus the whole number of
years plus 1 additional year.
STEP 3: Subtract this interpolated interest rate from the guaranteed interest
rate. The result could be negative.
STEP 4: Multiply the results of Step 1 and Step 2. Again, the result could be
negative. If the result is less than -0.4, use the value -0.4. If the result is
in between -0.4 and 0.4, use the actual value. If the result is more than 0.4,
use the value 0.4.
STEP 5: Multiply the result of Step 3 (which is the Market Value Factor) by the
value of the amount subject to a Market Value Adjustment. The result is the
Market Value Adjustment.
STEP 6: The result of Step 4 is added to the interest cell. If the Market Value
Adjustment is positive, the interest cell will go up in value. If the Market
Value Adjustment is negative, the interest cell will go down in value.
Depending upon when the withdrawal request is made, a withdrawal charge may
apply.
The following example will illustrate the application of a market value
adjustment and the determination of the withdrawal charge:
Suppose a contractowner made two invested purchase payments, the first in the
amount of $10,000 on December 1, 2000, all of which was allocated to the Equity
Subaccount, and the second in the amount of $5,000 on October 1, 2002, all of
which was allocated to the MVA option with a guaranteed interest rate of 8%
(0.08) for 7 years. A request for withdrawal of $8,500 is made on February 1,
2005 (the contract owner does not provide any withdrawal instructions). On that
date the amount in the Equity Subaccount is equal to $12,000 and the amount in
the interest cell with a maturity date of September 30, 2009 is $5,985.23, so
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that the contract fund on that date is equal to $17,985.23.
On February 1, 2005, the interest rates declared by Pruco Life for the
duration's 4 and 5 years (4 whole years remaining until September 30, 2009, plus
1 year) are 10.8% and 11.4%, respectively.
The following computations would be made:
1) Calculate the Contract Fund value as of the effective date of the
transaction. This would be $17,985.23.
2) Calculate the charge-free amount (the amount of the withdrawal that is not
subject to a withdrawal charge).
The charge-free amount in the fifth Contract year is 10% of $15,000 (total
purchase payments) plus $5,500 (the charge-free amount available in the
fourth Contract year) for a total of $7,000.
3) Since the withdrawal request is in the fifth Contract year, a 3% withdrawal
charge rate applies to any portion of the withdrawal which is not
charge-free.
The Contract provides that the Contract Fund will be reduced by an amount
which, when reduced by the withdrawal charge, will equal the amount
requested. Therefore, in order to produce the amount needed to complete the
withdrawal request ($1,500), we must "gross-up" that amount, before applying
the withdrawal charge rate. This is done by dividing by 1 minus the
withdrawal charge rate.
-----------------------------------------------------------
$1,500.00 / (1-.03) =
$1,500.00 / 0.97 = $1,546.39 grossed-up amount
Please note that a 3% withdrawal charge on this grossed-up amount reduces it
to $1,500, the balance needed to complete the request.
4) The Market Value Factor is determined as described in steps 1 through 5,
above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the
existing cell) minus 0.11 (11% is the interpolated value for the interest
rates that would be offered for interest cells with durations of whole years
remaining and whole year plus 1 remaining in the existing interest rate
period), which is -0.03, multiplied by 4.58333 (55 months remaining until
September 30, 2009, divided by 12) or -0.13750. Thus, there will be a
negative Market Value Adjustment of approximately 14% of the amount in the
interest cell that is subject to the adjustment.
5) The total amount to be withdrawn, $8,546.39, (sum of the surrender charge,
$46.39, and the requested withdrawal amount of $8,500) is apportioned over
all accounts making up the Contract Fund following the Market Value
Adjustments, if any, associated with the MVA option.
6) The adjusted value of the interest cell, $5,162.26, reduced by the withdrawal
of $2,570.68 leaves $2,591.58. This amount must be "unadjusted" by dividing
it by 0.86250 (1 plus the Market Value Adjustment of -0.13750) to determine
the amount remaining in the interest cell to which the guaranteed
interest-rate of 8% will continue to be credited until September 30, 2009 or
a subsequent withdrawal. That amount is $3,004.73.
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APPENDIX A
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ACCUMULATION UNIT VALUES
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Following are the historical unit values for each of the portfolios offered as
investment options.
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THIS CHART CONTINUES ON THE NEXT PAGE
* DATE THAT THIS ANNUITY WAS FIRST OFFERED.
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THIS CHART CONTINUES ON THE NEXT PAGE
* DATE THAT THIS ANNUITY WAS FIRST OFFERED.
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THIS CHART CONTINUES ON THE NEXT PAGE
* DATE THAT THIS ANNUITY WAS FIRST OFFERED.
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THIS CHART CONTINUES ON THE NEXT PAGE
* DATE THAT THIS ANNUITY WAS FIRST OFFERED.
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* DATE THAT THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THIS FUND FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
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APPENDIX B
- --------------------------------------------------------------------------------
SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Within the Strategic Partners(SM) family of annuities, we offer several
different deferred variable annuity products. These annuities are issued by
Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of
New Jersey). Not all of these annuities may be available to you due to state
approval or broker-dealer offerings. You can verify which of these annuities is
available to you by asking your registered representative, or by calling us at
(888) PRU-2888. For comprehensive information about each of these annuities,
please consult the prospectus for the annuity.
Each annuity has different features and benefits that may be appropriate for
you, based on your individual financial situation and how you intend to use the
annuity.
The different features and benefits may include variations on your ability to
access funds in your annuity without the imposition of a withdrawal charge as
well as different ongoing fees and charges you pay while your contract remains
in force. Additionally, differences may exist in various optional benefits such
as guaranteed living benefits or death benefit protection.
Among the factors you should consider when choosing which annuity product may
be most appropriate for your individual needs are the following:
- - Your age;
- - The amount of your investment and any planned future deposits into the
annuity;
- - How long you intend to hold the annuity (also referred to as investment time
horizon);
- - Your desire to make withdrawals from the annuity;
- - Your investment return objectives;
- - The effect of optional benefits that may be elected; and
- - Your desire to minimize costs and/or maximize return associated with the
annuity.
The following chart sets forth the prominent features of each Strategic
Partners variable annuity. The availability of optional features, such as those
noted in the chart, may increase the cost of the contract. Therefore, you should
carefully consider which features you plan to use when selecting your annuity.
In addition to the chart, we set out below certain hypothetical illustrations
that reflect the contract value and surrender value of each variable annuity
over a variety of holding periods. These charts are meant to reflect how your
annuities can grow or decrease depending on market conditions and the comparable
value of each of the annuities (which reflects the charges associated with the
annuities) under the assumptions noted. In comparing the values within the
illustrations, a number of distinctions are evident. To fully appreciate these
distinctions, we encourage you to speak to your registered representative and to
read the prospectuses. However, we do point out the following noteworthy items:
- - Strategic Partners Advisor, because it has no sales charge, offers the
highest surrender value during the first few years. However, unlike Strategic
Partners FlexElite 2 (i.e., the version of the contract sold on or after May
1, 2003) and the Strategic Partners Annuity One 3 / Plus 3 contracts,
Strategic Partners Advisor offers few optional benefits.
- - Strategic Partners FlexElite 2 offers both an array of optional benefits as
well as the "liquidity" to surrender the annuity without any withdrawal
charge after three contract years have passed. FlexElite 2 also is unique in
offering an optional persistency bonus (which, if taken, extends the
withdrawal charge period).
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STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9 PART II
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- - Strategic Partners Select, as part of its standard insurance and
administrative expense, offers a guaranteed minimum death benefit equal to
the greater of contract value, a step-up value, or a roll-up value. In
contrast, you incur an additional charge if you opt for an enhanced death
benefit under the other annuities.
- - Strategic Partners Annuity One 3 / Plus 3 comes in both a bonus version and a
non-bonus version, each of which offers several optional insurance features.
A bonus is added to your purchase payments under the bonus version, although
the withdrawal charges under the bonus version are higher than those under
the non-bonus version. Although the non-bonus version offers no bonus, it is
accompanied by fixed interest rate options and a market value adjustment
option that may provide higher interest rates than such options accompanying
the bonus version.
STRATEGIC PARTNERS ANNUITY PRODUCT COMPARISON
Below is a summary of Strategic Partners variable annuity products. You should
consider the investment objectives, risks, charges and expenses of an investment
in any contract carefully before investing. Each product prospectus as well as
the underlying portfolio prospectuses contains this and other information about
the variable annuities and underlying investment options. Your registered
representative can provide you with prospectuses for one or more of these
variable annuities and the underlying portfolios and can help you decide upon
the product that would be most advantageous for you given your individual needs.
Please read the prospectuses carefully before investing.
APPENDIX B -- SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
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STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9 PART II
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1 THIS COLUMN DEPICTS FEATURES OF THE VERSION OF STRATEGIC PARTNERS FLEXELITE
SOLD ON OR AFTER MAY 1, 2003 OR UPON SUBSEQUENT STATE APPROVAL. IN ONE STATE,
PRUCO LIFE CONTINUES TO SELL A PRIOR VERSION OF THE CONTRACT. UNDER THAT
VERSION, THE CHARGE FOR THE BASE DEATH BENEFIT IS 1.60%, RATHER THAN 1.65%. THE
PRIOR VERSION ALSO DIFFERS IN CERTAIN OTHER RESPECTS (E.G., AVAILABILITY OF
OPTIONAL BENEFITS). THE VALUES ILLUSTRATED BELOW ARE BASED ON THE 1.65% CHARGE,
AND THEREFORE ARE SLIGHTLY LOWER THAN IF THE 1.60% CHARGE WERE USED.
2 WITHDRAWALS OF TAXABLE AMOUNTS WILL BE SUBJECT TO INCOME TAX, AND PRIOR TO AGE
59 1/2, MAY BE SUBJECT TO A 10% FEDERAL INCOME TAX PENALTY.
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STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9 PART II
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3 MAY OFFER LOWER INTEREST RATES FOR THE FIXED RATE OPTIONS THAN THE INTEREST
RATES OFFERED IN THE CONTRACTS WITHOUT CREDIT.
4 FOR MORE INFORMATION ON THESE BENEFITS, REFER TO SECTION 4, "WHAT IS THE DEATH
BENEFIT?" IN THE PROSPECTUS.
5 NOT ALL OPTIONAL BENEFITS MAY BE AVAILABLE IN ALL STATES.
6 FOR MORE INFORMATION ON THESE BENEFITS, REFER TO SECTION 3, "WHAT KIND OF
PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?; SECTION 5, "WHAT IS THE
LIFETIME FIVE(SM) Income Benefit?"; and Section 6, "What Is The Income
Appreciator Benefit?" in the Prospectus.
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HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each annuity as well as the amount
that would be available to an investor as a result of full surrender at the end
of each of the contract years specified. The values shown below are based on the
following assumptions:
- - An initial investment of $100,000 is made into each contract earning a gross
rate of return of 0% and 6% respectively.
- - No subsequent deposits or withdrawals are made from the contract.
- - The hypothetical gross rates of return are reduced by the arithmetic average
of the fees and expenses of the underlying portfolios and the charges that
are deducted from the contract at the Separate Account level as follows:
- - 0.99% average of all fund expenses (as of December 31, 2005) are computed by
adding Portfolio management fees, 12b-1 fees and other expenses of all of the
underlying portfolios and then dividing by the number of portfolios. For
purposes of the illustrations, we do not reflect any expense reimbursements
or expense waivers that might apply and are described in the prospectus fee
table.
- - The Separate Account level charges include the Insurance Charge and
Administration Charge (as applicable).
The Contract Value assumes no surrender, while the Surrender Value assumes a
100% surrender two days prior to the contract anniversary, therefore reflecting
the withdrawal charge applicable to that contract year. Note that a withdrawal
on the contract anniversary, or the day before the contract anniversary, would
be subject to the withdrawal charge applicable to the next contract year, which
usually is lower. The values that you actually experience under an contract will
be different from what is depicted here if any of the assumptions we make here
differ from your circumstances, however the relative values for each product
reflected below will remain the same. (We will provide you with a personalized
illustration upon request).
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STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9 PART II
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0% GROSS RETURN
- --------------------------------------------------------------------------------
Assumptions:
1. $100,000 initial investment.
2. Fund Expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor -2.35%; Strategic Partners Select -2.46%;
Strategic Partners FlexElite 2 -2.59%; Strategic Partners Annuity One 3/Plus
3 Non-Bonus -2.35%; Strategic Partners Annuity One 3/Plus 3 Bonus -2.44%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
77
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9 PART II
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6% GROSS RETURN
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Assumptions:
1. $100,000 initial investment.
2. Fund Expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor 3.51%; Strategic Partners Select 3.39%; Strategic
Partners FlexElite 2 3.26%; Strategic Partners Annuity One 3/Plus 3 Non-Bonus
3.51%; Strategic Partners Annuity One 3/Plus Bonus 3.41%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
78
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE PRUCO LIFE ANNUITY DESCRIBED IN PROSPECTUS ORD01009 (05/2006).
---------------------------------------------------------
(print your name)
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(address)
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(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960
Philadelphia, PA 19176
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ORD01009
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees
Pruco Life registered $500 million of interests in the market value adjusted
annuity contracts described in this registration statement. Pruco Life has paid
$172,413.79 to the SEC for the registration fees required under the Securities
Act of 1933.
Federal Taxes
Pruco Life Insurance Company estimates the federal tax effect associated with
the deferred acquisition costs attributable to receipt of $10 million of
purchase payments over a two year period to be approximately $37,000.
State Taxes
Pruco Life estimates that approximately $2,000 in premium taxes will be owed
upon receipt of purchase payments under the contracts, and that additional
premium taxes in the approximate amount of $20,000 would be owed if the full $10
million of purchase payments were applied to annuity options. The taxes set
forth here are an estimate, based on the amount of purchase payments we expect
to receive during the next two years.
Printing Costs
Pruco Life estimates that the cost of printing prospectuses for the amount of
securities registered herein will be approximately $46,106.
Legal Costs
This registration statement was prepared by Prudential attorneys whose time is
allocated to Pruco Life.
Accounting Costs
PricewaterhouseCoopers LLP, the independent registered public accounting firm
that audits Pruco Life's financial statements, charges approximately $4,000 in
connection with each filing of this registration statement with the Commission.
Premium Paid to Indemnify Officers
Officers and Directors of Pruco Life Insurance Company 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)
(4) (a) Discovery Select Variable Annuity Contract (Note 3)
(b) Strategic Partners Select Variable Annuity Contract (Note 4)
(5) Opinion of Counsel as to the legality of the securities being registered.
(Note 1)
(23) Written Consent of PricewaterhouseCoopers LLP, Independent Registered
Public Accounting Firm. (Note 1)
(24) Powers of Attorney:
(a) James J. Avery Jr., C. Edward Chaplin, John Chieffo, Helen M. Galt,
Bernard J. Jacob, Ronald P. Joelson, David R. Odenath (Note 1)
II-2
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(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 Registrant's Form S-1, filed July 19,
1995.
(Note 4) Incorporated by reference to initial Registration on Form N-4,
Registration No. 333-52754, filed December 26, 2000 on behalf of the
Pruco Life Flexible Premium Variable Annuity Account.
II-3
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; and
(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.
(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.
II-4
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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newark, State of New Jersey, on this 19th day of
April, 2006.
PRUCO LIFE INSURANCE COMPANY
(Registrant)
By: /s/ BERNARD J. JACOB
------------------------------------
BERNARD J. JACOB
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/* April 19, 2006
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JAMES J. AVERY JR.
VICE CHAIRMAN AND DIRECTOR
/s/* *By: /s/ CLIFFORD E. KIRSCH
- ------------------------------------- -----------------------------------
BERNARD J. JACOB CLIFFORD E. KIRSCH
PRESIDENT AND DIRECTOR (ATTORNEY-IN-FACT)
/s/*
- -------------------------------------
JOHN CHIEFFO
VICE PRESIDENT, CHIEF ACCOUNTING
OFFICER AND PRINCIPAL FINANCIAL
OFFICER
/s/*
- -------------------------------------
C. EDWARD CHAPLIN
SENIOR VICE PRESIDENT AND DIRECTOR
/s/*
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HELEN M. GALT
DIRECTOR
/s/*
- -------------------------------------
RONALD P. JOELSON
DIRECTOR
/s/*
- -------------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
II-5
EXHIBIT INDEX
(5) Opinion of Counsel
(23) Written Consent of PricewaterhouseCoopers LLP, Independent Registered
Public Accounting Firm
(24) (a) Powers of Attorney