<PAGE>

================================================================================
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                                  FORM 10-Q/A
                               (Amendment No. 1)

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

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

                 For the quarterly period ended June 30, 2005

                                      OR

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

                For the Transition Period from        to

                        Commission File Number 33-44202

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

                  American Skandia Life Assurance Corporation
            (Exact Name of Registrant as Specified in its Charter)

                       Connecticut                 06-1241288
             (State or Other Jurisdiction of    (I.R.S. Employer
             Incorporation or Organization)  Identification Number)

                              One Corporate Drive
                          Shelton, Connecticut 06484
                                (203) 926-1888
  (Address and Telephone Number of Registrant's Principal Executive Offices)

   Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act).  Yes [_]  No [X]

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [_]

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes [_]  No [X]

   Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act.):  Yes [_]  No [X]

   As of August 12, 2005, 25,000 shares of the registrant's Common Stock (par
value $100) consisting of 100 voting shares and 24,900 non-voting shares, were
outstanding. As of such date, American Skandia, Inc., an indirect wholly owned
subsidiary of Prudential Financial, Inc., a New Jersey corporation, owned all
of the registrant's Common Stock.

     American Skandia Life Assurance Corporation meets the conditions set
      forth in General Instruction (H) (1) (a) and (b) on Form 10-Q/A and
       is therefore filing this Form with the reduced disclosure format.

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

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               Page
                                                                              Number
                                                                              ------
<C> <S>                                                                       <C>
PART I FINANCIAL INFORMATION

Explanatory Note                                                                 2

Item 1. Financial Statements (unaudited):

    Interim Statements of Financial Position
    As of June 30, 2005 and December 31, 2004................................    3

    Interim Statements of Operations and Comprehensive Income
    Three months ended June 30, 2005 and 2004................................    4

    Interim Statements of Operations and Comprehensive Income
    Six months ended June 30, 2005 and 2004..................................    5

    Interim Statements of Stockholder's Equity Six months ended June 30, 2005    6

    Interim Statements of Cash Flows (restated)
    Six months ended June 30, 2005 and 2004..................................    7

    Notes to Interim Financial Statements....................................    8

Item 4. Controls and Procedures                                                 12

PART II OTHER INFORMATION

Item 6. Exhibits.............................................................   13

SIGNATURES...................................................................   14
</TABLE>

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A is being filed for the purpose of amending
Items 1 and 4 of Part I of the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2005 of American Skandia Life Assurance Corporation to reflect
the restatement of American Skandia Life Assurance Corporation's Interim
Statements of Cash Flows for the six months ended June 30, 2005 and 2004, as
described in Footnote 2 to the Interim Financial Statements included in this
Form 10-Q/A. All other Items of the original filing on Form 10-Q made on
August 12, 2005 are unaffected by the changes to the Interim Statements of Cash
Flows and such Items have not been included in this Amendment. Information in
this Form 10-Q/A is generally stated as of June 30, 2005 and does not reflect
any subsequent information or events other than the restatement of the Interim
Statements of Cash Flows. More current information with respect to American
Skandia Life Assurance Corporation is contained within its Quarterly Report on
Form 10-Q for the quarter ended September 30, 2005, and other filings with the
Securities and Exchange Commission.

                                      2

<PAGE>

                         PART I-FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
American Skandia Life Assurance Corporation

Interim Statements of Financial Position
As of June 30, 2005 and December 31, 2004 (in thousands)

<TABLE>
<CAPTION>
                                                                                                         June 30,   December 31,
                                                                                                           2005         2004
                                                                                                       -----------  ------------
<S>                                                                                                    <C>          <C>
ASSETS
Fixed maturities available for sale, at fair value (amortized cost, 2005 $1,879,107; 2004: $1,737,949) $ 1,908,416  $ 1,771,976
Trading account assets, at fair value                                                                       34,806       47,316
Equity securities available for sale, at fair value (cost of $11,238)                                       11,440       11,567
Policy loans                                                                                                10,576       10,323
Short-term investments                                                                                     241,742      423,971
                                                                                                       -----------  -----------
   Total investments                                                                                     2,206,980    2,265,153
Cash and cash equivalents                                                                                    5,296       72,854
Deferred policy acquisition costs                                                                          404,520      300,901
Accrued investment income                                                                                   21,919       22,321
Receivables from Parent and affiliates                                                                           -        5,098
Income taxes receivable                                                                                    225,406      244,932
Valuation of business acquired                                                                             220,924      234,167
Deferred purchase credits                                                                                  181,263      144,395
Other assets                                                                                                39,770       60,412
Separate account assets                                                                                 27,113,685   26,984,413
                                                                                                       -----------  -----------
TOTAL ASSETS                                                                                           $30,419,763  $30,334,646
                                                                                                       ===========  ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances                                                                        $ 1,516,332  $ 1,411,483
Future policy benefits and other policyholder liabilities                                                   71,769       50,980
Payables to Parent and affiliates                                                                           24,440       24,182
Cash collateral for loaned securities                                                                      185,439      291,299
Securities sold under agreements to repurchase                                                               4,848       33,373
Short-term borrowing                                                                                       245,340      140,363
Long-term borrowing                                                                                        135,000      135,000
Future fees payable to American Skandia, Inc. ("ASI")                                                      154,183      200,597
Other liabilities                                                                                          218,577      375,486
Separate account liabilities                                                                            27,113,685   26,984,413
                                                                                                       -----------  -----------
Total liabilities                                                                                       29,669,613   29,647,176
                                                                                                       -----------  -----------
Contingencies (See Note 3)

Stockholder's Equity
Common stock, $100 par value; 25,000 shares, authorized, issued and outstanding                              2,500        2,500
Additional paid-in capital                                                                                 484,393      484,425
Retained earnings                                                                                          246,465      180,758
Deferred compensation                                                                                       (1,467)        (904)
Accumulated other comprehensive income                                                                      18,259       20,691
                                                                                                       -----------  -----------
Total stockholder's equity                                                                                 750,150      687,470
                                                                                                       -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                                             $30,419,763  $30,334,646
                                                                                                       ===========  ===========
</TABLE>

                   See Notes to Interim Financial Statements

                                      3

<PAGE>

American Skandia Life Assurance Corporation

Interim Statements of Operations and Comprehensive Income
Three Months ended June 30, 2005 and 2004 (in thousands)

<TABLE>
<CAPTION>
                                                      Three Months Three Months
                                                         ended        ended
                                                        June 30,     June 30,
                                                          2005         2004
                                                      ------------ ------------
 <S>                                                  <C>          <C>
 REVENUES

 Premiums                                               $    686     $  4,594
 Policy charges and fee income                           119,722      103,209
 Net investment income                                    24,006       22,239
 Realized investment (losses) gains, net                  (3,682)      (8,391)
 Asset management fees                                    30,315       27,773
 Other income                                              2,349          695
                                                        --------     --------
 Total revenues                                          173,396      150,119
                                                        --------     --------
 BENEFITS AND EXPENSES

 Policyholders' benefits                                  31,525       29,976
 Interest credited to policyholders' account balances     20,457       20,648
 General, administrative and other expenses               79,628       63,221
                                                        --------     --------
 Total benefits and expenses                             131,610      113,845
                                                        --------     --------
 INCOME FROM OPERATIONS BEFORE INCOME TAXES               41,786       36,274
                                                        --------     --------
 Income tax expense                                        6,201       10,471
                                                        --------     --------
 NET INCOME                                               35,585       25,803
                                                        --------     --------
 Other comprehensive (loss) income, net of taxes          20,821      (31,806)
                                                        --------     --------
 COMPREHENSIVE INCOME                                   $ 56,406     $ (6,003)
                                                        ========     ========
</TABLE>

                   See Notes to Interim Financial Statements

                                      4

<PAGE>

American Skandia Life Assurance Corporation

Interim Statements of Operations and Comprehensive Income
Six Months ended June 30, 2005 and 2004 (in thousands)

<TABLE>
<CAPTION>
                                                                        Six Months Six Months
                                                                          ended      ended
                                                                         June 30,   June 30,
                                                                           2005       2004
                                                                        ---------- ----------
<S>                                                                     <C>        <C>
REVENUES

Premiums                                                                 $ 10,352   $  7,306
Policy charges and fee income                                             235,675    201,283
Net investment income                                                      45,796     41,550
Realized investment losses, net                                            (5,484)    (8,648)
Asset management fees                                                      60,096     55,115
Other income                                                                1,104      1,990
                                                                         --------   --------
Total revenues                                                            347,539    298,596
                                                                         --------   --------
BENEFITS AND EXPENSES

Policyholders' benefits                                                    70,487     57,725
Interest credited to policyholders' account balances                       38,703     41,201
General, administrative and other expenses                                154,423    124,377
                                                                         --------   --------
Total benefits and expenses                                               263,613    223,303
                                                                         --------   --------
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING PRINCIPLE                                           83,926     75,293
                                                                         --------   --------
Income tax expense                                                         18,220     22,604
                                                                         --------   --------
INCOME FROM OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE                                                                65,706     52,689
                                                                         --------   --------
Cumulative effect of accounting change, net of taxes                            -    (17,079)
                                                                         --------   --------
NET INCOME                                                                 65,706     35,610
                                                                         --------   --------
Other comprehensive (loss) income, net of taxes                            (2,431)    (8,873)
                                                                         --------   --------
COMPREHENSIVE INCOME                                                     $ 63,275   $ 26,737
                                                                         ========   ========
</TABLE>

                   See Notes to Interim Financial Statements

                                      5

<PAGE>

American Skandia Life Assurance Corporation

Interim Statements of Stockholder's Equity
Six months ended June 30, 2005 (in thousands)

<TABLE>
<CAPTION>
                                                                                            Accumulated
                                                          Additional                           other         Total
                                                   Common  paid-in - Retained   Deferred   comprehensive stockholder's
                                                    Stock  capital   earnings compensation    income        equity
                                                   ------ ---------- -------- ------------ ------------- -------------
<S>                                                <C>    <C>        <C>      <C>          <C>           <C>
Balance, December 31, 2004                         $2,500  $484,425  $180,759   $  (904)      $20,690      $687,470

Net income                                                             65,706                                65,706
Stock-based compensation                                        (32)                                            (32)
Deferred compensation program                                                      (563)                       (563)
Change in net unrealized investment gains/(losses)                                             (2,431)       (2,431)
                                                   ------  --------  --------   -------       -------      --------
Balance, June 30, 2005                             $2,500  $484,393  $246,465   $(1,467)      $18,259      $750,150
                                                   ======  ========  ========   =======       =======      ========
</TABLE>

                   See Notes to Interim Financial Statements

                                      6

<PAGE>

American Skandia Life Assurance Corporation

Interim Statements of Cash Flows (restated)
Six Months ended June 30, 2005 and 2004 (in thousands)

<TABLE>
<CAPTION>
                                                                                Six Months Ended Six Months Ended
                                                                                    June 30,         June 30,
                                                                                      2005             2004
                                                                                ---------------- ----------------
<S>                                                                             <C>              <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income                                                                        $    65,706      $    35,610
Adjustments to reconcile net income to net cash (used in) operating activities:
   Realized investment losses, net                                                      5,484            8,648
   Amortization and depreciation                                                       19,159           33,844
   Cumulative effect of accounting change, net of taxes                                     -           17,079
   Interest credited to policyholders' account balances                                29,237           36,655
   Change in:
       Policy reserves                                                                 20,789           21,406
       Accrued investment income                                                          402           (2,224)
       Trading account assets                                                          12,146           11,650
       Net receivable to Parent and affiliates                                          5,356            6,158
       Deferred sales inducements                                                     (36,868)         (42,788)
       Deferred policy acquisition costs                                             (103,619)        (100,891)
       Income taxes (receivable) payable                                               19,526          (19,521)
       Other, net                                                                     (48,116)          42,028
                                                                                  -----------      -----------
Cash Flows From (Used in) Operating Activities                                        (10,798)          47,654
                                                                                  -----------      -----------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
   Proceeds from the sale/maturity of fixed maturities available for sale             968,858        1,133,412
   Payments for the purchase of fixed maturities available for sale                (1,111,133)      (1,412,515)
   Proceeds from the sale/maturity of policy loans                                        413                -
   Payments for the issuance of policy loans                                             (666)          (1,567)
   Other short-term investments, net                                                  182,229         (316,575)
                                                                                  -----------      -----------
Cash Flows From (Used in) Investing Activities                                         39,701         (597,245)
                                                                                  -----------      -----------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
   Decrease in future fees payable to ASI, net                                        (46,414)         (56,002)
   Cash collateral for loaned securities                                             (105,860)         227,478
   Securities sold under agreement to repurchase                                      (28,525)          91,885
   Net increase in long-term borrowing                                                      -          135,000
   Net increase in short-term borrowing                                               104,977           35,222
   Drafts outstanding                                                                 (90,044)           3,884
Policyholder's account balances:
   Deposits                                                                           224,780          296,115
   Withdrawals                                                                       (155,375)        (170,559)
                                                                                  -----------      -----------
Cash Flows From (Used in) Financing Activities                                        (96,461)         563,023
                                                                                  -----------      -----------
   Net (decrease) increase in cash and cash equivalents                               (67,558)          13,432
   Cash and cash equivalents, beginning of period                                      72,854            6,300
                                                                                  -----------      -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $     5,296      $    19,732
                                                                                  ===========      ===========
   Income taxes paid (received)                                                   $    (2,640)     $    41,615
                                                                                  ===========      ===========
   Interest paid                                                                  $     2,116      $     7,271
                                                                                  ===========      ===========
</TABLE>

                   See Notes to Interim Financial Statements

                                      7

<PAGE>

American Skandia Life Assurance Corporation

Notes to Interim Financial Statements

1. BUSINESS

American Skandia Life Assurance Corporation (the "Company"), with its principal
offices in Shelton, Connecticut, is an indirect wholly owned subsidiary of
Prudential Financial, Inc. ("Prudential Financial"), a New Jersey corporation.
The Company is a wholly owned subsidiary of American Skandia, Inc. ("ASI"),
which in turn is an indirect wholly owned subsidiary of Prudential Financial.
On December 19, 2002, Skandia Insurance Company Ltd. (publ) ("Skandia"), an
insurance company organized under the laws of the Kingdom of Sweden, and the
ultimate parent company of the Company prior to May 1, 2003, entered into a
definitive purchase agreement with Prudential Financial whereby Prudential
Financial would acquire the Company and certain of its affiliates (the
"Acquisition"). On May 1, 2003, the initial phase of the Acquisition was
consummated. This included Prudential Financial acquiring 90% of the
outstanding common stock of Skandia U.S. Inc. ("SUSI"), an indirect parent of
the Company. On September 9, 2003, Prudential Financial acquired the remaining
10% of SUSI's outstanding common stock. On June 23, 2005, SUSI amended its
certificate of incorporation to change its name to Prudential Annuities Holding
Company, Inc.

The Company develops long-term savings and retirement products, that are
distributed through its affiliated broker-dealer company, American Skandia
Marketing, Incorporated. The Company currently issues variable deferred and
immediate annuities for individuals and groups in the United States of America
and its territories.

The Company is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
engaged in marketing insurance products, and individual and group annuities.

2. BASIS OF PRESENTATION

Restatement of Statements of Cash Flows

The Statements of Cash Flows for the six months ended June 30, 2005 and 2004
have been restated to reflect the following:

Changes in the net receivable/payable from unsettled investment purchases and
sales, previously classified within "adjustments to reconcile net income to
cash provided by operating activities," have been reclassified to cash flows
from investing activities, to the extent such balances pertained to investments
classified as available for sale.

Interest credited to policyholder's account balances, previously classified
within "Change in contractowner accounts" within cash flows from financing
activities, is now reported as a component of cash flows from operating
activities.

Changes in trading account assets, previously classified within "Proceeds from
the sale of equity securities" and "Payments for the purchase of shares in
equity" within cash flows from investing activities have been reclassified to
cash flows from operating activities in "adjustments to reconcile net income to
cash provided by operating activities".

The net change in the policy loans receivable, previously reported in cash
flows operating activities, is now reported as a component of cash flows of
investing activities.

Changes related to stock based compensation and deferred compensation programs,
previously classified within cash flows from financing activities, have been
reclassified to cash flows from operating activities within "Other, net".

As a result of the restatements, previously reported cash flows from (used in)
operating activities, cash flows from (used) in investing activities and cash
flows from (used in) financing activities were increased or reduced for the six
months ended June 30, 2005 and 2004 as follows:

<TABLE>
<CAPTION>
      Six Months Ended June 30,
                                                       2005       2004
                                                     --------  ---------
      <S>                                            <C>       <C>
      Cash flows from (used in) operating activities
         As originally reported                      $(53,013) $  (1,628)
         Impact of Restatements                        42,215     49,282
         Revised for restatements                     (10,798)    47,654
      Cash flows from (used in) investing activities
         As originally reported                      $ 47,067  $(584,028)
         Impact of Restatements                        (7,366)   (13,217)
         Revised for restatements                      39,701   (597,245)
      Cash flows from (used in) financing activities
         As originally reported                      $(61,612) $ 599,088
         Impact of Restatements                       (34,849)   (36,065)
         Revised for restatements                     (96,461)   563,023
</TABLE>

The restatements had no impact on the total change in cash and cash equivalents
within the Statements of Cash Flows or on the Statements of Operations or
Statements of Financial Position.

                                      8

<PAGE>

American Skandia Life Assurance Corporation

Notes to Interim Financial Statements

The unaudited interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and on a basis consistent with reporting interim financial information in
accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X
of the Securities and Exchange Commission. These interim financial statements
are unaudited but reflect all adjustments that, in the opinion of management,
are necessary to provide a fair presentation of the results of operations and
financial condition of the Company for the interim periods presented. All such
adjustments are of a normal recurring nature. The results of operations for any
interim period are not necessarily indicative of results for a full year.
Certain amounts in the Company's prior year financial statements have been
reclassified to conform with the current year presentation. These unaudited
financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the year ended December 31, 2004.

3. CONTINGENCIES AND LITIGATION

Contingencies

On an ongoing basis, our internal supervisory and control functions review the
quality of our sales, marketing, annuity administration and servicing, and
other customer interface procedures and practices and may recommend
modifications or enhancements. In certain cases, if appropriate, the Company
may offer customers remediation and may incur charges, including the costs of
remediation, administrative costs and regulatory fines.

It is possible that the results of operations or the cash flow of the Company
in a particular quarterly or annual period could be materially affected as a
result of payments in connection with the matters discussed above or other
matters, depending, in part, upon the results of operations or cash flow for
that period. Management believes, however, that ultimate payments in connection
with these matters, after consideration of applicable reserves and
indemnification, should not have a material adverse effect on the Company's
financial position.

Litigation and Regulatory Matters

The Company is subject to legal and regulatory actions in the ordinary course
of its businesses. Pending legal and regulatory actions include proceedings
relating to aspects of our businesses and operations that are specific to the
Company and proceedings that are typical of the businesses in which the Company
operates. Some of these proceedings have been brought on behalf of various
alleged groups of complainants. In certain of these matters, the plaintiffs are
seeking large and/or indeterminate amounts, including punitive or exemplary
damages.

As indicated in the Company's Annual Report on Form 10-K for 2004, the
Securities and Exchange Commission and the State of New York Attorney General's
Office are investigating the Company and certain of its affiliates with regard
to alleged market timing in certain Company products. The Company believes that
these investigations are likely to lead to proceedings and/or settlements. The
Company is fully cooperating with these investigations. Any regulatory
settlement involving the Company and its affiliates would be subject to the
indemnification provisions of the acquisition agreement pursuant to which
Prudential Financial purchased the Company entities in May 2003 from Skandia
Insurance Company Ltd. (publ) ("Skandia"). With Skandia's approval, an offer
was made by the Company and its affiliates to these regulators to settle the
matters relating to market timing in variable annuities by paying restitution
and a civil penalty of $95 million in the aggregate, and there are ongoing
discussions with these regulators regarding settlement of these matters.

                                      9

<PAGE>

American Skandia Life Assurance Corporation

Notes to Interim Financial Statements

Prudential Financial and its subsidiaries currently use reinsurance primarily
to transfer mortality risk, to acquire or dispose of blocks of business and to
manage capital more effectively. Given the recent publicity surrounding certain
reinsurance transactions involving other companies in the insurance industry,
Prudential Financial voluntarily commenced a review of the accounting for the
reinsurance arrangements of Prudential Financial and its subsidiaries to
confirm that it complied with applicable accounting rules. This review includes
an inventory and examination of current and past arrangements. This review is
ongoing and not yet complete. Subsequent to commencing this voluntary review,
Prudential Financial and certain subsidiaries received formal requests for
information from the Connecticut Attorney General, the Connecticut Insurance
Department and the Securities and Exchange Commission requesting information
regarding their participation in certain reinsurance transactions. Prudential
Financial believes that a number of other insurance industry participants have
also received similar requests. It is possible that Prudential Financial and
its subsidiaries may receive additional requests from regulators relating to
reinsurance arrangements. Prudential Financial and its subsidiaries intend to
cooperate fully with all such requests.

The Company's litigation is subject to many uncertainties, and given its
complexity and scope, its outcome cannot be predicted. It is possible that the
results of operations or the cash flow of the Company in a particular quarterly
or annual period could be materially affected by an ultimate unfavorable
resolution of pending litigation and regulatory matters depending, in part,
upon the results of operations or cash flow for such period. Management
believes, however, that the ultimate outcome of all pending litigation and
regulatory matters, after consideration of applicable reserves, should not have
a material adverse effect on the Company's financial position.

4. RELATED PARTY TRANSACTIONS

Debt Agreements

On January 3, 2002, the Company entered into a $150 million credit facility
agreement with ASI. This credit facility terminates on December 31, 2005 and
bears interest at the London Interbank Offered Rate ("LIBOR") plus 0.35% per
annum for the relevant interest period. As of June 30, 2005, no amounts were
outstanding under this credit facility.

On March 12, 2004, the Company entered into a $45 million loan with Prudential
Funding, LLC, a wholly owned subsidiary of The Prudential Insurance Company of
America ("Prudential Insurance"). This loan matures on March 12, 2007 and has
an interest rate of 3.70%. The proceeds were used to support working capital
needs.

On May 1, 2004, the Company entered into a $500 million credit facility
agreement with Prudential Funding, LLC. Effective December 1, 2004, the credit
facility agreement was increased to $750 million. As of June 30, 2005, $335.3
million was outstanding under this credit facility.

Reinsurance Agreements

During 2005, the Company entered into a new reinsurance agreement with an
affiliate as part of its risk management and capital management strategies. The
company entered into a coinsurance agreement with Prudential Insurance
providing for the 100% reinsurance of its Lifetime Five benefit feature sold on
new business prior to May 6, 2005. Effective July 1, 2005, the Company entered
into a new coinsurance agreement with Pruco Re, Ltd. providing for the 100%
reinsurance of its Lifetime Five benefit feature sold on new business after
May 5, 2005 as well as for riders issued from March 15, 2005 forward on
business in-force before March 15, 2005.

5. NEW ACCOUNTING POLICIES AND ACCOUNTING PRONOUNCEMENTS

SFAS 154

In May 2005, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard ("SFAS") No. 154, "Accounting Changes and
Error Corrections--a replacement of APB Opinion No. 20 and FASB Statement
No. 3." SFAS No. 154 requires the retrospective application of changes in
accounting principles to prior periods' financial statements. This Statement
applies to all voluntary changes in accounting principles made after
December 15, 2005, and for the limited instance when a new accounting
pronouncement does not provide transition provisions.

Adoption of SOP 03-1

In July 2003, the Accounting Standards Executive Committee ("AcSEC") of the
American Institute of Certified Public Accountants ("AICPA") issued Statement
of Position ("SOP") 03-1, "Accounting and Reporting by Insurance Enterprises
for Certain Nontraditional Long-Duration Contracts and for Separate Accounts."
AcSEC issued the SOP 03-1 to address the need for interpretive guidance to be
developed in three areas: separate account presentation and valuation; the
accounting recognition given sales inducements (bonus interest, bonus credits,
persistency bonuses); and the classification and valuation of certain
long-duration contract liabilities.

                                      10

<PAGE>

The Company adopted the SOP effective January 1, 2004. The effect of initially
adopting SOP 03-1 was a charge of $17.1 million, net of $9.4 million of taxes,
which was reported as a "Cumulative effect of accounting change, net of taxes"
in the results of operations for the six months ended June 30, 2004. This
charge reflects the net impact of converting certain individual market value
adjusted annuity contracts from separate account accounting treatment to
general account accounting treatment and the effect of establishing reserves
for guaranteed minimum death benefit provisions of the Company's annuity
contracts. The Company also recognized a cumulative effect of accounting change
related to unrealized investment gains within "Other comprehensive income, net
of taxes" of $3.4 million, net of $1.9 million of taxes. Upon adoption of the
SOP $1.8 billion in "Separate account assets" were reclassified resulting in a
$1.7 billion increase in "Fixed maturities, available for sale, at fair value"
as well as changes in other non-separate account assets. Similarly, upon
adoption, $1.8 billion in "Separate account liabilities" were reclassified
resulting in increases in "Policyholders' account balances," as well as changes
in other non-separate account liabilities.

In December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (R), "Share-Based Payment," which
replaces FASB Statement No. 123, "Accounting for Stock-Based Compensation."
SFAS No. 123 (R) requires all entities to apply the fair value base measurement
method in accounting for share-based payment transactions with employees,
except for equity instruments held by employee share ownership plans. Under
this method, compensation costs of awards to employees, such as stock options,
are measured at fair value and expensed over the period during which an
employee is required to provide service in exchange for the award (the vesting
period). The Company had previously adopted the fair value recognition
provision of the original SFAS No. 123, prospectively for all interim and
annual periods beginning after June 15, 2005. However, the SEC has recently
deferred the effective date and as a result the Company will adopt SFAS No. 123
(R) on January 1, 2006. By that date, there will be no unvested stock options
issued prior to January 1, 2003.

Share-based Compensation Awards with Non-substantive Vesting Conditions

Prudential Financial issues share-based compensation awards to employees of the
Company under an authorized plan that are subject to specific vesting
conditions; generally the awards vest ratably over a three year period "the
nominal vesting period", or at the date the employee retires (as defined by the
plan), if earlier. For awards that specify an employee vests in the award upon
retirement, we account for the awards using the nominal vesting period
approach. Under this approach, the Company records compensation expense over
the nominal vesting period. If the employee retires before the end of the
nominal vesting period, any remaining unrecognized compensation expenses is
recorded at the date of retirement.

Upon the Company's adoption of SFAS No. 123(R), the Company will revise its
approach to apply the non-substantive vesting period approach to all new
share-based compensation awards. Under this approach, compensation cost will be
recognized immediately for awards granted to retirement-eligible employees, or
over the period from the grant date to the date retirement eligibility is
achieved, if that is expected to occur during the nominal vesting period. The
Company will continue to apply the nominal vesting period approach for any new
awards granted prior to the Company's adoption of SFAS No. 123(R), and for the
remaining portion of unvested outstanding awards.

The Company believes the adoption of SFAS No. 123(R) will not have a material
impact on its results of operations.

                                      11

<PAGE>

Item 4. Controls and Procedures

In order to ensure that the information we must disclose in our filings with
the Securities and Exchange Commission is recorded, processed, summarized, and
reported on a timely basis, the Company's management, including our Chief
Executive Officer and Chief Financial Officer, previously reviewed and
evaluated the effectiveness of our disclosure controls and procedures, as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of June 30, 2005.
Based on such evaluation, the Chief Executive Officer and Chief Financial
Officer previously concluded that, as of June 30, 2005, our disclosure controls
and procedures were effective in timely alerting them to material information
required to be included in our periodic SEC filings. No change in our internal
control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and
15d-15(f), occurred during the quarter ended June 30, 2005, that materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting. These conclusions are not affected by the
misclassifications in the Company's Statements of Cash Flows discussed in the
following paragraph, which were identified subsequent to the filing of the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.

As reported in a Current Report on Form 8-K filed by the Company on February 9,
2006, management of the Company concluded that certain amounts were incorrectly
classified in the Company's audited Statements of Cash Flows for the years
ended December 31, 2004, 2003 and 2002 included in the Company's 2004 Annual
Report on Form 10-K (the "2004 Form 10-K") and in the Company's interim
Statements of Cash Flows for the periods ended March 31 and June 30, 2005 and
2004 included in the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 2005 (the "2005 Forms 10-Q"). In connection with
the preparation of the Company's financial statements for the year ended
December 31, 2005, management of the Company concluded on February 3, 2006 that
the Company should file a Form 10-K/A and Forms 10-Q/A, including this Form
10-Q/A, restating the Statements of Cash Flows included in the 2004 Form 10-K
and in the 2005 Forms 10-Q. The restatements are limited in scope, relating
principally to the classification of data collected and not to the collection
of data or to the numerical accuracy of data collected. The Company has
implemented enhancements to its internal control over financial reporting,
primarily with respect to the periodic analysis and review of statements of
cash flows, designed to provide reasonable assurance that errors of this type
in the Company's Statements of Cash Flows will not recur.

                                      12

<PAGE>

                           PART II OTHER INFORMATION

Item 6. Exhibits

      31.1    Section 302 Certification of the Chief Executive Officer.

      31.2    Section 302 Certification of the Chief Financial Officer.

      32.1    Section 906 Certification of the Chief Executive Officer.

      32.2    Section 906 Certification of the Chief Financial Officer.

Schedules are omitted because they are either inapplicable or the information
required therein is included in the notes to Financial Statements included
herein.

                                      13

<PAGE>

                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                              AMERICAN SKANDIA LIFE ASSURANCE CORPORATION

                                              By: /s/ Michael A. Bohm
                                                  -----------------------------
                                                  Michael A. Bohm
                                                  Executive Vice President and
                                                  Chief Financial Officer
                                                  (Principal Financial Officer
                                                  and Principal Accounting
                                                  Officer)

February 9, 2006

                                      14

<PAGE>

                                 Exhibit Index

Exhibit Number and Description

      31.1    Section 302 Certification of the Chief Executive Officer.

      31.2    Section 302 Certification of the Chief Financial Officer.

      32.1    Section 906 Certification of the Chief Executive Officer.

      32.2    Section 906 Certification of the Chief Financial Officer.

                                      15