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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(MARK ONE)

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

For the quarterly period ended September 30, 2007

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 033-44202



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American Skandia Life Assurance
Corporation

(Exact Name of Registrant as Specified in its Charter)



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

One Corporate Drive

Shelton, Connecticut 06484

(203) 926-1888

(Address and Telephone Number of Registrants Principal Executive Offices)



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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 a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  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 November 13, 2007 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, Prudential Annuities, Inc. formerly known as 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 and

is therefore filing this Form 10-Q in the reduced disclosure format.



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TABLE OF CONTENTS



|                             |  |                                                                                                                                         |  |            
|---------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|                             |  |                                                                                                                                         |  | Page Number
|PART I FINANCIAL INFORMATION |  |                                                                                                                                        
|                             |  |                                                                                                                                        
|Item 1.                      |  | Financial Statements:                                                                                                                   |  |            
|                             |  |                                                                                                                                        
|                             |  | Unaudited Interim Statements of Financial PositionAs of September 30, 2007 and December 31, 2006                                        |  | 4          
|                             |  |                                                                                                                                        
|                             |  | Unaudited Interim Statements of Operations and Comprehensive IncomeThree Months Ended and Nine Months Ended September 30, 2007 and 2006 |  | 5          
|                             |  |                                                                                                                                        
|                             |  | Unaudited Interim Statement of Stockholders EquityNine Months Ended September 30, 2007                                                 |  | 6          
|                             |  |                                                                                                                                        
|                             |  | Unaudited Interim Statements of Cash FlowsNine Months Ended September 30, 2007 and 2006                                                 |  | 7          
|                             |  |                                                                                                                                        
|                             |  | Notes to Unaudited Interim Financial Statements                                                                                         |  | 8          
|                             |  |                                                                                                                                        
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                   |  | 12         
|                             |  |                                                                                                                                        
|Item 4.                      |  | Controls and Procedures                                                                                                                 |  | 15         
|                             | 
|PART II OTHER INFORMATION    |  |                                                                                                                                        
|                             |  |                                                                                                                                        
|Item 1.                      |  | Legal Proceedings                                                                                                                       |  | 16         
|                             |  |                                                                                                                                        
|Item 1A.                     |  | Risk Factors                                                                                                                            |  | 16         
|                             |  |                                                                                                                                        
|Item 6.                      |  | Exhibits                                                                                                                                |  | 16         
|                             | 
|SIGNATURES                   |  |                                                                                                                                        



2



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FORWARD LOOKING STATEMENTS

Certain of the statements included in this Quarterly Report on Form 10-Q, including but not limited to those in Managements Discussion and Analysis of Financial Condition and Results of Operations, may
constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, believes, anticipates, includes, plans,
assumes, estimates, projects, intends, should, will, shall or variations of such words are generally part of forward-looking statements. Forward-looking statements
are made based on managements current expectations and beliefs concerning future developments and their potential effects upon American Skandia Life Assurance Corporation. There can be no assurance that future developments affecting American
Skandia Life Assurance Corporation will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause
actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (1) general economic, market and political conditions, including the performance and
fluctuations of stock, real estate and other financial markets; (2) interest rate fluctuations; (3) reestimates of our reserves for future policy benefits and claims; (4) differences between actual experience regarding mortality,
morbidity, persistency, surrender experience, interest rates, or market returns and the assumptions we use in pricing our products, establishing liabilities and reserves or for other purposes; (5) changes in our assumptions related to deferred
policy acquisition costs, valuation of business acquired or goodwill; (6) changes in our claims-paying or credit ratings; (7) investment losses and defaults; (8) competition in our product lines and for personnel; (9) changes in
tax law; (10) regulatory or legislative changes; (11) adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities; (12) domestic or international military actions, natural or man-made
disasters including terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; (13) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks;
(14) effects of acquisitions, divestitures and restructurings, including possible difficulties in integrating and realizing the projected results of acquisitions; (15) changes in statutory or U.S. GAAP accounting principles, practices or
policies; and (16) changes in assumptions for retirement expense. American Skandia Life Assurance Corporation does not intend, and is under no obligation, to update any particular forward-looking statement included in this document. See
Risk Factors included in the Companys Annual Report on Form 10-K for the year ended December 31, 2006 and in this Quarterly Report on Form 10-Q for a discussion of certain risks relating to our business and investments in
securities.



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PART I-FINANCIAL INFORMATION

ITEM 1.Financial Statements

American Skandia Life Assurance Corporation

Unaudited Interim Statements of Financial Position

As of September 30, 2007 and December 31, 2006 (in thousands, except share amounts)



|                                                                                                         |  |                   |            |                  |   |           
|-------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | ---------------- | - | ----------
|                                                                                                         |  | September 30,2007 |            | December 31,2006
|ASSETS                                                                                                   |  |                   |            |                  |   |           
|Fixed maturities available for sale, at fair value (amortized cost  2007: $1,110,371; 2006: $1,161,355) |  | $                 | 1,117,035  |                  | $ | 1,174,353 
|Trading account assets, at fair value                                                                    |  |                   | 16,510     |                  |   | 18,144    
|Equity securities available for sale, at fair value (cost  2007: $18,130; 2006: $18,487)                |  |                   | 17,549     |                  |   | 18,344    
|Commercial loans                                                                                         |  |                   | 40,324     |                  |   | 40,846    
|Policy loans                                                                                             |  |                   | 12,676     |                  |   | 12,638    
|Short-term investments                                                                                   |  |                   | 53,030     |                  |   | 60,872    
|Other long-term investments                                                                              |  |                   | 1,046      |                  |   | 6,105     
|                                                                                                         |  |                   |            |                  |   |           
|Total investments                                                                                        |  | $                 | 1,258,170  |                  | $ | 1,331,302 
|                                                                                                         |  |                   |            |                  |   |           
|Cash and cash equivalents                                                                                |  |                   | 622        |                  |   | 664       
|Deferred policy acquisition costs                                                                        |  |                   | 967,384    |                  |   | 766,277   
|Accrued investment income                                                                                |  |                   | 11,062     |                  |   | 12,456    
|Income taxes receivable                                                                                  |  |                   | 208,983    |                  |   | 217,768   
|Valuation of business acquired                                                                           |  |                   | 127,693    |                  |   | 152,650   
|Deferred sales inducements                                                                               |  |                   | 499,480    |                  |   | 359,815   
|Receivables from parent and affiliates                                                                   |  |                   | 70,363     |                  |   | 94,221    
|Other assets                                                                                             |  |                   | 51,579     |                  |   | 17,036    
|Separate account assets                                                                                  |  |                   | 41,426,872 |                  |   | 35,608,409
|                                                                                                         |  |                   |            |                  |   |           
|TOTAL ASSETS                                                                                             |  | $                 | 44,622,208 |                  | $ | 38,560,598
|                                                                                                         |  |                   |            |                  |   |           
|                                                                                                         |  |                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                     |  |                   |            |                  |   |           
|                                                                                                         |  |                  
|LIABILITIES                                                                                              |  |                   |            |                  |   |           
|Policyholders account balances                                                                          |  | $                 | 938,044    |                  | $ | 993,260   
|Future policy benefits and other policyholder liabilities                                                |  |                   | 115,907    |                  |   | 114,854   
|Payables to parent and affiliates                                                                        |  |                   | 65,459     |                  |   | 45,667    
|Cash collateral for loaned securities                                                                    |  |                   | 35,261     |                  |   | 39,962    
|Short-term borrowing                                                                                     |  |                   | 482,112    |                  |   | 159,546   
|Long-term borrowing                                                                                      |  |                   | 330,000    |                  |   | 405,000   
|Future fees payable to Prudential Annuities, Inc.                                                        |  |                   | 18,561     |                  |   | 48,531    
|Other liabilities                                                                                        |  |                   | 248,435    |                  |   | 268,497   
|Separate account liabilities                                                                             |  |                   | 41,426,872 |                  |   | 35,608,409
|                                                                                                         |  |                   |            |                  |   |           
|Total liabilities                                                                                        |  | $                 | 43,660,651 |                  | $ | 37,683,726
|                                                                                                         |  |                   |            |                  |   |           
|Commitments and Contingent Liabilities (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                                                                               |  |                   | 334,096    |                  |   | 334,096   
|Retained earnings                                                                                        |  |                   | 622,527    |                  |   | 534,899   
|Accumulated other comprehensive income                                                                   |  |                   | 2,434      |                  |   | 5,377     
|                                                                                                         |  |                   |            |                  |   |           
|Total stockholders equity                                                                               |  | $                 | 961,557    |                  | $ | 876,872   
|                                                                                                         |  |                   |            |                  |   |           
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                               |  | $                 | 44,622,208 |                  | $ | 38,560,598
|                                                                                                         |  |                   |            |                  |   |           

See Notes to Unaudited Interim Financial Statements



4



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American Skandia Life Assurance Corporation

Unaudited Interim Statements of Operations and Comprehensive Income

Three and Nine Months Ended September 30, 2007 and 2006 (in thousands)



|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                     |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                     |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|REVENUES                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Premiums                                                             |  | $                               | 4,812   |   |                                | $ | 16,790  |      |  | $ | 21,792  |   |  | $ | 26,534  |  
|Policy charges and fee income                                        |  |                                 | 179,396 |   |                                |   | 140,902 |      |  |   | 512,648 |   |  |   | 414,954 |  
|Net investment income                                                |  |                                 | 18,577  |   |                                |   | 25,477  |      |  |   | 54,564  |   |  |   | 66,785  |  
|Realized investment (losses), net                                    |  |                                 | (13,673 | ) |                                |   | (7,996  | )    |  |   | (29,589 | ) |  |   | (44,423 | )
|Asset management fees                                                |  |                                 | 58,008  |   |                                |   | 41,917  |      |  |   | 162,832 |   |  |   | 122,838 |  
|Other income                                                         |  |                                 | 116     |   |                                |   | 214     |      |  |   | 899     |   |  |   | 640     |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total revenues                                                       |  | $                               | 247,236 |   |                                | $ | 217,304 |      |  | $ | 723,146 |   |  | $ | 587,328 |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                                     |  |                                 |         |  
|BENEFITS AND EXPENSES                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Policyholders benefits                                              |  |                                 | (3,222  | ) |                                |   | 32,968  |      |  |   | 43,352  |   |  |   | 71,120  |  
|Interest credited to policyholders account balances                 |  |                                 | 21,613  |   |                                |   | 22,799  |      |  |   | 66,377  |   |  |   | 56,977  |  
|General, administrative and other expenses                           |  |                                 | 129,775 |   |                                |   | 113,821 |      |  |   | 388,315 |   |  |   | 312,354 |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total benefits and expenses                                          |  | $                               | 148,166 |   |                                | $ | 169,588 |      |  | $ | 498,044 |   |  | $ | 440,451 |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income from operations before income taxes                           |  | $                               | 99,070  |   |                                | $ | 47,716  |      |  | $ | 225,102 |   |  | $ | 146,877 |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income tax expense                                                   |  |                                 | 9,335   |   |                                |   | 6,545   |      |  |   | 17,122  |   |  |   | 13,600  |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                                     |  |                                 |         |  
|NET INCOME                                                           |  | $                               | 89,735  |   |                                | $ | 41,171  |      |  | $ | 207,980 |   |  | $ | 133,277 |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Change in net unrealized investment gains (losses), net of taxes (1) |  |                                 | 3,775   |   |                                |   | 17,210  |      |  |   | (2,943  | ) |  |   | 10,165  |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                                     |  |                                 |         |  
|COMPREHENSIVE INCOME                                                 |  | $                               | 93,510  |   |                                | $ | 58,381  |      |  | $ | 205,037 |   |  | $ | 143,442 |  
|                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  

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|(1) | Amounts are net of tax benefits of $(2.1) million and $(9.4) million for the three months ended September 30, 2007 and 2006, respectively, and $1.6 million and $(5.6) million
for the nine months ended September 30, 2007 and 2006.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See Notes to Unaudited Interim Financial Statements



5



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American Skandia Life Assurance Corporation

Unaudited Interim Statement of Stockholders Equity

Nine Months Ended September 30, 2007 (in thousands)



|                                                                  |  |             |       |                          |   |                  |  |   |                                     |   |  |                          |        |   |  |   |          |  
|----------------------------------------------------------------- |  | ----------- | ----- | ------------------------ | - | ---------------- |  | - | ----------------------------------- | - |  | ------------------------ | ------ | - |  | - | -------- | -
|                                                                  |  | CommonStock |       | Additionalpaid-incapital |   | Retainedearnings |  |   | Accumulatedothercomprehensiveincome |   |  | Totalstockholdersequity |       
|Balance, December 31, 2006                                        |  | $           | 2,500 |                          | $ | 334,096          |  | $ | 534,899                             |   |  | $                        | 5,377  |   |  | $ | 876,872  |  
|Net income                                                        |  |             |       |                          |   |                  |  |   | 207,980                             |   |  |                          |        |   |  |   | 207,980  |  
|Cumulative effect of change in accounting principle, net of taxes |  |             |       |                          |   |                  |  |   | (8,153                              | ) |  |                          |        |   |  |   | (8,153   | )
|Distribution to parent                                            |  |             |      |                          |   |                 |  |   | (112,199                            | ) |  |                          |        |   |  |   | (112,199 | )
|Other comprehensive income, net of taxes                          |  |             |       |                          |   |                  |  |   |                                     |   |  |                          | (2,943 | ) |  |   | (2,943   | )
|                                                                  |  |             |       |                          |   |                  |  |   |                                     |   |  |                          |        |   |  |   |          |  
|Balance, September 30, 2007                                       |  | $           | 2,500 |                          | $ | 334,096          |  | $ | 622,527                             |   |  | $                        | 2,434  |   |  | $ | 961,557  |  
|                                                                  |  |             |       |                          |   |                  |  |   |                                     |   |  |                          |        |   |  |   |          |  

See Notes to Unaudited Interim Financial Statements



6



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American Skandia Life Assurance Corporation

Unaudited Interim Statements of Cash Flows

Nine Months Ended September 30, 2007 and 2006 (in thousands)



|                                                                                  |  |                                   |            |   |                                   |   |            |  
|--------------------------------------------------------------------------------- |  | --------------------------------- | ---------- | - | --------------------------------- | - | ---------- | -
|                                                                                  |  | Nine monthsendedSeptember 30,2007 |            |   | Nine monthsendedSeptember 30,2006 |  
|CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:                                   |  |                                   |            |   |                                   |   |            |  
|Net income                                                                        |  | $                                 | 207,980    |   |                                   | $ | 133,276    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                   |            |   |                                   |   |            |  
|Realized investment losses, net                                                   |  |                                   | 29,589     |   |                                   |   | 44,423     |  
|Amortization and depreciation                                                     |  |                                   | 22,782     |   |                                   |   | 29,400     |  
|Interest credited to policyholders account balances                              |  |                                   | 48,340     |   |                                   |   | 44,647     |  
|Change in:                                                                        |  |                                   |            |   |                                   |   |            |  
|Policy reserves                                                                   |  |                                   | (701       | ) |                                   |   | 33,032     |  
|Accrued investment income                                                         |  |                                   | 1,186      |   |                                   |   | (177       | )
|Trading account assets                                                            |  |                                   | 1,634      |   |                                   |   | 7,506      |  
|Net receivable from parent and affiliates                                         |  |                                   | 43,650     |   |                                   |   | 19,662     |  
|Deferred sales inducements                                                        |  |                                   | (143,241   | ) |                                   |   | (90,082    | )
|Deferred policy acquisition costs                                                 |  |                                   | (210,379   | ) |                                   |   | (174,973   | )
|Income taxes payable                                                              |  |                                   | 17,015     |   |                                   |   | 14,868     |  
|Other, net                                                                        |  |                                   | (30,996    | ) |                                   |   | (93,895    | )
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|Cash Flows From (Used in) Operating Activities                                    |  | $                                 | (13,141    | ) |                                   | $ | (32,313    | )
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|                                                                                  |  |                                  
|CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:                                   |  |                                   |            |   |                                   |   |            |  
|Proceeds from the sale/maturity of fixed maturities available for sale            |  |                                   | 1,297,568  |   |                                   |   | 3,155,396  |  
|Payments for the purchase of fixed maturities available for sale                  |  |                                   | (1,274,430 | ) |                                   |   | (3,196,317 | )
|Payments for the purchase of commercial loans                                     |  |                                   | (282       | ) |                                   |   | (27,533    | )
|Proceeds from the repayment of commercial loans                                   |  |                                   | 649        |   |                                   |   | 1,351      |  
|Proceeds from the sale/maturity of policy loans                                   |  |                                   | 1,790      |   |                                   |   |            |  
|Payments for the issuance of policy loans                                         |  |                                   | (1,828     | ) |                                   |   | (1,611     | )
|Proceeds from the sale of other long-term investments                             |  |                                   | 1,771      |   |                                   |   |           |  
|Other short-term investments, net                                                 |  |                                   | 7,842      |   |                                   |   | 79,653     |  
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|Cash Flows From (Used in) Investing Activities                                    |  | $                                 | 33,080     |   |                                   | $ | 10,939     |  
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|                                                                                  |  |                                  
|CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:                                   |  |                                   |            |   |                                   |   |            |  
|Decrease in future fees payable to Prudential Annuities Inc., net                 |  |                                   | (29,970    | ) |                                   |   | (50,893    | )
|Cash collateral for loaned securities                                             |  |                                   | (4,701     | ) |                                   |   | (61,065    | )
|Securities sold under agreement to repurchase                                     |  |                                   |           |   |                                   |   | (7,147     | )
|Repayments of debt (maturities longer than 90 days)                               |  |                                   | (75,000    | ) |                                   |   | (30,000    | )
|Net increase in short-term borrowing                                              |  |                                   | 322,567    |   |                                   |   | 243,272    |  
|Drafts outstanding                                                                |  |                                   | (20,608    | ) |                                   |   | 7,079      |  
|Distribution (to) parent Policyholders account balances:                         |  |                                   | (112,199   | ) |                                   |   | (150,000   | )
|Deposits                                                                          |  |                                   | 948,854    |   |                                   |   | 1,157,903  |  
|Withdrawals                                                                       |  |                                   | (1,048,924 | ) |                                   |   | (1,087,371 | )
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|Cash Flows (Used in) From Financing Activities                                    |  | $                                 | (19,981    | ) |                                   | $ | 21,778     |  
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|Net increase in cash and cash equivalents                                         |  |                                   | (42        | ) |                                   |   | 404        |  
|Cash and cash equivalents, beginning of period                                    |  |                                   | 664        |   |                                   |   | 3,507      |  
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |  | $                                 | 622        |   |                                   | $ | 3,911      |  
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|Income taxes paid (received)                                                      |  | $                                 | 106        |   |                                   | $ | (1,271     | )
|                                                                                  |  |                                   |            |   |                                   |   |            |  
|Interest paid                                                                     |  | $                                 | 18,677     |   |                                   | $ | 35,251     |  
|                                                                                  |  |                                   |            |   |                                   |   |            |  

See Notes to Unaudited Interim Financial Statements



7



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American Skandia Life Assurance Corporation

Notes to Unaudited 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
Prudential Annuities, Inc. (PAI), formerly known as American Skandia, Inc., 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 (the Acquisition
Agreement) with Prudential Financial whereby Prudential Financial would acquire the Company and certain of its affiliates (the Acquisition) and would be authorized to use the American Skandia name through April, 2008. On
May 1, 2003, the Acquisition was consummated. Thus, the Company now is an indirect wholly owned subsidiary of Prudential Financial. During 2007, we began the process of changing the names of the Companys various legal entities that
include the American Skandia name.

The Company develops long-term savings and retirement products, that are distributed through its affiliated
broker-dealer company, American Skandia Marketing, Incorporated, which is a wholly owned subsidiary of PAI. The Company currently issues variable and fixed 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

The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.
GAAP) 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 U.S. Securities and Exchange Commission (the SEC). 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. These unaudited interim 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, 2006.

Use of
Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.

The most significant estimates include those used in determining deferred policy acquisition costs, valuation of business acquired,
investments, future policy benefits, provision for income taxes, reserves for contingent liabilities and reserves for losses in connection with unresolved legal matters.

3. CONTINGENT LIABILITIES AND LITIGATION

Contingent Liabilities

On an ongoing basis, our internal supervisory and control functions review the quality of our sales, marketing, administration and servicing, and other customer interface
procedures and practices and may recommend modifications or enhancements. From time to time, this review process results in the discovery of administration, servicing or other errors, including errors relating to the timing or amount of payments or
contract values due to customers. In certain cases, if appropriate, we may offer customers remediation and may incur charges, including the costs of such 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 rights to 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 business,
including class action lawsuits. The Companys pending legal and regulatory actions include proceedings specific to the Company and proceedings generally applicable to business practices in the industry in which it operates. The Company is
subject to class action lawsuits and other litigation alleging, among other things, that it 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



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accounts or breached fiduciary duties to customers. The Company is also subject to litigation arising out of its general business activities, such as its
investments and contracts, and could be exposed to claims or litigation concerning certain business or process patents. In some of the Companys pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts,
including punitive or exemplary damages. The following is a summary of certain pending proceedings.

The Company commenced a remediation program to correct
errors in the administration of approximately 11,000 annuity contracts issued by the Company. The owners of these contracts did not receive notification that the contracts were approaching or past their designated annuitization date or default
annuitization date (both dates referred to as the contractual annuity date) and the contracts were not annuitized at their contractual annuity dates. Some of these contracts also were affected by data integrity errors resulting in
incorrect contractual annuity dates. The lack of notice and the data integrity errors, as reflected on the annuities administrative system, all occurred before the Acquisition. The remediation and administrative costs of the remediation program are
subject to the indemnification provisions of the Acquisition Agreement.

Commencing in 2003, the Company received formal requests for information from the
SEC and the New York Attorney General (NYAG) relating to market timing in variable annuities by the Company and certain affiliated companies. In connection with these investigations, with the approval of Skandia an offer was made by the
Company to the authorities investigating its companies, the SEC and NYAG to settle these matters by paying restitution and a civil penalty of $95 million in the aggregate. While not assured, the Company believes these discussions are likely to lead
to settlements with these authorities by it or its affiliates. Any regulatory settlement involving the Company and certain affiliates would be subject to the indemnification provisions of the Acquisition Agreement pursuant to which Prudential
Financial purchased the Company and certain affiliates in May 2003 from Skandia. If achieved, settlement of the matters relating to the Company and certain affiliates also could involve continuing monitoring, changes to and/or supervision of
business practices, findings that may adversely affect existing or cause additional litigation, adverse publicity and other adverse impacts to the Companys businesses.

During the third quarter of 2004, the Company identified a system-generated calculation error in its annuity contract administration system that existed prior to the Acquisition. This error related to the calculation
of amounts due to customers for certain transactions subject to a market value adjustment upon the surrender or transfer of monies out of their annuity contracts fixed allocation options. The error resulted in an underpayment to policyholders,
as well as additional anticipated costs to the Company associated with remediation, breakage and other costs. The Companys consultants have developed the systems functionality to compute remediation amounts and are in the process of running
the computations on affected contracts. The Company has begun contacting regulators and expects to commence a phased outreach to customers early next quarter as computations are completed. The Company has advised Skandia that a portion of the
remediation and related administrative costs are subject to the indemnification provisions of the Acquisition Agreement.

The Companys litigation and
regulatory matters are subject to many uncertainties, and given their complexity and scope, the outcomes 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 and rights to indemnification, should not have a material adverse effect on the Companys financial position.

It should be noted that the judgments, settlements and expenses associated with many of these lawsuits, administrative and regulatory matters, and contingencies,
including certain claims described above, may, in whole or in part, after satisfaction of certain retention requirements, fall within Skandias indemnification obligations to Prudential Financial and its subsidiaries under the terms of the
Acquisition Agreement. Those obligations of Skandia provide for indemnification of certain judgments, settlements, and costs and expenses associated with lawsuits and other claims against the Company (matters), and apply only to matters,
or groups of related matters, for which the costs and expenses exceed $25,000 individually. Additionally, those obligations only apply to such otherwise indemnifiable costs and expenses that exceed $10 million in the aggregate, subject to reduction
for insurance proceeds, certain accruals and any realized tax benefit applicable to such amounts, and those obligations do not apply to the extent that such aggregate exceeds $1 billion. We are in discussions with Skandia regarding the satisfaction
of the $10 million deductible.

4. RELATED PARTY TRANSACTIONS

The Company is a party to numerous transactions and relationships with its affiliate The Prudential Insurance Company of America (Prudential Insurance) and other affiliates. It is possible that the terms of these transactions
are not the same as those that would result from transactions among unrelated parties.

Expense Charges and Allocations

Many of the Companys expenses are allocations or charges from Prudential Insurance or other affiliates.

The Companys general and administrative expenses are charged to the Company using allocation methodologies based on business processes. Management believes that
the methodology is reasonable and reflects costs incurred by Prudential Insurance to process transactions on behalf of the Company. The Company operates under service and lease agreements whereby services of officers and employees, supplies, use of
equipment and office space are provided by Prudential Insurance. Since 2003, general and administrative expenses also include allocations of stock compensation expenses related to a stock option program and a deferred compensation program sponsored
by Prudential Financial.



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The Company is charged for its share of employee benefits expenses. These expenses include costs for funded and
non-funded contributory and non-contributory defined benefit pension plans. Some of these benefits are based on earnings and length of service. Other benefits are based on an account balance, which takes into consideration age, service and earnings
during career.

The Companys share of net expense for the pension plans was $1.0 million and $1.1 million for the three months ended
September 30, 2007 and 2006 respectively; and $2.9 million and $3.2 million, for the nine months ended September 30, 2007 and 2006, respectively.

Prudential Insurance sponsors voluntary savings plans for the Companys employees (401(k) plans). The 401(k) plans provide for salary reduction contributions by employees and matching contributions by the Company of up to
4% of annual salary. The expense charged the Company for the matching contribution to the 401k plans was $0.5 million and $0.4 million for the three months ended September 30, 2007 and 2006, respectively; and $1.4 million and $1.1 million, for
the nine months ended September 30, 2007 and 2006, respectively.

Debt Agreements

Short-term and Long-term borrowings

On December 14, 2006, the Company entered into a $300 million loan with
Prudential Financial. This loan has an interest rate of 5.18% and matures on December 14, 2011.

On March 12, 2004, the Company entered into a
$45 million loan with Prudential Funding, LLC. This loan had an interest rate of 5.37% and matured on July 17, 2007.

On March 10, 2005, the
Company entered into a $30 million loan with Prudential Funding, LLC. This loan had an interest rate of 5.37% and matured on July 17, 2007.

On
March 10, 2005, the Company entered into a $30 million loan with Prudential Funding, LLC. This loan has an interest rate of 6.10% and matures on March 11, 2008.

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
September 30, 2007 and December 31, 2006, $482.1 million and $159.5 million, respectively, was outstanding under this credit facility.

Reinsurance Agreements

During 2006, the Company entered into two new reinsurance agreements with an affiliate as part of its risk
management and capital management strategies. Effective November 20, 2006, the Company entered into a coinsurance agreement with Pruco Reinsurance, Ltd. (Pruco Re) providing for the 100% reinsurance of its Highest Daily Lifetime
Five (HDLT5) benefit feature sold on certain of its annuities. Effective March 20, 2006, the Company entered into a new coinsurance agreement with Pruco Re providing for the 100% reinsurance of its Spousal Lifetime Five benefit
(SLT5) feature.

Affiliated Asset Management Fee Income

In accordance with an agreement with AST Investment Services, Inc. formerly known as American Skandia Investment Services, Inc, the Company receives fee income calculated on contractholder separate account balances
invested in the Advanced Series Trust, formerly known as American Skandia Trust. Income received from AST Investment Services, Inc. related to this agreement was $46.4 million and $31.2 million, for the three months ended September 30, 2007 and
2006, respectively; and $128.4 million and $86.5 million, for the nine months ended September 30, 2007 and 2006, respectively. These revenues are recorded as Asset management fees in the Statements of Operations and Comprehensive
Income.

5. NEW ACCOUNTING POLICIES AND ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted

In June 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109. This interpretation prescribes a comprehensive model for how a company should recognize,
measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on a tax return. The Company adopted FIN No. 48 on January 1, 2007, which resulted in a decrease to its income
tax liability and an increase to retained earnings of $1.4 million as of January 1, 2007, which was reported as a Cumulative effect of a change in accounting principle, net of taxes in the Statement of Stockholders Equity for
the nine months ended September 30, 2007.

The Company had no unrecognized tax benefits as of the date of adoption of FIN No. 48.

The Company classifies all interest and penalties related to tax uncertainties as income tax expense. As of the date of adoption of FIN No. 48, the Company had no
liabilities for tax-related interest and penalties.



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The audit periods of the Internal Revenue Service (the Service) remain open for review until the statute of
limitations has passed. Generally, for tax years which produce the net operating losses, capital losses or tax credit carryforwards (tax attributes), the statute of limitations does not close, to the extent of these tax attributes, until
the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to our liability for income taxes. Any such adjustment could be material
to our results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next
12 months.

In August 2007, the Service released Revenue Ruling 2007-54, which included, among other items, guidance on the methodology to be followed in
calculating the dividends received deduction related to variable life insurance and annuity contracts. In September 2007, the IRS released Revenue Ruling 2007-61. Revenue Ruling 2007-61 suspends Revenue Ruling 2007-54 and informs taxpayers that the
U.S. Treasury Department and the IRS intend to address through new regulations the issues considered in Revenue Ruling 2007-54, including the methodology to be followed in determining the dividends received deduction related to variable life
insurance and annuity contracts. These activities had no impact on the Companys 2007 results.

In February 2006, the FASB issued SFAS No. 155,
Accounting for Certain Hybrid Instruments. This statement eliminates an exception from the requirement to bifurcate an embedded derivative feature from beneficial interests in securitized financial assets. The Company has used this
exception for investments the Company has made in securitized financial assets in the normal course of operations, and thus has not previously had to consider whether such investments contain an embedded derivative. The new requirement to identify
embedded derivatives in beneficial interests will be applied on a prospective basis only to beneficial interests acquired, issued, or subject to certain remeasurement conditions after the adoption of the guidance. This statement also provides an
election, on an instrument by instrument basis, to measure at fair value an entire hybrid financial instrument that contains an embedded derivative requiring bifurcation, rather than measuring only the embedded derivative on a fair value basis. If
the fair value election is chosen, changes in unrealized gains and losses are reflected in the Statements of Operations and Comprehensive Income. The Company adopted this guidance effective January 1, 2007. The Companys adoption of this
guidance did not have a material effect on the Companys financial position or results of operations.

In September 2005, the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants issued SOP 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts. SOP
05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97. SOP 05-1 defines an internal
replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within
a contract, and is effective for internal replacements occurring in fiscal years beginning after December 15, 2006.

The Company adopted SOP 05-1
effective January 1, 2007. The effect of initially adopting SOP 05-1 was a charge to the opening balance of retained earnings of $14.7 million before tax, $9.5 million net of taxes, which was reported as a Cumulative effect of a change in
accounting principle, net of taxes in the Statement of Stockholders Equity for the nine months ended September 30, 2007.

Recent
Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities. This statement provides companies with an option to report selected financial assets and liabilities at fair value with the associated changes in fair value reflected in the Statement of Operations and Comprehensive Income. This
statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2008. The Company is currently assessing the impact of SFAS No. 159
on its financial position and results of operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement does not change which assets and liabilities are
required to be reported at fair value, but the application of this Statement could change current practices in determining fair value. The Company plans to adopt this guidance effective January 1, 2008. This statement is effective for fiscal
years beginning after November 15, 2007 with early adoption permitted. The Company is currently assessing the impact of SFAS No. 157 on its financial position and results of operations.



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American Skandia Life Assurance Corporation

Notes to Unaudited Interim Financial Statements

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

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

This Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) addresses the financial condition of American
Skandia Life Assurance Corporation (the Company) as of September 30, 2007 compared with December 31, 2006 and its results of operations for the three month periods ended September 30, 2007 and 2006 and the nine month
periods ended September 30, 2007 and 2006. You should read the following analysis of our financial condition and results of operations in conjunction with the Risk Factors section, the MD&A and the audited Financial Statements
included in the Companys Annual Report on Form 10-K for the year ended December 31, 2006, as well as the Risk Factors section, the statements under Forward Looking Statements, and the Interim Financial Statements
included elsewhere in this Quarterly Report on Form 10-Q.

General

The Company was established in 1988 and is a significant provider of variable annuity contracts for the individual market in the United States of America and its territories. The Companys products are sold
primarily to individuals to provide for savings and retirement needs and to address the economic impact of premature death, estate planning concerns and supplemental retirement income. The investment performance of the registered investment
companies supporting the variable annuity contracts, which is principally correlated to equity market performance, can significantly impact the market for the Companys products.

Products

The Company offers a wide array of annuities, including deferred and immediate variable annuities that are
registered with the United States Securities and Exchange Commission (the SEC), which may include (1) fixed interest rate allocation options, subject to a market value adjustment, and registered with the SEC, and (2) fixed rate
allocation options not subject to a market value adjustment and not registered with the SEC. In addition, the Company has in force a relatively small block of variable life insurance policies, but it no longer actively sells such policies.

The Company offers variable annuities that provide our customers with a full suite of optional guaranteed death and living benefits. Our investment
options within our variable annuities provide our customers with the opportunity to make allocations in proprietary and non-proprietary mutual fund options, frequently under asset allocation programs, and fixed interest rate options. The allocations
made by customers to the proprietary and non-proprietary mutual fund options represent an interest in separate investment companies that provide a return linked to an underlying investment portfolio. The investments made in the fixed interest rate
options are credited with a rate of return that we determine from time to time, subject to certain contractual minimums. The Company also offers fixed annuities that provide a guarantee of principal and a guaranteed interest rate.

Annuity contracts represent the insurers contractual obligation to make payments over a given period of time, often measured by the life of the annuitant, in
return for a single deposit or a series of scheduled or flexible deposits. The insurers obligation to pay may commence immediately or be deferred. If the insurers payments are deferred, the insurer generally incurs an obligation to offer
a surrender value available during the deferral period based on an account value, and certain guarantees as applicable. The account value consists of the deposits and may earn interest, or may vary with the performance of investments in the
underlying fund options made available by the insurer and elected by contractholders. Gains on deposits made by the contractholder, before distribution, generally are tax deferred for the contractholder. Distributions are taxed as ordinary income to
the contractholder, until all gain has been withdrawn. For immediate annuities and annuitized deferred annuities, a portion of each distribution may be treated as a return of the contractholders investment in the contract.

Marketing and Distribution

The Company sells its annuity products
through multiple distribution channels, including (1) independent broker-dealer firms and financial planners; (2) broker-dealers that are members of the New York Stock Exchange, including wirehouse and regional broker-dealer
firms; and (3) broker-dealers affiliated with banks or that specialize in marketing to customers of banks. Although the Company is active in each of those distribution channels, the majority of the Companys sales have come from the
independent broker-dealer firms and financial planners. The Company has selling agreements with approximately nine hundred broker-dealer firms and financial institutions. On June 1, 2006, The Prudential Insurance Company of America, an
affiliate of the Company, acquired the variable annuity business of The Allstate Corporation (Allstate), which included access to the Allstate affiliated broker-dealer. The Company began distributing variable annuities through the
Allstate affiliated broker-dealer registered representatives in the third quarter of 2006.

Although many of the Companys competitors have acquired
or are seeking to acquire their distribution channels as a means of securing sales, the Company typically does not follow that model. Instead, the Company believes that its success is dependent on its ability to enhance its relationships with both
the selling firms and their registered representatives. In cooperation with its affiliated broker-dealer, American Skandia Marketing, Incorporated, the Company uses wholesalers to provide support to its distribution channels.

The Companys Changes in Financial Position and Results of Operations are described below.



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Significant Accounting Policies

For information on the Companys significant accounting policies, see Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations of the Companys
Annual Report on Form 10-K for the year ended December 31, 2006.

Changes in Financial Position

Assets increased by $6.1 billion, from $38.5 billion at December 31, 2006 to $44.6 billion at September 30, 2007. Separate account assets increased by $5.8
billion, driven by positive net flows and market appreciation during the current year. Deferred policy acquisition costs (DAC) and deferred sales inducements also increased by $201.1 million and $139.7 million, between December 31,
2006 and September 30, 2007, respectively, due to increased sales driving higher capitalized costs.

During the period, total liabilities increased by
$6.0 billion, from $37.7 billion at December 31, 2006 to $43.7 billion at September 30, 2007. Separate account liabilities increased by $5.8 billion, driven by positive net flows and market appreciation during the current year.
Additionally, borrowings increased by $247.6 million in order to fund the costs associated with new business sales.

Results of Operations

2007 to 2006 Three Month Comparison

Net Income

Net income increased by $48.5 million, from $41.2 million for the three months ended September 30, 2006 to $89.7 million for the three months
ended September 30, 2007. Net income includes a $40.6 million benefit in the current quarter compared to $8.9 million expense in the prior year quarter from a net reduction in amortization of deferred policy acquisition and other costs and a
decrease in reserves for the guaranteed minimum death benefit and guaranteed minimum income benefit features of our variable annuity products, due to decreased costs of actual and expected death claims and an increased estimate of total gross
profits used as a basis for amortizing deferred policy acquisition and other costs based on a regular annual review. Policy charges and fee income increased by $38.5 million and asset management fees increased by $16.1 million, driven by growth in
the separate account assets due to positive net flows and market appreciation since September 30, 2006. These favorable variances were partially offset by an increase of $17.5 million in amortization of DAC, excluding the current year
benefit mentioned above, due to higher than expected actual gross profits in the current period. In addition, commissions, net of capitalization, increased by $8.7 million, driven by higher asset based commissions due to growth in separate account
assets, general and administrative expenses increased by $10.2 million, primarily driven by the customer remediation reserve increase due to the market value adjustment error as previously discussed, net investment income decreased by $6.9 million,
and realized investment losses increased by $5.7 million. Further details regarding the components of revenues and expenses are described below.

Revenues

Revenues increased by $29.9 million, from $217.3 million for the three months ended September 30, 2006 to $247.2 million for
the three months ended September 30, 2007. Premiums decreased by $12.0 million, from $16.8 million for the three months ended September 30, 2006 to $4.8 million for the three months ended September 30, 2007, reflecting a reduction in
the volume of settlements in the current year related to the previously discussed annuitization remediation program as the majority of these claims were processed in 2006.

Policy charges and fee income increased by $38.5 million, from $140.9 million for the three months ended September 30, 2006 to $179.4 million for the three months ended September 30, 2007 due to growth of
separate account assets driven by net flows and market appreciation. Optional benefit charges on our living and death benefit features increased $6.4 million, primarily driven by sales of our Lifetime Five, Spousal Lifetime Five and Highest Daily
Lifetime Five benefit features. This increase was primarily offset in realized investment losses, net because these features are reinsured with affiliates. Additionally, policy charges and fee income decreased $1.0 million from the prior year
quarter due to the change in realized market value adjustments related to the Companys fixed, market value adjusted investment option (MVA option).

Net investment income decreased $6.9 million from $25.5 million for the three months ended September 30, 2006 to $18.6 million for the three months ended September 30, 2007 as a result of lower general
account assets as these assets moved from general account fixed rate investment options into separate account variable investment options due to the guaranteed return option (GRO) rebalancing feature.

Realized investment losses, net, increased by $5.7 million from a loss of $8.0 million for the three months ended September 30, 2006 to a loss of $13.7 million for
the three months ended September 30, 2007. This increase was driven by the reinsurance of our living benefit features to affiliates as previously discussed.

Asset management fees increased by $16.1 million, from $41.9 million for the three months ended September 30, 2006 to $58.0 million for the three months ended September 30, 2007 as a result of growth of separate account
assets compared to the prior year period, primarily due to net inflows and market appreciation. Asset management fees are asset-based fees, which are dependent on the value of assets under management.



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Benefits and Expenses

Policyholders benefits decreased by $36.2 million, from $33.0 million for the three months ended September 30, 2006 to $(3.2) million for the three months ended September 30, 2007. The decrease was driven primarily by a
$25.5 million favorable adjustment in the reserves for the guaranteed minimum death benefit feature of our variable annuity products due to decreased costs of actual and expected death claims, as discussed above. Also contributing to the decrease
was an $11.0 million reduction in the change reserves due to lower settlements in the current quarter related to the previously discussed annuitization remediation.

General, administrative and other expenses increased by $16.0 million, from $113.8 million for the three months ended September 30, 2006 to $129.8 million for the three months ended September 30, 2007. The
increase was primarily due to higher commission expenses of $8.7 million, net of capitalization, driven by higher asset based commissions due to growth in separate account assets, as previously discussed, and an increase in interest expense of $2.2
million resulting from higher borrowing levels to fund the costs associated with new business sales. The remaining increase of $5.1 million in general expenses was primarily driven by an increase to a customer remediation reserve related to the
market value adjustment error discussed above.

Results of Operations

2007 to 2006 Nine Month Comparison

Net Income

Net income increased by $74.7 million, from $133.3 million for the nine months ended September 30, 2006 to $208.0 million for the nine months ended September 30, 2007. Policy charges and fee income increased
by $97.6 million and asset management fees increased by $40.0 million, driven by growth in the separate account assets due to net flows and market appreciation since September 30, 2006. Additionally, realized investment losses, net, decreased
by $14.8 million from $44.4 million for the nine months ended September 30, 2006 to $29.6 million for the nine months ended September 30, 2007. Net income also includes a $40.6 million benefit in the current year compared to $8.9 million
expense in the prior year from a net reduction in amortization of deferred policy acquisition and other costs and a decrease in reserves for the guaranteed minimum death benefit and guaranteed minimum income benefit features of our variable annuity
products, due to decreased costs of actual and expected death claims and an increased estimate of total gross profits used as a basis for amortizing deferred policy acquisition based on an annual review. These favorable variances were partially
offset by an increase of $53.5 million in amortization of DAC and other costs, excluding the current year benefit mentioned above, due to higher actual gross profits. Commissions, net of capitalization, increased $21.9 million driven by higher asset
based commissions due to growth in separate account assets, $12.2 million of lower net investment income, increased general and administrative expenses of $10.4 million primarily driven by an increase to a customer remediation reserve due to the
market value adjustment error as discussed above, $9.4 million of higher interest credited to policyholder account balances driven by amortization of deferred sales inducements due to higher gross profits and an increase in interest expense of $9.1
million. Further details regarding the components of revenues and expenses are described below.

Revenues

Revenues increased by $135.8 million, from $587.3 million for the nine months ended September 30, 2006 to $723.1 million for the nine months ended September 30,
2007. Premiums decreased by $4.7 million, from $26.5 million for the nine months ended September 30, 2006 to $21.8 million for the nine months ended September 30, 2007, reflecting a reduction in the volume of settlements in the current
year related to the previously discussed annuitization remediation program as the majority of these claims were processed in 2006.

Policy charges and fee
income increased by $97.6 million, from $415.0 million for the nine months ended September 30, 2006 to $512.6 million for the nine months ended September 30, 2007 due to growth of separate account assets driven by net flows and market
appreciation. Optional benefit charges on our living and death benefit features increased $16.5 million, primarily driven by the sales of our Lifetime Five, Spousal Lifetime Five and Highest Daily Lifetime Five benefit features. This increase was
primarily offset in realized investment losses, net because these features are reinsured with affiliates. Additionally, policy charges and fee income decreased $4.2 million from the prior year due to the change in realized market value adjustments
related to the Companys fixed, market value adjusted investment option (MVA option).

Net investment income decreased $12.2 million from
$66.8 million for the nine months ended September 30, 2006 to $54.6 million for the nine months ended September 30, 2007 as a result of lower general account assets as these assets moved from general account fixed rate investment options
into separate account variable investment options due to the GRO rebalancing feature.

Realized investment losses, net, decreased $14.8 million from a loss
of $44.4 million for the nine months ended September 30, 2006 to a loss of $29.6 million for the nine months ended September 30, 2007. This change was driven by decreased investment losses on our MVA portfolio due to prior year
dispositions of fixed maturities in a rising interest rate environment. The decrease in realized investment losses was partially offset by reinsurance of our living benefit features to affiliates as discussed above.

Asset management fees increased by $40.0 million, from $122.8 million for the nine months ended September 30, 2006 to $162.8 million for the nine months ended
September 30, 2007 as a result of growth of separate account assets compared to the prior year period, primarily due to increased net inflows and market appreciation. Asset management fees are asset based fees, which are dependent on the value
of assets under management.



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Benefits and Expenses

Policyholders benefits decreased by $27.7 million, from $71.1 million for the nine months ended September 30, 2006 to $43.4 million for the nine months ended September 30, 2007. The decrease was driven primarily by a
$25.5 million reserve reduction for the guaranteed minimum death benefit feature of our variable annuity products due to decreased costs of actual and expected death claims, as discussed above, and favorable market performance.

Interest credited to policyholders account balances increased $9.4 million, from $57.0 million for the nine months ended September 30, 2006 to $66.4 million
for the nine months ended September 30, 2007, primarily driven by increased amortization of deferred sales inducements due to higher gross profits of $19.4 million, partially offset by decreased interest credited on the MVA option of $8.1
million as customer account values were transferred from general account fixed rate options to the separate account variable investment options due to favorable market conditions.

General, administrative and other expenses increased by $75.9 million, from $312.4 million for the nine months ended September 30, 2006 to $388.3 million for the nine months ended September 30, 2007. The
increase was primarily due to an increase in the amortization of DAC and valuation of business acquired of $36.0 million, driven by a higher level of actual gross profits due to increased fee income as previously discussed. In addition, commissions,
net of capitalization, increased $21.8 million, driven by higher asset based commissions due to growth in separate account assets, as previously discussed, and interest expense increased by $9.1 million resulting from higher borrowing levels to fund
new business. The remaining increase of $9.0 million in general expenses was primarily driven by an increase to a customer remediation reserve, as discussed above, for the market value adjustment error.

Income Taxes

Our income tax provision amounted to $9.3 million in
the third quarter of 2007 compared to $6.5 million in the third quarter of 2006, representing 9.4% of income from continuing operations before income taxes in the third quarter of 2007 and 13.7% in the third quarter of 2006. The decrease in the
effective rate was primarily due to an increase in non-taxable investment income.

Our income tax provision amounted to $17.1 million in the first nine
months of 2007 compared to $13.6 million in the first nine months of 2006, representing 7.6% of income from continuing operations before income taxes in the first nine months of 2007 and 9.2% in the first nine months of 2006. The decrease in the
effective rate was primarily due to an increase in non-taxable investment income.

We employ various tax strategies, including strategies to minimize the
amount of taxes resulting from realized capital gains.

We adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes,
an Interpretation of FASB Statement No. 109 on January 1, 2007. For additional information regarding the adoption of this guidance, see Note 5 of the Unaudited Interim Financial Statements.

The dividends received deduction reduces the amount of dividend income subject to tax and is a significant component of the difference between our periodic effective tax
rate and the federal statutory tax rate of 35%. In August 2007, the Service released Revenue Ruling 2007-54, which included, among other items, guidance on the methodology to be followed in calculating the dividends received deduction related to
variable life insurance and annuity contracts. In September 2007, the Service released Revenue Ruling 2007-61. Revenue Ruling 2007-61 suspends Revenue Ruling 2007-54 and informs taxpayers that the U.S. Treasury Department and the Service intend to
address through new regulations the issues considered in Revenue Ruling 2007-54, including the methodology to be followed in determining the dividends received deduction related to variable life insurance and annuity contracts. These activities had
no impact on our 2007 results.

Item 4. Controls and Procedures

In order to ensure that the information we must disclose in our filings with the SEC
is recorded, processed, summarized and reported on a timely basis, the Companys management, including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended, or the Exchange Act, as of September 30, 2007. Based on such evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that, as of September 30, 2007, our disclosure controls and procedures were effective. No change in our internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f),
occurred during the quarter ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



15



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PART II-OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to legal and regulatory actions in the ordinary course of our business,
including class action lawsuits. Our pending legal and regulatory actions include proceedings specific to the Company and proceedings generally applicable to business practices in the industry in which we operate. We are subject to 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. We are also subject to litigation arising out of our general business activities, such as our investments and contracts, and could be exposed to claims or
litigation concerning certain business or process patents. In some of our pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages.

The Companys litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, the outcomes 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 and rights to indemnification, should
not have a material adverse effect on the Companys financial position.

It should be noted that the judgments, settlements and expenses associated
with many of these lawsuits, administrative and regulatory matters, and contingencies, including certain claims described in this report, may, in whole or in part, after satisfaction of certain retention requirements, fall within Skandias
indemnification obligations to Prudential Financial and its subsidiaries under the terms of the Acquisition Agreement. Those obligations of Skandia provide for indemnification of certain judgments, settlements, and costs and expenses associated with
lawsuits and other claims against the Company (matters), and apply only to matters, or groups of related matters, for which the costs and expenses exceed $25,000 individually. Additionally, those obligations only apply to such otherwise
indemnifiable costs and expenses that exceed $10 million in the aggregate, subject to reduction for insurance proceeds, certain accruals and any realized tax benefit applicable to such amounts, and those obligations do not apply to the extent that
such aggregate exceeds $1 billion. We are in discussions with Skandia regarding the satisfaction of the $10 million deductible.

The foregoing discussion
is limited to recent developments concerning our legal and regulatory proceedings. See Note 3 to the Unaudited Interim Financial Statements included herein for additional discussion of our litigation and regulatory matters.

Item 1A. Risk Factors

You should carefully consider the risks described under Risk Factors in our Annual
Report on Form 10-K for the year ended December 31, 2006. These risks could materially affect our business, results of operations or financial condition, or cause our actual results to differ materially from those expected or those expressed in
any forward looking statements made by or on behalf of the Company. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to, the factors mentioned under Forward-Looking Statements above
and the risks of our businesses described elsewhere in our Annual Report on Form 10-K and in the immediately following paragraph and elsewhere in this Quarterly Report on Form 10-Q.

The third quarter of 2007 was characterized by adverse capital market conditions generally affecting the value and liquidity of certain fixed maturity securities, as well as other investments. Regardless of market
conditions, certain investments we hold, including private bonds and commercial mortgages, are relatively illiquid. While we have various sources of liquidity other than selling these investments, if we needed to sell these investments we may have
difficulty doing so in a timely manner at a price we would realize if we otherwise held the investments. Adverse capital market conditions could impact the liquidity of our investments, affecting their value and potentially resulting in higher
realized and/or unrealized losses.

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 the Unaudited Interim Financial Statements included herein.



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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 CORPORATIONBy:

/s/ Kenneth Y. TanjiKenneth Y. TanjiExecutive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)


November 13, 2007



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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.