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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 June 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 August 10, 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



|                             |  |                                                                                                                                    |  |           
|---------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|                             |  |                                                                                                                                    |  | PageNumber
|PART I FINANCIAL INFORMATION |  |                                                                                                                                   
|                             |  |                                                                                                                                   
|Item 1.                      |  | Financial Statements:                                                                                                              |  |           
|                             |  |                                                                                                                                   
|                             |  | Unaudited Interim Statements of Financial Position As of June 30, 2007 and December 31, 2006                                       |  | 4         
|                             |  |                                                                                                                                   
|                             |  | Unaudited Interim Statements of Operations and Comprehensive Income Three Months Ended and Six Months Ended June 30, 2007 and 2006 |  | 5         
|                             |  |                                                                                                                                   
|                             |  | Unaudited Interim Statements of Stockholders Equity Six Months Ended June 30, 2007                                                |  | 6         
|                             |  |                                                                                                                                   
|                             |  | Unaudited Interim Statements of Cash Flows Six Months Ended June 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 for a discussion of certain risks relating to our business.



3



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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 June 30, 2007 and December 31, 2006 (in thousands, except share amounts)

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|                                                                                                         |  |               |            |   |                  |   |           
|-------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ----------
|                                                                                                         |  | June 30, 2007 |            |   | December 31,2006
|ASSETS                                                                                                   |  |               |            |   |                  |   |           
|Fixed maturities available for sale, at fair value (amortized cost  2007: $1,032,954; 2006: $1,161,355) |  | $             | 1,031,933  |   |                  | $ | 1,174,353 
|Trading account assets, at fair value                                                                    |  |               | 16,535     |   |                  |   | 18,144    
|Equity securities available for sale, at fair value (cost  2007: $18,487; 2006: $18,487)                |  |               | 17,787     |   |                  |   | 18,344    
|Commercial loans                                                                                         |  |               | 40,340     |   |                  |   | 40,846    
|Policy loans                                                                                             |  |               | 12,421     |   |                  |   | 12,638    
|Short-term investments                                                                                   |  |               | 63,118     |   |                  |   | 60,872    
|Other long-term investments                                                                              |  |               | 5,682      |   |                  |   | 6,105     
|                                                                                                         |  |               |            |   |                  |   |           
|Total investments                                                                                        |  | $             | 1,187,816  |   |                  | $ | 1,331,302 
|                                                                                                         |  |               |            |   |                  |   |           
|Cash and cash equivalents                                                                                |  |               | 736        |   |                  |   | 664       
|Deferred policy acquisition costs                                                                        |  |               | 895,097    |   |                  |   | 766,277   
|Accrued investment income                                                                                |  |               | 10,322     |   |                  |   | 12,456    
|Income taxes receivable                                                                                  |  |               | 220,379    |   |                  |   | 217,768   
|Valuation of business acquired                                                                           |  |               | 132,400    |   |                  |   | 152,650   
|Deferred sales inducements                                                                               |  |               | 449,435    |   |                  |   | 359,815   
|Receivables from parent and affiliates                                                                   |  |               | 73,046     |   |                  |   | 94,221    
|Other assets                                                                                             |  |               | 10,903     |   |                  |   | 17,036    
|Separate account assets                                                                                  |  |               | 39,451,640 |   |                  |   | 35,608,409
|                                                                                                         |  |               |            |   |                  |   |           
|TOTAL ASSETS                                                                                             |  | $             | 42,431,774 |   |                  | $ | 38,560,598
|                                                                                                         |  |               |            |   |                  |   |           
|                                                                                                         |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                     |  |               |            |   |                  |   |           
|                                                                                                         |  |              
|LIABILITIES                                                                                              |  |               |            |   |                  |   |           
|Policyholders account balances                                                                          |  | $             | 844,093    |   |                  | $ | 993,260   
|Future policy benefits and other policyholder liabilities                                                |  |               | 133,107    |   |                  |   | 114,854   
|Payables to parent and affiliates                                                                        |  |               | 49,115     |   |                  |   | 45,667    
|Cash collateral for loaned securities                                                                    |  |               | 53,522     |   |                  |   | 39,962    
|Securities sold under agreements to repurchase                                                           |  |               |           |   |                  |   |          
|Short-term borrowing                                                                                     |  |               | 409,215    |   |                  |   | 159,546   
|Long-term borrowing                                                                                      |  |               | 330,000    |   |                  |   | 405,000   
|Future fees payable to Prudential Annuities, Inc.                                                        |  |               | 26,568     |   |                  |   | 48,531    
|Other liabilities                                                                                        |  |               | 266,468    |   |                  |   | 268,497   
|Separate account liabilities                                                                             |  |               | 39,451,640 |   |                  |   | 35,608,409
|                                                                                                         |  |               |            |   |                  |   |           
|Total liabilities                                                                                        |  | $             | 41,563,728 |   |                  | $ | 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                                                                               |  |               | 221,897    |   |                  |   | 334,096   
|Retained earnings                                                                                        |  |               | 644,990    |   |                  |   | 534,899   
|Accumulated other comprehensive income                                                                   |  |               | (1,341     | ) |                  |   | 5,377     
|                                                                                                         |  |               |            |   |                  |   |           
|Total stockholders equity                                                                               |  | $             | 868,046    |   |                  | $ | 876,872   
|                                                                                                         |  |               |            |   |                  |   |           
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                               |  | $             | 42,431,774 |   |                  | $ | 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 Six Months Ended June 30, 2007 and 2006 (in thousands)

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|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                     |  | Three Months EndedJune 30, |         |   | Six Months EndedJune 30, |  
|                                                                     |  | 2007                       |         |   | 2006                     |   |         | 2007 |  |   | 2006    |  
|REVENUES                                                             |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|                                                                     |  |                            |         |  
|Premiums                                                             |  | $                          | 8,209   |   |                          | $ | $5,272  |      |  | $ | 16,980  |   |  | $ | 9,744   |  
|Policy charges and fee income                                        |  |                            | 173,256 |   |                          |   | 140,878 |      |  |   | 333,252 |   |  |   | 274,052 |  
|Net investment income                                                |  |                            | 17,393  |   |                          |   | 21,630  |      |  |   | 35,987  |   |  |   | 41,308  |  
|Realized investment (losses), net                                    |  |                            | (8,076  | ) |                          |   | (22,289 | )    |  |   | (15,916 | ) |  |   | (36,427 | )
|Asset management fees                                                |  |                            | 55,112  |   |                          |   | 45,818  |      |  |   | 104,824 |   |  |   | 80,921  |  
|Other income                                                         |  |                            | 508     |   |                          |   | (108    | )    |  |   | 782     |   |  |   | 426     |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Total revenues                                                       |  |                            | 246,402 |   |                          |   | 191,201 |      |  |   | 475,909 |   |  |   | 370,024 |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|                                                                     |  |                            |         |  
|BENEFITS AND EXPENSES                                                |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|                                                                     |  |                            |         |  
|Policyholders benefits                                              |  |                            | 22,882  |   |                          |   | 18,424  |      |  |   | 46,575  |   |  |   | 38,152  |  
|Interest credited to policyholders account balances                 |  |                            | 23,427  |   |                          |   | 17,055  |      |  |   | 44,764  |   |  |   | 34,178  |  
|General, administrative and other expenses                           |  |                            | 134,695 |   |                          |   | 98,947  |      |  |   | 258,540 |   |  |   | 198,533 |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Total benefits and expenses                                          |  |                            | 181,004 |   |                          |   | 134,426 |      |  |   | 349,879 |   |  |   | 270,863 |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Income from operations before income taxes                           |  |                            | 65,398  |   |                          |   | 56,775  |      |  |   | 126,030 |   |  |   | 99,161  |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Income tax expense                                                   |  |                            | (813    | ) |                          |   | 2,224   |      |  |   | 7,787   |   |  |   | 7,055   |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|NET INCOME                                                           |  |                            | 66,211  |   |                          |   | 54,551  |      |  |   | 118,243 |   |  |   | 92,106  |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Change in net unrealized investment gains (losses), net of taxes (1) |  |                            | (8,586  | ) |                          |   | (1,296  | )    |  |   | (6,718  | ) |  |   | (7,045  | )
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|COMPREHENSIVE INCOME                                                 |  | $                          | 57,625  |   |                          | $ | 53,255  |      |  | $ | 111,525 |   |  | $ | 85,061  |  
|                                                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  

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|(1) | Amounts are net of tax benefits of $4.7 million and $0.7 million for the three months ended June 30, 2007 and 2006, respectively, and $3.7 million and $3.9 million for the six
months ended June 30, 2007 and 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See Notes to Unaudited Interim Financial Statements



5



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American Skandia Life Assurance Corporation

Unaudited Interim Statements of Stockholders Equity

Six Months Ended June 30, 2007 (in thousands)

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|                                                                  |  |             |       |                          |   |          |                  |  |   |                                     |   |  |                          |        |   |  |   |          |  
|----------------------------------------------------------------- |  | ----------- | ----- | ------------------------ | - | -------- | ---------------- |  | - | ----------------------------------- | - |  | ------------------------ | ------ | - |  | - | -------- | -
|                                                                  |  | CommonStock |       | Additionalpaid-incapital |   |          | Retainedearnings |  |   | Accumulatedothercomprehensiveincome |   |  | Totalstockholdersequity |       
|Balance, December 31, 2006                                        |  | $           | 2,500 |                          | $ | 334,096  |                  |  | $ | 534,899                             |   |  | $                        | 5,377  |   |  | $ | 876,872  |  
|Net income                                                        |  |             |       |                          |   |          |                  |  |   | 118,244                             |   |  |                          |        |   |  |   | 118,244  |  
|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                          |  |             |       |                          |   |          |                  |  |   |                                     |   |  |                          | (6,718 | ) |  |   | (6,718   | )
|                                                                  |  |             |       |                          |   |          |                  |  |   |                                     |   |  |                          |        |   |  |   |          |  
|Balance, June 30, 2007                                            |  | $           | 2,500 |                          | $ | 221,897  |                  |  | $ | 644,990                             |   |  | $                        | (1,341 | ) |  | $ | 868,046  |  
|                                                                  |  |             |       |                          |   |          |                  |  |   |                                     |   |  |                          |        |   |  |   |          |  

See Notes to Unaudited Interim Financial Statements



6



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American Skandia Life Assurance Corporation

Unaudited Interim Statements of Cash Flows

Six Months Ended June 30, 2007 and 2006 (in thousands)

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|                                                                                  |  |                               |          |   |                              |   |            |  
|--------------------------------------------------------------------------------- |  | ----------------------------- | -------- | - | ---------------------------- | - | ---------- | -
|                                                                                  |  | Six months endedJune 30, 2007 |          |   | Six monthsendedJune 30, 2006 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                               |          |   |                              |   |            |  
|                                                                                  |  |                              
|Net income                                                                        |  | $                             | 118,244  |   |                              | $ | 92,106     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                               |          |   |                              |   |            |  
|Realized investment losses, net                                                   |  |                               | 15,917   |   |                              |   | 36,427     |  
|Amortization and depreciation                                                     |  |                               | 19,228   |   |                              |   | 20,002     |  
|Interest credited to policyholders account balances                              |  |                               | 30,832   |   |                              |   | 26,782     |  
|Change in:                                                                        |  |                               |          |   |                              |   |            |  
|Policy reserves                                                                   |  |                               | 19,559   |   |                              |   | 14,359     |  
|Accrued investment income                                                         |  |                               | 1,764    |   |                              |   | (3,985     | )
|Trading account assets                                                            |  |                               | 1,609    |   |                              |   | 4,706      |  
|Net receivable from parent and affiliates                                         |  |                               | 24,623   |   |                              |   | 6,049      |  
|Deferred sales inducements                                                        |  |                               | (93,196  | ) |                              |   | (59,669    | )
|Deferred policy acquisition costs                                                 |  |                               | (136,786 | ) |                              |   | (128,028   | )
|Income taxes payable                                                              |  |                               | 7,687    |   |                              |   | 8,326      |  
|Other, net                                                                        |  |                               | 483      |   |                              |   | 3,407      |  
|                                                                                  |  |                               |          |   |                              |   |            |  
|Cash Flows From Operating Activities                                              |  | $                             | 9,964    |   |                              | $ | 20,481     |  
|                                                                                  |  |                               |          |   |                              |   |            |  
|                                                                                  |  |                              
|CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:                                   |  |                               |          |   |                              |   |            |  
|Proceeds from the sale/maturity of fixed maturities available for sale            |  |                               | 438,517  |   |                              |   | 2,407,886  |  
|Payments for the purchase of fixed maturities available for sale                  |  |                               | (303,370 | ) |                              |   | (2,817,980 | )
|Payments for the purchase of commercial loans                                     |  |                               |         |   |                              |   | (17,204    | )
|Proceeds from the repayment of commercial loans                                   |  |                               | 338      |   |                              |   |           |  
|Proceeds from the sale/maturity of policy loans                                   |  |                               | 1,263    |   |                              |   | 133        |  
|Payments for the issuance of policy loans                                         |  |                               | (1,046   | ) |                              |   | (724       | )
|Proceeds from the sale of other long-term investments                             |  |                               | 1,419    |   |                              |   |           |  
|Other short-term investments, net                                                 |  |                               | (2,246   | ) |                              |   | (139,115   | )
|                                                                                  |  |                               |          |   |                              |   |            |  
|Cash Flows From (Used in) Investing Activities                                    |  | $                             | 134,875  |   |                              | $ | (567,004   | )
|                                                                                  |  |                               |          |   |                              |   |            |  
|                                                                                  |  |                              
|CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:                                   |  |                               |          |   |                              |   |            |  
|Decrease in future fees payable to Prudential Annuities Inc, net                  |  |                               | (21,963  | ) |                              |   | (35,611    | )
|Cash collateral for loaned securities                                             |  |                               | 13,560   |   |                              |   | 176,158    |  
|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                                              |  |                               | 249,669  |   |                              |   | 220,637    |  
|Drafts outstanding                                                                |  |                               | (19,446  | ) |                              |   | 5,887      |  
|Distribution (to) parent                                                          |  |                               | (112,199 | ) |                              |   | (150,000   | )
|Policyholders account balances:                                                  |  |                               |          |   |                              |   |            |  
|Deposits                                                                          |  |                               | 290,304  |   |                              |   | 915,162    |  
|Withdrawals                                                                       |  |                               | (469,692 | ) |                              |   | (541,751   | )
|                                                                                  |  |                               |          |   |                              |   |            |  
|Cash Flows (Used in) From Financing Activities                                    |  | $                             | (144,767 | ) |                              | $ | (553,335   | )
|                                                                                  |  |                               |          |   |                              |   |            |  
|Net increase in cash and cash equivalents                                         |  |                               | 72       |   |                              |   | 6,812      |  
|Cash and cash equivalents, beginning of period                                    |  |                               | 664      |   |                              |   | 3,507      |  
|                                                                                  |  |                               |          |   |                              |   |            |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |  | $                             | 736      |   |                              | $ | 10,319     |  
|                                                                                  |  |                               |          |   |                              |   |            |  
|Income taxes paid (received)                                                      |  | $                             | 98       |   |                              | $ | (1,271     | )
|                                                                                  |  |                               |          |   |                              |   |            |  
|Interest paid                                                                     |  | $                             | 17,020   |   |                              | $ | 20,234     |  
|                                                                                  |  |                               |          |   |                              |   |            |  

See Notes to Unaudited Interim Financial Statements



7



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American Skandia Life Assurance Corporation

Notes to Unaudited Interim Financial Statements

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|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



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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 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. Recently, the Company retained a consultant to assist it with the systems modifications needed to implement the remediation plan currently in place. 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
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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.



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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.

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 $(0.6) million
for the three months ended June 30, 2007 and 2006 respectively; and $1.9 million and $0.4 million, for the six months ended June 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 $(0.2) million for the three months ended June 30, 2007 and 2006, respectively; and $0.9 million and
$0.1 million, for the six months ended June 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 5.67% and matured on March 12, 2007. The loan was subsequently rolled over with a new 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 5.67% and matured on March 12, 2007. The loan was subsequently rolled over with a new 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 5.74% 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
June 30, 2007 and 2006, $409.2 million and $429.2 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 $43.3 million and $33.9 million, for the three months ended June 30, 2007 and 2006, respectively; and $82.0
million and $55.3 million, for the six months ended June 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 six months ended
June 30, 2007.



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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.

Internal Revenue Service (Service) audit periods remain open for review until the statute
of limitations has passed. Generally, for tax years which produce 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 December 2006, the Service completed all fieldwork with regards to its examination of the Companys federal income tax returns for tax
years 2002-2003. The statute of limitations for the 2002-2003 tax years expires in 2008.

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. 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 six months ended June 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. 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 requires additional
disclosures about fair value measurements. This Statement does not require any new fair value measurements, 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. The Company is currently assessing the impact of SFAS No. 157 on the Companys financial position and results of operations.



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|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 June 30, 2007 compared with December 31, 2006 and its results of operations for the three month periods ended June 30, 2007 and 2006 and the six month periods ended
June 30, 2007 and 2006. You should read the following analysis of our financial condition and results of operations in conjunction with the Companys MD&A and audited Financial Statements included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2006 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 eleven 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 $3.9 billion, from $38.5 billion at December 31, 2006 to $42.4 billion at June 30, 2007. Separate account assets increased by $3.8 billion,
driven by positive net flows and market appreciation during the current year. Deferred policy acquisition costs (DAC) and deferred sales inducements also increased $128.8 million and $89.6 million, respectively, due to increased sales
driving an increase in capitalized costs. Partially offsetting these increases was a decline in fixed maturities from $1.2 billion at December 31, 2006 to $1.0 billion at June 30, 2007, primarily driven by a decline in policyholders
account balances discussed below. Additionally, the valuation of business acquired decreased from $152.6 million at December 31, 2006 to $132.4 million at June 30, 2007, due to amortization.

During the period, total liabilities increased by $3.9 billion, from $37.7 billion at December 31, 2006 to $41.6 billion at June 30, 2007. Separate account
liabilities increased by $3.8 billion, driven by positive net flows and market appreciation during the current year. Additionally, borrowings increased $174.7 million in order to fund the growth of new business sales. Partially offsetting these
increases was a decrease in policyholders account balances from $ 993.3 million at December 31, 2006 to $844.1 million at June 30, 2007, primarily due to rebalancing of customer account values from the market value adjustment
options to the separate account mutual fund options pursuant to contract provisions driven by improved market conditions.

Results of Operations

2007 to 2006 Three Month Comparison

Net Income

Net income increased by $11.7 million, from $54.5 million for the three months ended June 30, 2006 to $66.2 million for the three months ended
June 30, 2007. Policy charges and fee income increased by $32.4 million and asset management fees increased by $9.3 million, driven by growth in the separate account assets due to net flows and market appreciation since June 30, 2006.
Additionally, realized investment losses, net, decreased by $14.2 million from $22.3 million for the three months ended June 30, 2006 to $8.1 million for the three months ended June 30, 2007. These favorable variances were partially offset
by $35.7 million of higher general, administrative and other expenses and $6.4 million of higher interest credited to policyholder account balances. Further details regarding the components of revenues and expenses are described below.

Revenues

Revenues increased by $55.2 million, from $191.2 million
for the three months ended June 30, 2006 to $246.4 million for the three months ended June 30, 2007. Premiums of $8.2 million increased by $2.9 million, from $5.3 million for the three months ended June 30, 2006, reflecting an
increase in funds from customers entering into the payout phase of their annuity contracts driven by settlements in the current year quarter related to the previously discussed annuitization remediation program.

Policy charges and fee income increased by $32.4 million, from $140.9 million for the three months ended June 30, 2006 to $173.3 million for the three months ended
June 30, 2007. Mortality and expense (M&E) charges increased by $29.1 million as a result of growth of separate account assets driven by net flows and market appreciation. Optional benefit charges on our living and death benefit
features increased $5.6 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 $2.0 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 $4.2 million from $21.6 million for the three months ended June 30, 2006 to $17.4
million for the three months ended June 30, 2007 as a result of lower general account assets as these assets moved from fixed rate investment options into variable investment options due to the guaranteed return option (GRO) rebalancing
feature.

Realized investment losses, net, decreased $14.2 million from a loss of $22.3 million for the three months ended June 30, 2006 to a loss of
$8.1 million over the same period in 2007. This change was driven by decreased investment losses on our MVA portfolio due to dispositions in the second quarter of 2006 of fixed maturities in a rising interest rate environment. The decrease in
realized investment losses was partially offset by the change in the value of our embedded derivatives related to our living benefit features. This change was offset in policy charges and fee income as discussed in the preceding paragraph.



Asset management fees increased by $9.3 million, from $45.8 million for the
three months ended June 30, 2006 to $55.1 million for the three months ended June 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 increased by $4.5 million, from $18.4 million for the three months ended June 30, 2006 to $22.9 million for the three months ended June 30, 2007. The increase was primarily driven by a $3.0 million
increase in change in reserves due to an increase in the number of outstanding annuity contracts entering into the payout phase primarily as a result of the previously discussed annuitization remediation program. This increase was offset by higher
premium revenue, as discussed above.

Interest credited to policyholders account balances increased $6.4 million, from $17.0 million for the three
months ended June 30, 2006 to $23.4 million for the three months ended June 30, 2007 primarily driven by increased amortization of deferred sales inducements due to higher gross profits. This is partially offset by lower interest credited
on the MVA option as a result of decreased investment in the MVA option during the current quarter compared to the prior year quarter.

General,
administrative and other expenses increased by $35.7 million, from $99.0 million for the three months ended June 30, 2006 to $134.7 million for the three months ended June 30, 2007. The increase was primarily due to an increase in the
amortization of DAC and valuation of business acquired of $24.7 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 $7.2 million
driven by increased asset based commissions due to growth in separate account assets, as previously discussed. The remaining increase of $3.8 million in general expenses was primarily the result of higher interest expense as a result of increased
borrowings.

Results of Operations

2007 to 2006 Six
Month Comparison

Net Income

Net income increased
by $26.1 million, from $92.1 million for the six months ended June 30, 2006 to $118.2 million for the six months ended June 30, 2007. Policy charges and fee income increased by $59.2 million and asset management fees increased by $23.9
million, driven by growth in the separate account assets due to net flows and market appreciation since June 30, 2006. Additionally, realized investment losses, net, decreased by $20.5 million from $36.4 million for the six months ended
June 30, 2006 to $15.9 million for the six months ended June 30, 2007. These favorable variances were partially offset by $60.0 million of higher general, administrative and other expenses and $10.6 million of higher interest credited to
policyholder account balances. Further details regarding the components of revenues and expenses are described below.

Revenues

Revenues increased by $105.9 million, from $370.0 million for the six months ended June 30, 2006 to $475.9 million for the six months ended June 30, 2007.
Premiums of $16.9 million increased by $7.2 million, from $9.7 million for the six months ended June 30, 2006, reflecting an increase in funds from customers entering into the payout phase of their annuity contracts, driven by settlements in
the current year related to the previously discussed annuitization remediation program.

Policy charges and fee income increased by $59.2 million, from
$274.1 million for the six months ended June 30, 2006 to $333.3 million for the six months ended June 30, 2007. Mortality and expense (M&E) charges increased by $51.3 million as a result of growth of separate account assets
driven by net flows and market appreciation. Optional benefit charges on our living and death benefit features increased $9.8 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 $3.1 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 $5.3 million from $36.0 million for the six months ended June 30, 2006 to $41.3 million for the six months ended June 30, 2007 as a result of lower general account assets as these assets moved from fixed rate investment
options into variable investment options due to the GRO rebalancing feature.

Realized investment losses, net, decreased $20.5 million from a loss of $36.4
million for the six months ended June 30, 2006 to a loss of $15.9 million over the same period in 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 the change in the value of our embedded derivatives related to our living benefit features. This change was offset in policy charges and fee income as
discussed in the preceding paragraph.

Asset management fees increased by $23.9 million, from $80.9 million for the six months ended June 30, 2006 to
$104.8 million for the six months ended June 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.



14



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Benefits and Expenses

Policyholders benefits increased by $8.4 million, from $38.2 million for the six months ended June 30, 2006 to $46.6 million for the six months ended June 30, 2007. The increase was driven by a $7.3 million increase in
change in reserves due to an increase in the number of outstanding annuity contracts entering into the payout phase primarily as a result of the previously discussed annuitization remediation program. This increase was offset by higher premium
revenue, as discussed above.

Interest credited to policyholders account balances increased $10.6 million, from $34.2 million for the six months
ended June 30, 2006 to $44.8 million for the six months ended June 30, 2007 primarily driven by increased amortization of deferred sales inducements due to higher gross profits of $15.8 million, partially offset by decreased interest
credited on the MVA option of $4.1 million as customer account values transferred from the market value adjustment options to the separate account mutual fund options due to market conditions.

General, administrative and other expenses increased by $60.0 million, from $198.5 million for the six months ended June 30, 2006 to $258.5 million for the six
months ended June 30, 2007. The increase was primarily due to an increase in the amortization of DAC and valuation of business acquired of $41.1 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 $13.1 million, driven by increased asset based commissions due to growth in separate account assets, as previously discussed. The remaining increase of $5.8 million in general
expenses was primarily the result of higher interest expense as a result of increased borrowings.



|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 June 30, 2007. Based on such evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that, as of June 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 June 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 this Quarterly Report on Form 10-Q.



|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.



16



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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)


August 10, 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.