<PAGE>

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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

(Mark One)

X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
-   OF 1934 [FEE REQUIRED]


                   For the fiscal year ended December 31, 2002

                                       OR

_   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 [NO FEE REQUIRED]

                         Commission file number 33-18053

                          PRUCO LIFE INSURANCE COMPANY
                                  OF NEW JERSEY

             (Exact name of Registrant as specified in its charter)

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

                 213 Washington Street, Newark, New Jersey 07102
         --------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (973) 802-3274
               ---------------------------------------------------
              (Registrant's Telephone Number, including area code)

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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   YES  X   NO
                                         ---     ---
    State the aggregate market value of the voting stock held by non-affiliates
of the registrant:  NONE

  Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of March 24, 2003. Common stock, par value of $5 per share:
                           400,000 shares outstanding

       Pruco Life Insurance Company of New Jersey meets the conditions set
        forth in General Instruction (I) (1) (a) and (b) on Form 10-K and
        is therefore filing this Form with the reduced disclosure format.

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

<PAGE>
                   PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
                                  (Registrant)

                                      INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S>           <C>              <C>                                                                        <C>
Cover Page                                                                                                  -

Index                                                                                                       2

PART I        Item 1.          Business                                                                     3

              Item 2.          Properties                                                                   6

              Item 3.          Legal Proceedings                                                            6

PART II       Item 5.          Market for Registrant's Common Equity and Related Stockholder Matters        6

              Item 7.          Management's Discussion and Analysis of Financial Position and Results of
                                  of Operations                                                             6

              Item 8.          Financial Statements and Supplementary Data                                 18

              Item 9.          Changes in and Disagreements with Independent Accountants on Accounting
                                 and Financial Disclosure                                                  18

              Item 14.          Controls and Procedures                                                    18

PART IV       Item 15.         Exhibits, Financial Statement Schedules and Reports on Form 8-K             19


Signatures                                                                                                 21

Certifications                                                                                             22
</TABLE>

Forward-Looking Statement Disclosure

Management's Discussion and Analysis of Financial Condition and Results of
Operations, constitute forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. Words Certain of the
statements included in this Annual Report on Form 10-K, including but not
limited to those in the such as "expects," "believes," "anticipates,"
"includes," "plans," "assumes," "estimates," "projects," "intends," 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
Pruco Life Insurance Company of New Jersey ("the Company"). There can be no
assurance that future developments affecting the Company 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 without limitation: general economic, market and political
conditions, including the performance of financial markets, interest rate
fluctuations and the continuing negative impact of the current economic
environment; various domestic or international military or terrorist activities
or conflicts; volatility in the securities markets; reestimates of our reserves
for future policy benefits and claims; changes in our assumptions related to
deferred policy acquisition costs; our exposure to contingent liabilities;
catastrophe losses; investment losses and defaults; changes in our claims-paying
or credit ratings; competition in our product lines and for personnel;
fluctuations in foreign currency exchange rates and foreign securities markets;
the impact of changing regulation or accounting practices; adverse litigation
results; and changes in tax law. The Company does not intend, and is under no
obligation to, update any particular forward-looking statement included in this
document.

                                       2
<PAGE>
                                     PART 1

Item 1.  Business

Overview

Pruco Life Insurance Company of New Jersey ("the Company") is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
The Company is licensed to sell interest-sensitive individual life insurance and
variable life insurance, term life insurance, and individual variable and fixed
annuities ("the Contracts") only in the states of New Jersey and New York.

The Company is a wholly owned subsidiary of Pruco Life Insurance Company ("Pruco
Life"), a stock life insurance company organized in 1971 under the laws of the
state of Arizona. Pruco Life, in turn, is a wholly owned subsidiary of The
Prudential Insurance Company of America ("Prudential Insurance"), an insurance
company founded in 1875 under the laws of the state of New Jersey. On December
18, 2001 ("the date of demutualization") Prudential Insurance converted from a
mutual life insurance company to a stock life insurance company and became an
indirect wholly owned subsidiary of Prudential Financial, Inc. ("Prudential
Financial"). The demutualization was completed in accordance with Prudential's
Plan of Reorganization, which was approved by the Commissioner of the New Jersey
Department of Banking and Insurance in October 2001.

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 annuities. The following
paragraphs describe the Company's products, marketing and distribution, and
underwriting and pricing.

Products

Variable Life Insurance
We offer a number of individual variable life insurance products that provide a
return linked to an underlying investment portfolio designated by the
policyholder while providing the policyholder with the flexibility to change
both the death benefit and premium payments. Each product provides for the
deduction of charges and expenses from the customer's investment account. We
also offer variable life products targeted to the estate planning and
corporate-owned life insurance markets.

Term Life Insurance
We offer a variety of term life insurance products. Most term products include a
conversion feature that allows the policyholder to convert the policy into
permanent life insurance coverage.

Universal Life Insurance
We offer universal life insurance products that feature a market rate fixed
interest investment account and flexible premiums.

Variable and Fixed Annuities
We offer variable annuities that provide our customers with the opportunity to
invest in proprietary and non-proprietary mutual funds and fixed-rate options.
The investments made by customers in the proprietary and non-proprietary mutual
funds represent separate accounts for which the contractholder bears the
investment risk. The investments made in the fixed rate options are credited
with interest at rates determined by us, subject to certain minimums.
Additionally, our variable annuities products offer certain minimum death
benefit and living benefit guarantee options. We also had offered fixed
annuities that provide a guarantee of principal and a guaranteed interest rate
to be credited to the principal amount for a specified period of time. Fixed
annuities are not currently offered for sale.

Marketing and Distribution

Prudential Insurance Agents
Agents employed by Prudential Insurance, our Parent company, distribute
variable, universal and term life, variable and fixed annuities, and investment
and protection products with proprietary and non-proprietary investment options
as well as selected insurance products manufactured by others.

The majority of Prudential Insurance Agents are multi-line traditional agents.
Other than certain training allowances or salary paid at the beginning of their
employment, traditional Prudential Insurance Agents are paid on a commission
basis for the products they sell. As described in the Notes to the Financial
Statements, the Company is allocated expenses from Prudential Insurance. These
allocated expenses reflect a market based pricing arrangement.

                                       3
<PAGE>
Third Party Distribution
Our individual life and annuity products are offered through a variety of third
party channels, including independent brokers, general agencies, producer
groups, banks and broker-dealers. We have historically focused on serving the
intermediaries who provide insurance solutions in support of estate and wealth
transfer planning for affluent individuals and corporate-owned life insurance
for businesses. However, we have expanded our target market to include mass
affluent individuals in addition to affluent individuals. The life insurance and
annuity products offered are generally the same as those available through
Prudential Insurance Agents. Our third party efforts are supported by a network
of internal and external wholesalers.

Underwriting and Pricing

Life Insurance
Our life insurance underwriters follow detailed and uniform policies and
procedures to assess and quantify the risk of our individual life insurance
products. We require the applicant to take a variety of underwriting tests, such
as medical examinations, electrocardiograms, blood tests, urine tests, chest
x-rays and consumer investigative reports, depending on the age of the applicant
and the amount of insurance applied for. Our universal life insurance contracts
and the fixed component of our variable life insurance contracts feature
crediting rates which are reset periodically. In resetting these rates, we
consider the returns on our portfolios supporting the interest-sensitive life
insurance business, current interest rates, the competitive environment, and our
profit objectives.

Annuities
We earn investment management fees based upon the average assets of the mutual
funds in our variable annuity products and mortality and expense fees and other
fees for various insurance-related options and features based on average daily
net assets of the value of the annuity separate accounts. We price our fixed
annuities as well as the fixed-rate options of our variable annuities based on
assumptions as to investment returns, expenses and persistency. Competition also
influences our pricing. We seek to maintain a spread between the return on our
general account invested assets and the interest we credit on our fixed
annuities. To encourage persistency, all of our variable annuities have
withdrawal restrictions and declining surrender or withdrawal charges for a
specified number of years.

Reserves

We establish reserve and policyholder fund liabilities to recognize our future
benefit obligations for our in force life and annuity policies. For variable and
interest-sensitive life insurance and annuity contracts, we establish
policyholders' account balances that represent cumulative gross premium payments
plus credited interest and/or fund performance, less withdrawals, expenses and
mortality charges.

Our variable annuity products contain a guaranteed minimum death benefit feature
that prescribes a minimum benefit to be paid upon the death of the annuitant.
This minimum death benefit is based on the net deposits paid into the contract,
the net deposits accumulated at a specific rate, the highest historical account
value on a contract anniversary, or more typically the greatest of these values.
To the extent that the guaranteed minimum dearth benefit is higher than the
current account value at the time of death, we incur a cost that results in
increased annuity policy benefits We currently do not record a corresponding
reserve for these future obligations, as current accounting literature does not
prescribe the advanced recognition of expected future net costs associated with
these guarantees. Costs associated with such benefits are recorded as a charge
to earnings in the period in which the death benefit is paid. However, we
consider the expected net costs associated with these guarantees in our
calculations of expected gross profits on the variable annuity business, on
which our periodic evaluations of unamortized policy acquisition costs are
based. A proposed AICPA Statement of Position (SOP), "Accounting and Reporting
by Insurance Enterprises for Certain Non-traditional Long Duration Contracts,"
would require us to establish such a reserve. We are currently evaluating the
impact of this proposed SOP. As of December 31, 2002, the death benefit coverage
in force (representing the amount we would have to pay if all annuitants had
died on that date) was approximately $0.2 billion. The death benefit coverage in
force represents the excess of the guaranteed benefit amount over the fair value
of the underlying mutual fund investments.

Reinsurance

Since 2000, we have reinsured the majority of the mortality risk we assume under
our new individual life insurance products. The maximum amount of individual
life insurance we may retain on any life is $2.5 million.

                                       4
<PAGE>
Regulatory Environment

In order to continue to market life insurance and annuity products, the Company
must meet or exceed the statutory capital and surplus requirements of the
insurance departments of the states in which it conducts business. Statutory
accounting practices differ from generally accepted accounting principles
("GAAP") in two major respects. First, under statutory accounting practices, the
acquisition costs of new business are charged to expense, while under GAAP they
are initially deferred and amortized over a period of time. Second, under
statutory accounting practices, the required additions to statutory reserves for
new business in some cases may initially exceed the statutory revenues
attributable to such business. These practices result in a reduction of
statutory income and surplus at the time of recording new business.

Insurance companies are subject to Risk-Based Capital ("RBC") guidelines,
monitored by insurance regulatory authorities, that measure the ratio of the
Company's statutory surplus with certain adjustments ("Adjusted Capital") to its
required capital, based on the risk characteristics of its insurance liabilities
and investments. Required capital is determined by statutory formulae that
consider risks related to the type and quality of invested assets,
insurance-related risks associated with the Company's products, interest rate
risks, and general business risks. The RBC calculations are intended to assist
regulators in measuring the adequacy of the Company's statutory capitalization.

The Company considers RBC implications in its asset/liability management
strategies. Each year, the Company conducts a thorough review of the adequacy of
statutory insurance reserves and other actuarial liabilities. The review is
performed to ensure that the Company's statutory reserves are computed in
accordance with accepted actuarial standards, reflect all contractual
obligations, meet the requirements of state laws and regulations and include
adequate provisions for any other actuarial liabilities that need to be
established. All significant reserve changes are reviewed by the Board of
Directors and are subject to approval by the New Jersey Department of Banking
and Insurance (the "Insurance Department"). The Company believes that its
statutory capital is adequate for its currently anticipated levels of risk as
measured by regulatory guidelines.

In March 1998 the NAIC adopted the Codification of Statutory Accounting
Principles Guidance ("Codification"), which replaced the current Accounting
Practices and Procedures manual as the NAIC's primary guidance on statutory
accounting as of January 1, 2001. Codification provided guidance for areas where
statutory accounting had been silent and changed current statutory accounting in
certain areas. Certain of the standards had an impact on the measurement of
statutory capital, which in turn, affected RBC ratios of insurance companies.
The Company has adopted the Codification guidance effective January 1, 2001. As
a result of these changes, the Company reported an increase to statutory surplus
of $7 million, primarily as a result of the recognition of deferred tax assets.

The NAIC has developed a set of financial relationships or tests known as the
Insurance Regulatory Information System ("IRIS") to assist state regulators in
monitoring the financial condition of insurance companies and identifying
companies that require special attention or action by insurance regulatory
authorities. Insurance companies generally submit data annually to the NAIC,
which in turn analyzes the data using prescribed financial data ratios, each
with defined "usual ranges." Generally, regulators will begin to investigate or
monitor an insurance company if ratios fall outside the usual ranges for four or
more of the ratios. If an insurance company has insufficient capital, regulators
may act to reduce the amount of insurance it can issue. The Company is not
currently subject to regulatory scrutiny based on these ratios.

The Company is subject to the laws of the Insurance Department. A detailed
financial statement in the prescribed form (the "Annual Statement") is filed
with the Insurance Department each year covering the Company's operations for
the preceding year and its financial position as of the end of that year.
Regulation by the Insurance Department includes periodic examination to verify
the accuracy of contract liabilities and reserves. The Company's books and
accounts are subject to review by the Insurance Department at all times. A full
examination of the Company's operations is conducted periodically by the
Insurance Department and under the auspices of the NAIC.

The Company is subject to regulation under the insurance laws of all
jurisdictions in which it operates. The laws of the various jurisdictions
establish supervisory agencies with broad administrative powers with respect to
various matters, including licensing to transact business, overseeing trade
practices, licensing agents, approving contract forms, establishing reserve
requirements, fixing maximum interest rates on life insurance contract loans and
minimum rates for accumulation of surrender values, prescribing the form and
content of required financial statements and regulating the type and amounts of
investments permitted. The Company is required to file the Annual Statement with
supervisory agencies in each of the jurisdictions in which it does business, and
its operations and accounts are subject to examination by these agencies at
regular intervals.

Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Certain insurance products of the Company are subject to
various federal securities laws and regulations. In addition, current and
proposed federal measures which may significantly affect the insurance business
include regulation of insurance company solvency, employee benefit regulation,
removal of barriers preventing banks from engaging in the insurance business,
tax law changes affecting the taxation of insurance companies and the tax
treatment of insurance products and its impact on the relative desirability of
various personal investment vehicles.

                                       5
<PAGE>
Item 2.  Properties

Office space is provided by Prudential Insurance, as is described in the Notes
to the Financial Statements.

Item 3.  Legal Proceedings

The Company and Prudential Insurance are subject to legal and regulatory actions
in the ordinary course of their businesses, including class actions. Pending
legal and regulatory actions include proceedings relating to aspects of the
businesses and operations that are specific to the Company and Prudential
Insurance and that are typical of the businesses in which the Company and
Prudential Insurance operate. Class action and individual lawsuits involve a
variety of issues and/or allegations, which include sales practices,
underwriting practices, claims payment and procedures, premium charges, policy
servicing and breach of fiduciary duties to customers. We are also subject to
litigation arising out of our general business activities, such as our
investments and third party contracts. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or
exemplary damages.

The Company and Prudential Insurance have been subject to substantial regulatory
actions and civil litigation, including class actions, involving individual life
insurance sales practices from 1982 through 1995. As of January 31, 2003, the
Company and Prudential Insurance have resolved those regulatory actions, its
sales practices class action litigation and virtually all of the individual
sales practices actions filed by policyholders who "opted out" of the sales
practices class action. Prudential Insurance has indemnified the Company for any
liabilities incurred in connection with sales practices litigation covering
policyholders of individual permanent life insurance policies issued in the
United States from 1982 to 1995.

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

                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
        Matters

The Company is a wholly owned subsidiary of Pruco Life. There is no public
market for the Company's common stock.

Item 7. Management's Discussion and Analysis of Financial Position and Results
        of Operations.

The following analysis should be read in conjunction with the Notes to Financial
Statements.

The Company markets individual interest-sensitive life insurance, variable life
insurance, term insurance, and variable annuities through Prudential Insurance's
sales force in New Jersey and New York. These markets are subject to regulatory
oversight with particular emphasis placed on company solvency and sales
practices. These markets are also subject to increasing competitive pressures as
the legal barriers which have historically segregated the markets of the
financial services industry have been changed through both legislative and
judicial processes. Regulatory changes have opened the insurance industry to
competition from other financial institutions, particularly banks and mutual
funds that are positioned to deliver competing investment products through
large, stable distribution channels.

Application of Critical Accounting Policies

The preparation of financial statements in conformity with U.S. generally
accepted accounting principles ("GAAP") requires the application of accounting
policies that often involve a significant degree of judgment. Management, on an
ongoing basis, reviews estimates and assumptions used in the preparation of
financial statements. If management determines that modifications in assumptions
and estimates are appropriate given current facts and circumstances, results of
operations and financial position as reported in the Consolidated Financial
Statements may change significantly.

                                       6
<PAGE>
The following sections discuss the accounting policies applied in preparing our
financial statements that management believes are most dependent on the
application of estimates and assumptions.

Valuation of investments
A large portion of our investments is reflected at fair value in the statements
of financial position based on quoted market prices or estimates from
independent pricing services. However, when such information is not available,
for example, with respect to private placement fixed maturity securities, which
comprises 23.6% of our investments at December 31, 2002, fair value is
estimated, typically by using a discounted cash flow model, which considers
current market credit spreads for publicly traded issues with similar terms by
companies of comparable credit quality. Consequently, changes in estimated
future cash flows or in our assessment of the issuer's credit quality will
result in changes in fair value estimates. For fixed maturities and equity
securities classified as available for sale, the impact of such changes is
recorded in "Accumulated other comprehensive income (loss)," a separate
component of equity. However, the carrying value of these securities is reduced,
with a corresponding charge to earnings, when a decline in value is considered
to be other than temporary. Factors we consider in determining whether a decline
in value is other than temporary include: whether the decline is substantial,
the length of time the fair value has been less than cost, generally six months;
and the financial condition and near-term prospects of the issuer. This
corresponding charge is referred to as an impairment and is reflected in
"Realized investment losses, net" in the statements of operations. The level of
impairment losses can be expected to increase when economic conditions worsen
and decrease when economic conditions improve.

Policyholder liabilities and deferred policy acquisition costs
The liability for "Future policy benefits and other policyholder liabilities"
represents 5.7% of total liabilities as of December 31, 2002. Changes in this
liability are generally reflected in the "Policyholders' benefits" caption in
our statements of operations. This liability is primarily comprised of the
present value of estimated future payments to holders of life insurance and
annuity products where the timing and amount of payment depends on policyholder
mortality or surrender experience. For life insurance and annuity products,
expected mortality is generally based on the Company's historical experience or
standard industry tables. Interest rate assumptions are based on factors such as
market conditions and expected investment returns. Although mortality and
interest rate assumptions are "locked-in" upon the issuance of new insurance or
annuity business with fixed and guaranteed terms, significant changes in
experience or assumptions may require us to provide for expected future losses
on a product by establishing loss recognition reserves.

For most life insurance and annuity products that we sell, we defer costs that
vary with and are related primarily to the production of new business to the
extent these costs are deemed recoverable from future profits, and we record
these costs as an asset known as deferred policy acquisition costs or "DAC" "in
the statements of financial position. We amortize this DAC asset over the
expected lives of the contracts, based on the level and timing of either
estimated profits or premiums, depending on the type of contract. For products
with amortization based on estimated profits, the amortization rate is
periodically updated to reflect current period experience or changes in
assumptions that affect future profitability, such as lapse rates, investment
returns, mortality experience, expense margins and surrender charges. However,
for products with amortization based on future premiums, the amortization rate
is locked-in when the product is sold.

For example, expected profitability is a significant estimate in evaluating
deferred acquisition costs related to annuity products. Expected profitability
considers, among other assumptions, our best estimate of future asset returns to
estimate the future fees we expect to earn, the costs associated with minimum
death benefit guarantees we expect to incur and other profitability factors. For
the average remaining life of our variable annuity contracts in force as of
December 31, 2002, our evaluation of deferred policy acquisition costs is based
on a 9.25% annual blended rate of return that reflects an assumed rate of return
of 11.5% for equity type assets. Continuation of current market conditions or
further deterioration in market conditions may result in increases in the
amortization of deferred policy acquisition costs, while a significant
improvement in market conditions may result in a decrease in the amortization of
deferred policy acquisition costs. These changes in DAC balances are included as
a component of "General, administrative and other expenses" in our statements of
operations.

See "Results of Operations" for discussion of the impact of DAC amortization on
our results of our life and annuities products, including increased amortization
recorded in 2002 and 2001 reflecting lower estimates of future gross profits.

See "Results of Operations" for a discussion of the proposed AICPA Statement of
Position "Accounting and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate Accounts."

Reserves for contingencies
A contingency is an existing condition that involves a degree of uncertainty
that will ultimately be resolved upon the occurrence of future events. Under
GAAP, reserves for contingencies are required to be established when the future
event is probable and its impact can be reasonably estimated. An example is the
establishment of a reserve for losses in connection with an unresolved legal
matter. The initial reserve reflects management's best estimate of the probable
cost of ultimate resolution of the matter and is revised accordingly as facts
and circumstances change and, ultimately, when the matter is brought to closure.
In situations in which the Company is to be indemnified by Prudential Insurance,
there will be no financial impact on the statement of operations.

                                       7
<PAGE>
Other significant estimates
In addition to the items discussed above, the application of GAAP requires
management to make other estimates and assumptions. One example is the
recognition of deferred tax assets, which depends on management's assumption
that future earnings will be sufficient to realize the deferred benefit. This is
discussed in Note 7 to the Financial Statements.

Recently Issued Accounting Pronouncements

See Note 2 to the Financial Statements for a discussion of recently issued
accounting pronouncements.

The FASB is currently discussing the accounting related to certain modified
coinsurance ("modco") and funds withheld reinsurance agreements. More
specifically, the discussions relate to whether modco and funds withheld
reinsurance agreements that provide for a total return on a pool of fixed income
securities contain embedded derivatives that would require bifurcation under
SFAS No. 133. The FASB plans to address this issue by combining it with a
portion of the tentative guidance in SFAS No. 133 Implementation Issue No. B36,
"Embedded Derivatives-Bifurcation of Embedded Credit."

If embedded derivative accounting for certain modco and funds withheld
reinsurance agreements is eventually required under Implementation Issue No.
B36, we intend to apply the guidance prospectively, for all existing contracts
and future transactions, in the quarter following final resolution of the Issue.
Based upon our current level of modco and funds withheld reinsurance, we do not
believe application of Implementation Issue No. B36, as we currently understand
it, would have a material impact on our financial condition or results of
operations.

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

Changes in Financial Position

2002 versus 2001

Pruco Life Insurance Company of New Jersey meets the conditions set forth in
General Instruction H(1)(a) and (b) on Form 10-Q and is filing this form with
reduced disclosure.

Total assets of the Company increased $58 million from $2.525 billion at
December 31, 2001 to $2.583 billion at December 31, 2002. Fixed maturities
increased $63 million from investing policyholder deposits and unrealized market
gains. Deferred acquisition costs grew $18 million primarily as capitalized
costs from new sales were higher than the current year DAC amortization. Other
increases include receivables from affiliates and other assets due to the
increase in reinsurance recoverable resulting from growth in the business.
Separate account assets decreased $41 million as a result of market value
declines partially offset by increased contributions, as described below.

Total liabilities of the Company increased $36 million from $2.318 billion to
$2.354 billion. Policyholder Account balances increased $72 million mainly from
annuity deposits. Future policy benefits increased $15 million due to increases
to reserves for term insurance. Corresponding with the asset change, separate
account liabilities decreased by $41 million resulting from market value
declines of $197 million, policy and other charges of $46 million, offset by net
contributions (contributions less surrenders, withdrawals and transfers) of $202
million. Included in contributions is the sale of $190 million of Corporate
Owned Life Insurance (COLI) to Prudential Insurance. Other liabilities decreased
by $10 million mainly due to the funding of policy credits to the separate
account policyholders, which had been accrued in other liabilities at December
31, 2001.

2001 versus 2000

Total assets of the Company decreased $304 million during 2001, the majority of
which relates to a $174 million decrease in separate accounts primarily from
stock market declines, as described below. Fixed maturities decreased by $130
million primarily from an extraordinary dividend of $186 million paid to Pruco
Life of Arizona in December 2001, of which $159.5 million was paid with fixed
maturities. The Company reclassified held-to-maturity fixed maturities,
amounting to $7.5 million at January 1, 2001, to the available-for-sale
category.

Total liabilities of the Company decreased $127 million during the year from
$2.445 billion to $2.318 billion. Corresponding with the asset change, separate
account liabilities decreased by $174 million due to net investment losses of
$146 million, policy and other charges of $47 million, partially offset by net
contributions of $19 million. Net separate account contributions in 2000 were
$95 million. The current year decline in net contributions reflects activity
related to the Discovery Select exchange program, which was terminated in May
2000. This decrease was partially offset by an increase of $20 million in
PruSelect III contributions.

                                       8
<PAGE>
Policyholder Account balances increased $23 million mainly from interest
credited as net sales were relatively flat. Future policy benefits increased $11
million as a result of increases to reserves for term and extended term
insurance. Other liabilities increased $11 million due to adjustments to
separate account policy values in the form of policy credits, related to the
demutualization.

Total stockholder's equity decreased $176 million from December 31, 2000 to
December 31, 2001 mainly due to dividends and policy credits. On December 28,
2001, the Company paid to its Parent an extraordinary dividend, which was
approved by the New Jersey Department of Banking and Insurance. The dividend was
$186 million and was paid with cash of $26.5 million and fixed maturities of
$159.5 million. In connection with Prudential Insurance's demutualization,
qualified annuity contract holders were given increases to their policy values
in the form of policy credits. The policy credits of $10.3 million are reflected
as a reduction of retained earnings. Partially offsetting these decreases are
net income of $15.6 million and unrealized investment gains of $4.5 million.

Results of Operations

2002 versus 2001

Net Income
Net income for the year ended December 31, 2002 of $15.4 million is flat when
compared to prior year net income of $15.6 million. Benefiting net income in
2002 is higher policy charges and premiums and lower tax expense. Policy charges
are $20.6 million higher due to increases in the in-force business, and in
particular an affiliated sale to Prudential Insurance of Corporate Owned Life
Insurance ("COLI"), which generated $12 million in policy fees. The total income
effect of this transaction in 2002 was $7.1 million after adjusting for reserves
and deferred acquisition costs (DAC). Tax expense is $11.7 million lower when
compared to the prior year due to reduced income from operations before taxes
and a refinement of the estimated benefits from nontaxable investment income.
Offsetting these increases are higher amortization of deferred acquisition costs
("DAC"), lower net investment income, higher realized investment losses, and
increases in policyholder benefits and general and administrative expenses.

Revenues
Revenues increased by $18.6 million from the prior year. Policy charges and fee
income increased by $20.6 million, as discussed above, primarily driven by the
affiliated COLI sale of $12 million and an increase in life insurance charges of
$10.2 million for assuming mortality and expense risks due to the growth in the
in-force business of our life insurance products. The life insurance in-force
(excluding term insurance) grew to $8.9 billion at December 31, 2002 from $6.9
billion at December 31, 2001. This was partially offset by a decrease in annuity
policy charges and fees of $1.6 million due to decreased fund values as a result
of unfavorable market performance. Premiums increased $12.0 million from higher
term insurance sales and renewals of the Term Essential and Term Elite products,
as these are newer products launched at the end of 2000.

Lower investment results partially offset these increases. Net investment income
declined by $11.2 million due to lower yields available on the reinvestment of
fixed maturities and short-term investments and a lower average fixed maturity
balance than the prior year resulting from the December 2001 dividend of $186
million. Realized investment losses increased $4.6 million primarily from credit
related losses on sales in 2002 of $3.7 million compared to losses on sales in
the prior year of $.1 million. Losses on impairments increased $1.2 million from
$7.8 million in 2001 to $9.0 million in the current year.

Benefits and Expenses
Policyholder benefits increased by $12.4 million compared to the prior year as a
result of higher death benefits of $5.1 million and increases to reserves of $
7.3 million. The death benefit increase consists of $4.0 million in higher death
claims from our life insurance products due to the growth of the in-force
business and large claims, especially a $10 million claim, which impacted the
Company $2.5 million after reinsurance with Prudential Insurance. In addition,
the minimum death benefit guarantee for annuities increased death benefits by
$1.1 million. Reserves are higher by $7.3 million due to the increase in term
insurance.

                                       9
<PAGE>
The guaranteed minimum death benefit feature provides annuity contract holders
with a guarantee that the benefit received at death will be no less than a
prescribed minimum amount. This minimum amount is based on the net deposits paid
into the contract, the net deposits accumulated at a specified rate, the highest
historical account value on a contract anniversary, or more typically the
greatest of these values, depending on features offered in various contracts and
elected by the contract holders. These contracts generally require payment of
additional charges for guarantees other than those based on net deposits paid
into the contract. To the extent that the guaranteed minimum death benefit is
higher than the current account value at the time of death, the Company incurs a
cost. This results in increased annuity policy benefits in periods of declining
financial markets and in periods of stable financial markets following a
decline. Current accounting literature does not prescribe advance recognition of
the expected future net costs associated with these guarantees, and accordingly
we currently do not record a liability corresponding to these projected future
obligations for death benefits in excess of annuity account values. However, we
consider the expected net costs associated with these guarantees in our
calculations of expected gross profits on variable annuity business, on which
our periodic evaluations of unamortized policy acquisition costs are based. A
proposed AICPA Statement of Position, "Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate
accounts" (the "Proposed SOP"), would require recording of a liability for the
expected net costs associated with these guarantees under certain circumstances,
if adopted as proposed. We are currently evaluating the impact of the Proposed
SOP, which has a proposed effective date for fiscal years beginning after
December 15, 2003. We are currently evaluating the impact of this Proposed SOP.
As of December 31, 2002, the death benefit coverage in force (representing the
amount we would have to pay if all annuitants had died on that date) was
approximately $0.2 billion. The death benefit coverage in force represents the
excess of the guaranteed benefit amount over the fair value of the underlying
mutual fund investments.

General, administrative and other expenses increased by $18.1 million from the
prior year, primarily the result of increased DAC amortization of $9.2 million.
Of the DAC amortization increase, $5.0 million was related to our annuity
products. These charges reflect our lower estimates of future gross profits from
greater expected costs from minimum death benefit guarantees and lower expected
fees under these contracts due to declines in asset values and decreased future
asset returns. The remaining increase in DAC amortization is associated with our
life products and is primarily due to the growth of the in-force. In addition,
general and administrative expenses increased due to the growth of the in-force
business.

Deferred acquisition costs related to annuity products are evaluated quarterly
by comparing our actual profitability to our expectations. Expected
profitability considers, among other assumptions, our best estimate of future
asset returns to estimate the future fees we expect to earn, the costs
associated with minimum death benefit guarantees we expect to incur and other
profitability factors. If actual asset returns do not differ significantly from
our expectations, they do not result in a change in the rate of amortization of
deferred acquisition costs. Where actual asset returns differ more significantly
from expectations, future asset return assumptions are evaluated using a
reversion to mean approach. Under the reversion to mean approach we consider
historical returns over a period of time and project returns for a future
four-year period so that the investments underlying the annuities grow at a
targeted return for the entire period. We evaluate returns over a historical
period beginning January 1, 2000 giving higher weighting to the returns
experienced during the most recent two-year period. A calculated rate of return
over the four future years, which we refer to as the look-forward period, is
determined so that this calculated rate, together with the actual rate of return
for the historical period, produces the targeted return for the entire period.
If the calculated rate of return is consistent with our range of expectations in
light of market conditions, we will use it to project the asset growth for the
next four years. If the calculated rate of return is not supported by our
current expectations, we adjust our rate of return for purposes of these
computations. For contract years after the look-forward period, we project asset
growth using our long-term rate, currently an 8% annual blended rate of return,
which reflects an assumed rate of return of 8.85% for equity type assets.
Beginning in the second quarter and continuing throughout the year, we utilized
a rate of return lower than the calculated return, which contributed to
additional amortization of deferred acquisition costs during the second and
third quarter. The equity rate of return used in the immediate four-year
look-forward period varies by product, but is under 15% for all of our variable
annuity products for our evaluation of deferred policy acquisition costs as of
December 31, 2002. For the average remaining life of our variable annuity
contracts in force as of December 31, 2002, our evaluation of deferred policy
acquisition costs is based on a 9.25% annual blended rate of return, which
reflects an assumed rate of return of 11.5% for equity type assets. Continuation
of current market conditions or further deterioration in market conditions may
result in increases in the amortization of deferred policy acquisition costs,
while a significant improvement in market conditions may result in a decrease in
the amortization of deferred policy acquisition costs.

2001 versus 2000

Net Income
Net income after taxes for the year ended December 31, 2001 was $15.6 million, a
decrease of $8.0 million from the year ended December 31, 2000. Realized
investment losses increased $8.6 million mainly from recognized impairment
writedowns on fixed maturities. In addition, net asset management fee income
declined $4.7 million ($7.8 million in revenues less $3.1 million of expenses)
as the Company ceased receiving fee income or paying asset management fee
expenses related to the Pru Series Fund ("PSF") as of January 1, 2001, as
described in the Notes to Financial Statements. Tax expense for the current year
is lower than the prior year by $6.2 million due to reduced income from
operations before income taxes and a refinement of the estimated benefits from
nontaxable investment income.

                                       10
<PAGE>
Revenues
Revenues decreased by $9.5 million from the prior year comparable period. As
mentioned above, realized investment losses increased by $8.6 million as
writedowns for other than temporary impairments of fixed maturities grew $6.5
million, losses on the sale of Enron fixed maturities were $3.7 million, and
derivative losses were $4.7 million higher than the prior year. Partially
offsetting these losses were higher gains on sales of fixed maturities of $6.7
million as a result of selling in an environment of declining interest rates.
The elimination of PSF asset management fees reduced revenues by $7.8 million.
Policy charges and fee income, primarily consisting of expense, mortality,
loading and other insurance charges assessed on policyholder account balances,
decreased by $5.4 million primarily driven by a decrease in mortality and
expense charges as a result of the decline in separate account liabilities due
to unfavorable market returns.

Partially offsetting these decreases was an increase in premiums of $10.6
million. Premiums increased from higher term insurance sales of the Term
Essential and Term Elite products of $6.5 million and an increase in premiums
related to extended term policy conversions. As an option in the event of a
lapse, individual variable life insurance policies provide policyholders with
additional extended term or reduced paid-up life insurance based on the amount
that can be purchased with the remaining cash value of the contract (if the
policyholder does not elect to receive the remaining cash value as a cash
distribution). The application of the remaining cash value to purchase such
coverage is recorded as premium revenue in the Statement of Operations. Future
policy benefit reserves are also increased by the amount of these premiums. Net
investment income increased $1.5 million mainly as a result of increased income
from fixed maturities as the average portfolio balance was higher in the current
year, somewhat offset by lower income on short-term investments due to lower
interest rates.

Benefits and Expenses
Total benefits and expenses increased by $4.7 million. Policyholder benefits
increased $4.9 million due to increased reserve provisions for term and extended
term premiums and higher surrender benefits for reduced paid up insurance
policies. Interest credited increased by $1.2 million due to higher general
account liabilities. General, administrative and other expenses decreased by
$1.5 million from the prior year. The elimination of asset management expenses
resulted in a decrease of $3.1 million. Commission and distribution expenses,
net of capitalization, decreased $.5 million as a result of a change to market
based pricing as of April 1, 2000 and higher capitalization of commissions due
to increased sales. Offsetting this was an increase in DAC of $2.5 million
driven by lower projected future gross profits from continued market declines.

General Account Investments

The Company's investment portfolio supports its insurance and annuity
liabilities and other obligations to customers for which it assumes investment
related risks. The portfolio was comprised of total investments amounting to
$746.1 million at December 31, 2002, versus $685.1 million at December 31, 2001.
A diversified portfolio of publicly traded bonds, private placements, is managed
under strategies intended to maintain a competitive asset mix consistent with
current and anticipated cash flow requirements of the related obligations. The
risk tolerance reflects the Company's aggregate capital position, exposure to
business risk, liquidity and rating agency considerations.
<TABLE>
<CAPTION>
                                                                As of December 31,
                                           ------------------------------------------------------------
                                               2002          % of Total         2001         % of Total
                                           ----------------------------- ------------------------------
                                                                 ($ in thousands)
<S>                                        <C>              <C>              <C>              <C>
Fixed maturities
     Public, available for sale, at fair
       value                                  $ 377,969           50.7%       $ 290,974          42.4%
     Private, available for sale, at fair
       value                                    175,932           23.6%         199,760          29.2%
Other long-term investments (1)                   3,561            0.5%           2,614           0.4%
Policy loans, at outstanding balance            158,431           21.2%         158,754          23.2%
Short-term investments                           30,158            4.0%          32,983           4.8%

                                           ------------- --------------- --------------- --------------
Total investments                             $ 746,051          100.0%       $ 685,085         100.0%
                                           ============= =============== =============== ==============
</TABLE>
-------------
(1) Other long-term investments consist of the Company's interest in separate
account investments.

The asset management strategy for the portfolio is in accordance with an
investment policy statement developed and coordinated within the Company by the
Asset Liability and Risk Management Group, agreed to by senior management, and
approved by the Board of Directors. In managing the investment portfolio, the
long-term objective is to generate favorable investment results through
asset-liability management, strategic and tactical asset allocation and asset
manager selection. Asset management strategies take into account the need to
match asset structure to product liabilities, considering the underlying income
and return characteristics of investment alternatives and seeking to closely
approximate the interest rate sensitivity of the asset portfolio with the
estimated interest rate sensitivity of the product liabilities. Asset management
strategies also include broad diversification across asset classes, issuers and
sectors; effective utilization of capital while maintaining liquidity believed
to be adequate to satisfy cash flow requirements; and achievement of competitive
performance. The major categories of invested assets, the related quality of the
portfolio, and recent activities to manage the portfolio are discussed below.

                                       11
<PAGE>
As of December 31, 2002, our investment portfolio consisted primarily of $553.9
million of fixed maturity securities versus $490.7 million (74% of the total
portfolio in 2002 versus 72% in 2001), and $192.2 million of other investments
(26% of the total portfolio in 2002 versus 28% in 2001). The remaining $192.2
million of other investments were comprised of other long-term investments,
policy loans and short-term investments as compared to $194.4 million in 2001.

Investment Results

The overall income yield on our invested assets after investment expenses,
excluding realized investment gains (losses), was 6.61% for the year ended
December 31, 2002 and 7.15% for 2001. The decline in yield on the portfolio in
2002 from 2001 is primarily attributable to reinvestment activities over the
last two years in a declining interest rate environment.

Continuation of the low interest rate environment will result in our
reinvestment of maturing securities at lower rates and would reduce the yield we
are able to earn on our investments, which support our obligations for certain
products, including fixed annuities, and guaranteed investment contracts. This
reduction in yield would also have a corresponding impact on the "spread," the
difference between the yield on our investments and the amounts that we are
required to pay our customers related to these products, which would have a
negative impact on our future profitability.

The following table sets forth the income yield and investment income, excluding
realized investment gains/(losses), for each major asset category of the Company
for the periods indicated.
<TABLE>
<CAPTION>
                                                For the year ended December 31,
                                 ---------------------------------------------------------------
                                                2002                           2001
                                 ------------------------------- -------------------------------
(1)                                   Yield            Amount          Yield           Amount
                                 ---------------------------------------------------------------
                                                        ($ in thousands)
<S>                               <C>              <C>             <C>             <C>
Fixed maturities                         7.11%          $35,078          8.00%          $46,813
Policy loans                             5.64             8,715          5.71             8,647
Short-term investments                   3.38             1,852          4.24             4,496
Other investments                       33.38               932        (11.67)             (418)
                                 ------------- ----------------- ------------- -----------------

Income before investment expenses        6.74            46,577          7.26            59,538
Investment expenses                     (0.13)           (1,765)        (0.11)           (3,557)

                                 ------------- ----------------- ------------- -----------------
Income after investment expenses        6.61%           $44,812          7.15%          $55,981
                                 ============= ================= ============= =================
</TABLE>
--------------
(1)      Yields are based on quarterly average carrying values except for fixed
         maturities, equity securities and securities lending activity. Yields
         for fixed maturities are based on amortized cost. Yields for securities
         lending activity are calculated net of corresponding liabilities and
         rebate expenses. Yields for prior year are presented on a basis
         consistent with our current reporting practices.

Fixed Maturity Securities

Investment Mix

We manage our public portfolio to a risk profile directed by the Asset Liability
and Risk Management Group. We seek to employ relative value analysis both in
credit selection and in purchasing and selling securities. To the extent that we
actively purchase and sell securities as part of portfolio selection and
portfolio rebalancing, the total return that we earn on the portfolio will be
reflected both as investment income and also as realized gains or losses on
investments.

We use our private placement and asset-backed portfolios to enhance the
diversification and yield of our overall fixed maturity portfolio. Our
investment staff directly originates approximately half of all of our private
placements. Our origination capability offers the opportunity to lead
transactions and gives us the opportunity for better terms, including covenants
and call protection, and to take advantage of innovative deal structures.

The Company has classified all privately placements and publicly traded
securities as available for sale. "Available for sale" securities are carried in
the Consolidated Statement of Financial Position at fair value, with unrealized
gains and losses (after certain related adjustments) recognized by credits and
charges to equity capital. At December 31, 2002 the fixed maturities portfolio
totaled $553.9 million, an increase of $63.2 million compared to December 31,
2001. This increase in fixed maturities reflected growth in the overall
portfolio due to positive cash flow from insurance operations during 2002,
appreciation arising from a lower interest rate environment, as well as
reinvestment of net investment income.

                                       12
<PAGE>
Our fixed maturity securities portfolio consists principally of public and
private fixed maturities across an array of industry categories. As of December
31, 2002, we held approximately 74% of assets in fixed maturity securities
(versus 72% as of December 31, 2001) with a total amortized cost of $525.9
million and an estimated fair value of $553.9 million, compared to an amortized
cost of $479.0 million and estimated fair value of $490.7 million as of December
31, 2001. Our investments in public fixed maturities as of December 31, 2002
were $358.1 million at amortized cost and $378.0 million at estimated fair value
compared to $285.5 million at amortized cost and $291.0 million at estimated
fair value as of December 31, 2001. Our investments in private fixed maturities
as of December 31, 2002 were $167.7 million at amortized cost and $175.9 million
at estimated fair value compared to $193.5 million at amortized cost and $199.7
million at estimated fair value as of December 31, 2001.

Fixed Maturity Securities and Unrealized Gains and Losses by Industry Category

The following table sets forth the composition of our fixed maturity securities
portfolio by industry category as of the dates indicated and the associated
gross unrealized gains and losses.
<TABLE>
<CAPTION>
                                                                     As of December 31,
                      -------------------------------------------------------------------------------------------------------------
                                                  2002                                                    2001
                      ------------------------------------------------------    ---------------------------------------------------
(1)                                       Gross        Gross                                      Gross         Gross
                                        Unrealized   Unrealized                                 Unrealized    Unrealized     Fair
                      Amortized Cost      Gains        Losses     Fair Value    Amortized Cost    Gains         Losses       Value
                      -------------------------------------------------------------------------------------------------------------
                                                                        (in thousands)
<S>                   <C>               <C>          <C>          <C>           <C>            <C>           <C>            <C>
Industry
U.S. Government          $ 42,149        $ 1,222      $    -      $ 43,371        $ 19,136        $   241      $   99      $ 19,278
Manufacturing             119,244          6,714         538       125,420          87,581          2,979         644        89,916
Utilities                  64,765          3,874       1,190        67,449          86,564          2,885         901        88,548
Finance                    88,285          7,467          26        95,726          76,376          4,236          55        80,557
Services                   29,927          1,456         255        31,128          25,496            518         763        25,251
Mortgage Backed            15,455            342           -        15,797             681              -           4           677
Foreign Government          4,027            280           -         4,307           4,029            259           -         4,288
Retail and Wholesale       42,695          3,999         113        46,581          35,176          1,486         126        36,536
Securities                 69,183          1,965         775        70,373          99,006          2,403         985       100,424
Transportation             22,772          1,175          53        23,894          22,582            382         920        22,044
Energy                     27,364          2,498           7        29,855          22,369            883          37        23,215
                         --------        -------      ------      --------        --------        -------      ------      --------
Total                    $525,866        $30,992      $2,957      $553,901        $478,996        $16,272      $4,534      $490,734
                         ========        =======      ======      ========        ========        =======      ======      ========
</TABLE>
-------------
(1)  Investment data for 2002 has been classified based on industry accepted
     Lehman categorizations for public holdings and similar classifications by
     industry for all other holdings. Prior year data has been reclassified to
     conform to current year presentation.

As a percentage of amortized cost, fixed maturity investments as of December 31,
2002 consist primarily of 23% manufacturing sector, 17% finance sector, 13%
asset-backed securities and 12% utilities sector compared to 18% manufacturing
sector, 16% finance sector, 21% asset-backed securities and 18% utilities sector
as of December 31, 2001. 100% of the mortgage-backed securities were publicly
traded agency pass-through securities. The Company did not invest in
collateralized mortgage obligations as of December 31, 2002 and 2001.

The gross unrealized losses related to our fixed maturity portfolio were $3.0
million as of December 31, 2002 compared to $4.5 million as of December 31,
2001. The gross unrealized losses in 2002 were concentrated primarily in the
utilities, asset-backed securities, manufacturing and services sectors while
gross unrealized losses in 2001 were concentrated in the asset-backed
securities, transportation, utilities and services sectors. Non-investment grade
securities represented 62% of the gross unrealized losses in 2002 versus 59% of
gross unrealized losses in 2001.

                                       13
<PAGE>
The following table sets forth the breakdown of our fixed maturity securities
portfolio by contractual maturity as of the dates indicated.
<TABLE>
<CAPTION>
                                                         As of December 31,
                                   ---------------------------------------------------------
                                                2002                          2001
                                   ---------------------------------------------------------
                                   Amortized Cost   % of Total   Amortized Cost  % of Total
                                   ---------------------------------------------------------
                                                         ($ in thousands)
<S>                               <C>               <C>           <C>             <C>
Maturing in 2002                      $      -            -%       $  9,395         2.0%
Maturing in 2003                        43,397          8.3%         42,030         8.8%
Maturing in 2004                        28,443          5.4%         40,933         8.5%
Maturing in 2005                        49,046          9.3%         63,686        13.3%
Maturing in 2006                        96,868         18.3%         78,058        16.2%
Maturing in 2007                        51,443          9.8%         43,072         9.0%
Maturing in 2008                        41,335          7.9%         41,067         8.6%
Maturing in 2009                        43,924          8.4%         44,374         9.3%
Maturing in 2010                        14,857          2.8%         11,117         2.3%
Maturing in 2011                        48,331          9.2%         56,057        11.7%
Maturing in 2012 and Beyond            108,222         20.6%         49,208        10.3%
                                      --------        -----        --------       -----
Total Fixed Maturities                $525,866        100.0%       $478,996       100.0%
                                      ========        =====        ========       =====
</TABLE>

Fixed Maturity Securities Credit Quality

The NAIC evaluates the investments of insurers for regulatory reporting purposes
and assigns fixed maturity securities to one of six categories called "NAIC
Designations." NAIC designations of "1" or "2" include fixed maturities
considered investment grade, which include securities rated Baa3 or higher by
Moody's or BBB- or higher by S&P. NAIC Designations of "3" through "6" are
referred to as below investment grade, which include securities rated Ba1 or
lower by Moody's and BB+ or lower by S&P. The fixed maturity securities
designated as NAIC 6 include securities that are not rated.

The amortized cost of our public and private below-investment grade fixed
maturities totaled $63.8 million, or 12%, of the total fixed maturities as of
December 31, 2002, compared to $45.6 million, or 10%, of total fixed maturities
as of December 31, 2001. The increase in the amount of below-investment grade
fixed maturities at December 31, 2002 from a year earlier came primarily from
negative credit migration over the period.

Public Fixed Maturities - Credit Quality

The following table sets forth our public fixed maturity portfolios by NAIC
rating as of the dates indicated.
<TABLE>
<CAPTION>
                                                                         As of December 31,
                             --------------------------------------------------------------------------------------------------
                                                       2002                                            2001
                             ---------------------------------------------------  -----------------------------------------------
                                              Gross         Gross                                Gross       Gross
                              Amortized     Unrealized    Unrealized    Fair      Amortized    Unrealized  Unrealized   Fair
                                Cost          Gains         Losses      Value       Cost         Gains       Losses     Value
                             --------------------------------------------------------------------------------------------------
                                                                           (in thousands)
<S>          <C>              <C>           <C>           <C>         <C>        <C>           <C>           <C>      <C>
NAIC          Rating Agency
Designation   Equivalent
-----------   -------------
1             Aaa, Aa, A       $200,153      $12,626       $   35     $212,744    $141,629       $5,738      $  150   $147,217
2             Baa               132,938        8,798          874      140,862     103,006        2,634       1,135    104,505
3             Ba                 11,993          309           96       12,206      19,155          294       1,066     18,383
4             B                   9,232          266          636        8,862      18,904          530       1,409     18,025
5             C and lower         2,330           82          450        1,962       2,750          181         184      2,747
6             In or near
               default           1,491            -          158        1,333          92            8           3         97
                               --------      -------       ------     --------    --------       ------      ------   --------
Public Fixed Maturities        $358,137      $22,081       $2,249     $377,969    $285,536       $9,385      $3,947   $290,974
                               ========      =======       ======     ========    ========       ======      ======   ========
</TABLE>

                                       14
<PAGE>
Private Fixed Maturities - Credit Quality

The following table sets forth our private fixed maturity portfolios by NAIC
rating as of the dates indicated.
<TABLE>
<CAPTION>
                                                                         As of December 31,
                             --------------------------------------------------------------------------------------------------
                                                       2002                                            2001
                             ---------------------------------------------------  -----------------------------------------------
                                              Gross         Gross                                Gross       Gross
                              Amortized     Unrealized    Unrealized    Fair      Amortized    Unrealized  Unrealized   Fair
                                Cost          Gains         Losses      Value       Cost         Gains       Losses     Value
                             --------------------------------------------------------------------------------------------------
                                                                           (in thousands)
<S>          <C>              <C>           <C>           <C>         <C>        <C>           <C>           <C>      <C>
NAIC          Rating Agency
Designation   Equivalent
-----------   -------------
1             Aaa, Aa, A        $39,178       $1,341         $199      $40,320     $47,563       $1,083         $ -    $48,646
2             Baa                89,806        6,823           10       96,619     141,224        5,382         585    146,021
3             Ba                 25,270          588          338       25,520       3,889          253           -      4,142
4             B                   1,518            -           28        1,490         357            -           2        355
5             C and lower        11,957          158          132       11,983         427          169           -        596
6             In or near
               default                -            -            -            -           -            -           -          -
                               --------      -------       ------     --------    --------       ------      ------   --------
Private Fixed Maturities       $167,729       $8,910         $707     $175,932    $193,460       $6,887        $587   $199,760
                               ========      =======       ======     ========    ========       ======      ======   ========
</TABLE>

Unrealized Losses from Fixed Maturity Securities

The following table sets forth the amortized cost and gross unrealized losses of
fixed maturity securities where the estimated fair value had declined and
remained below amortized cost by 20% or more for the following timeframes:
<TABLE>
<CAPTION>
                                                                   As of December 31,
                                             -----------------------------------------------------------
                                                         2002                         2001
                                             -----------------------------  ----------------------------
                                                                  Gross                        Gross
                                                                Unrealized                  Unrealized
                                             Amortized Cost       Losses    Amortized Cost    Losses
                                             ---------------------------------------------------------
                                                               (in thousands)
<S>                                             <C>                <C>          <C>            <C>
Less than six months                            $2,969             $990         $4,513         $1,279
Greater than six months but less than nine
 months                                            706              260              -              -
Greater than nine months                             -                -              -              -

                                                ------           ------         ------         ------
Total                                           $3,675           $1,250         $4,513         $1,279
                                                ======           ======         ======         ======
</TABLE>

Gross unrealized losses of fixed maturity securities where estimated fair value
has been 20% or more below amortized cost was $1.3 million in both 2002 and
2001. The gross unrealized losses in 2002 were primarily concentrated in the
utilities, manufacturing, and retail and wholesale sectors while the gross
unrealized losses in 2001 were concentrated in the transportation, services, and
manufacturing sectors.

Impairments of Fixed Maturity Securities

Our credit and portfolio management processes help ensure prudent controls over
valuation and management of the private portfolio. We have separate pricing and
authorization processes to establish "checks and balances" for new investments.
We apply consistent standards of credit analysis and due diligence for all
transactions, whether they originate through our own in-house origination staff
or through agents. Our regional offices closely monitor the portfolios in their
regions. We set all valuation standards centrally, and we assess the fair value
of all investments quarterly.

We maintain separate monitoring processes for public and private fixed
maturities and create watch lists to highlight securities which require special
scrutiny and management. Our public fixed maturity asset managers formally
review all public fixed maturity holdings on a monthly basis and more frequently
when necessary to identify potential credit deterioration whether due to ratings
downgrades, unexpected price variances, and/or industry specific concerns. We
classify public fixed maturity securities of issuers that have defaulted as
securities not in good standing and all other public watch list assets as
closely monitored.

Our private fixed maturity asset managers conduct specific servicing tests on
each investment on an ongoing basis to determine whether the investment is in
compliance or should be placed on the watch list or assigned an early warning
classification. We assign early warning classifications to those issuers that
have failed a servicing test or experienced a minor covenant default, and we
continue to monitor them for improvement or deterioration. In certain
situations, the Company benefits from negotiated rate increases or fees
resulting from a covenant breach. We assign closely monitored status to those
investments that have been recently restructured or for which restructuring is a
possibility due to substantial credit deterioration or material covenant
defaults. We classify as not in good standing securities of issuers that are in
more severe conditions, for example, bankruptcy or payment default.

                                       15
<PAGE>
We classify our fixed maturity securities as available for sale. As a result we
record unrealized gains and losses to the extent that amortized cost is
different from estimated fair value. All available for sale securities with
unrealized losses are subject to our review to identify other-than-temporary
impairments in value. In evaluating whether a decline in value is
other-than-temporary, we consider several factors including, but not limited to,
the following:

                  1.  whether the decline is substantial;
                  2.  the duration (generally greater than six months);
                  3.  the reasons for the decline in value (credit event or
                      interest rate related);
                  4.  our ability and intent to hold our investment for a period
                      of time to allow for a recovery of value; and
                  5.  the financial condition of and near-term prospects of the
                      issuer.

When we determine that there is an other-than-temporary impairment, we record a
writedown to estimated fair value which reduces the cost basis. The new cost
basis of an impaired security is not adjusted for subsequent increases in
estimated fair value. Estimated fair values for fixed maturities, other than
private placement securities are based on quoted market prices or prices
obtained from independent pricing services.

Estimated fair values for private placement fixed maturities are determined
primarily by using a discounted cash flow model which considers the current
market spreads between the U.S. Treasury yield curve and corporate bond yield
curve, adjusted for type of issue, its current credit quality and its remaining
average life. The estimated fair value of certain non-performing private
placement fixed maturities is based on amounts estimated by management.

Impairments of fixed maturity securities totaled $9.0 million in 2002 and $7.8
million in 2001.

Liquidity and Capital Resources

Consolidated Liquidity and Capital Management

We manage our liquidity and capital resources on a company-wide basis, as well
as by legal entity and business, recognizing regulatory restrictions on
transfers of funds among entities engaged in the insurance and other businesses.

We seek to manage our consolidated liquidity position so that we have, on a
cost-effective basis, adequate resources to satisfy operating cash requirements
and investment objectives, as well as to fund business growth. We also seek to
manage our liquidity so that we have adequate sources of funding to support our
needs under stress scenarios so that we can meet our obligations without
materially disrupting our operating and investing activities.

Insurance, Annuities and Guaranteed Products Liquidity

Our principal cash flow sources are premiums and fund deposits, investment and
fee income and investment maturities and sales. These cash inflows may be
supplemented by financing activities either directly through asset-based
financing or through borrowing from other Prudential Insurance affiliates. We
actively use our balance sheet capacity for financing activities on a secured
basis through securities lending and repurchase transactions to earn additional
spread income.

Cash outflow requirements principally relate to benefits, claims, and payments
to contract holders as well as amounts paid to policyholders and contract
holders in connection with surrenders, withdrawals, and net policy loan
activity. Uses of cash include commissions, general and administrative expenses,
and purchase of investments. We regularly monitor our liquidity requirements
associated with our policyholder and contract holder obligations so that we
manage cash inflows to match anticipated cash outflow requirements. We utilize a
cash flow projection system and regularly perform asset/liability duration
matching in the management of our asset and liability portfolios.

Gross account withdrawals, amounted to $73.5 million in the year ended December
31, 2002 and $76.3 million in the year ended December 31, 2001. Since these
withdrawals as well as the level of surrenders experienced, were consistent with
our assumptions in asset liability management, the associated cash outflows did
not have an adverse impact on our overall liquidity.

Interest rate fluctuations can affect the timing of cash flows associated with
our insurance and annuity liabilities as well as the value of assets supporting
these obligations. Changes in interest rates and other market conditions can
also expose us to the risk of accelerated surrenders as policyholders and
contract holders are attracted to alternative products. We seek to maintain an
appropriate match between our assets and liabilities so that we can satisfy the
changing cash flow requirements associated with interest rate fluctuations. In
response to interest rate changes, we can alter our strategies for investment of
new cash flows, adjust interest credited interest rates if and to the extent
permitted by contracts, and adjust the pricing of new products.

                                       16
<PAGE>
We closely monitor surrenders and withdrawals for our life insurance and annuity
contracts. Upon policy surrender, life insurance policyholders are surrendering
the life insurance protection in addition to their investment in the contract,
which would typically require new underwriting and acquisition costs to replace.
Therefore, our exposure to increased surrenders is considerably less for life
insurance policies than for annuities. In addition, many of our contracts
contain provisions that discourage early surrender. Market value adjustment
features in some contracts provide for adjustments of the amount available in
the event of surrender to reflect changes in the value of the underlying
investments. We deduct policy loans, which we report as assets, from amounts
available on surrender. Some contracts impose surrender charges that we deduct
in the event of surrender before specified dates.

We use surrender charges and other contract provisions to mitigate the extent,
timing and profitability impact of withdrawals of funds by customers from
annuity contracts. The following table sets forth withdrawal characteristics of
our general account annuity reserves and deposit liabilities (based on statutory
liability values) as of the dates indicated.
<TABLE>
<CAPTION>
                                                                             As of December 31,
                                                                       2002                    2001
                                                                -------------------   --------------------
                                                                Amount   % of Total   Amount    % of Total
                                                                ------   ----------   ------    ----------
                                                                             ($ in millions)
<S>                                                             <C>          <C>      <C>           <C>
Not subject to discretionary withdrawal provisions              $   3        1.8%     $   3         2.6%
Subject to discretionary withdrawal, with adjustment:
      With market value adjustment                                  -          -%         -           -%
      At contract value, less surrender charge of 5% or more       49       29.9%        21        18.3%
                                                                -----      -----      -----       -----
            Subtotal                                               52       31.7%        24        20.9%
Subject to discretionary  withdrawal at contract value with no
   surrender charge or surrender charge of less than 5%           112       68.3%        91        79.1%
                                                                -----      -----      -----       -----
Total annuity reserves and deposit liabilities                  $ 164      100.0%     $ 115       100.0%
                                                                =====      =====      =====       =====
</TABLE>

We sell variable life insurance products that contain both general and separate
account components, with the bulk of account balances in separate accounts. The
principal product of this type, Variable Appreciable Life, also imposes
surrender charges for the first ten years after issuance. In addition to the
right to surrender, policyholders may transfer account balances between the
general account and the separate account components, subject to limitations on
the amount transferred and only within a 30-day period following each
anniversary of the policy. As of December 31, 2002 and 2001, general account
balances for variable life insurance products were $309.6 million and $286.5
million, respectively, while separate account balances were $1,023.9 million and
$930.9 million, respectively.

We believe that cash flows from operating and investing activities of our
insurance and annuity operations are adequate to satisfy liquidity requirements
of these operations based on our current liability structure and considering a
variety of reasonably foreseeable stress scenarios. The continued adequacy of
this liquidity will depend upon factors including future securities market
conditions, changes in interest rate levels and policyholder perceptions of our
financial strength, which could lead to reduced cash inflows or increased cash
outflows. As of December 31, 2002 and 2001, we had cash and short-term
investments of approximately $91.6 million and $91.2 million, respectively, and
fixed maturity investments classified as "available for sale" with fair values
of $553.9 million and $490.7 million at those dates, respectively.

Financing Activities

Our financing principally consists of an affiliated revolving line of credit
with Prudential Funding LLC, a wholly owned subsidiary of Prudential Insurance,
and asset-based or secured forms of financing. The total capacity to borrow for
the Company and its parent, Pruco Life of Arizona, is $700 million, which
includes both the asset-based financing and borrowings from Prudential Funding
LLC. There was no outstanding debt relating to the Prudential Funding LLC credit
facility as of December 31, 2002 or December 31, 2001. The secured financing
arrangements include transactions such as securities lending and repurchase
agreements, which we generally use to finance portfolios of liquid securities
and earn additional spread income.

                                       17
<PAGE>
                                                           As of December 31,
                                                          --------------------
                                                          2002            2001
                                                          ----            ----
                                                               (in millions)
Borrowings:
      General obligations                                 $   -          $   -
      Total asset-based financing                            57             55
                                                          -----          -----
         Total borrowings and asset-based financings      $  57          $  55
                                                          =====          =====

Deferred Policy Acquisition Costs

We capitalize costs that vary with and are related primarily to the production
of new insurance and annuity business. These costs include commissions, costs to
issue and underwrite the policies and certain variable field office expenses.
The capitalized amounts are known as deferred policy acquisition costs, or DAC.
Our total DAC, including the impact of unrealized investment gains and losses,
amounted to $137.1 million and $119.0 million as of December 31, 2002 and 2001,
respectively.

If we were to experience a significant increase in lapse or surrender rates on
policies for which we amortize DAC based on estimated gross margins or gross
profits, such as variable life insurance and variable annuities, we would expect
acceleration of the write-off of DAC for the affected blocks of policies.
Additionally, for all policies on which we have outstanding DAC, we would be
required to evaluate whether this experience called into question our ability to
recover all or a portion of the DAC, and we would be required to write off some
or all of the DAC if we concluded that we could not recover it. While an
accelerated write-off of DAC would not affect our cash flow or liquidity, it
would negatively affect our reported earnings and level of capital under
generally accepted accounting principles.

Effective New Accounting Pronouncements

Refer to Footnote 2, "Summary of Significant Accounting Policies," of the Notes
to Financial Statements.

Item 8. Financial Statements and Supplementary Data

Information required with respect to this Item 8 regarding Financial Statements
and Supplementary Data is set forth commencing on page F-3 hereof. See Index to
Financial Statements elsewhere in this Annual Report.

Item 9. Changes in and Disagreements with Independent Accountants on Accounting
        and Financial Disclosure

None.

Item 14. Controls and Procedures

Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of the Company's
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of these disclosure
controls and procedures were effective. No significant changes were made in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.



                                       18
<PAGE>
                                     PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

    (a)(1) and (2) Financial Statements of Registrant are listed in the
    accompanying "Index to Financial Statements" on page F-1 hereof and are
    filed as part of this Report.

    (a)(3) Exhibits

    Regulation S-K

    2.   Not applicable.

    3.   Documents Incorporated by Reference

         (i) The Articles of Incorporation of Pruco Life Insurance Company of
         New Jersey as amended March 11, 1983 and the Bylaws of Pruco Life
         Insurance Company of New Jersey, as amended February 1, 1991 are
         incorporated herein by reference to Post-Effective Amendment No. 26 to
         Form S-6, Registration No. 2-89780, filed April 28, 1997 on behalf of
         the Company; (ii) Bylaws of Pruco Life Insurance Company of New Jersey
         as amended May 5, 1997 are incorporated herein by reference to Form
         10-Q, Registration No. 333-18117-01, filed August 15, 1997 on behalf of
         Pruco Life Insurance Company of New Jersey.

    3b.  Reports on Form 8-K
         Form 8-Ks, Commission file number 33-18053, filed on August 16, 2002
         and November 14, 2002.

    4.   Exhibits

         Market-Value Adjustment Annuity Contract, incorporated by reference to
         Registrant's Form S-3 Registration Statement, Registration No.
         333-100713, filed October 24, 2002, on behalf of Pruco Life Insurance
         Company of New Jersey.

    9.   None.

    10.  None.

    11.  Not applicable.

    12.  Not applicable.

    13.  Not applicable.

    16.  Not applicable.

    18.  None.

    21.  None.

    22.  None.

    23.  Not applicable.

    24.  Powers of Attorney for Vivian L. Banta, Richard J. Carbone, and Helen
         M. Galt are incorporated by reference to Post-Effective Amendment No. 5
         to Form S-6, Registration No. 333-85117, filed June 28, 2001 on behalf
         of the Pruco Life of New Jersey Variable Appreciable Account. Powers of
         Attorney for David R. Odenath, Jr. and William J. Eckert, IV are
         incorporated by reference to Pre-Effective Amendment No. 1,
         Registration No. 333-49334, filed February 8, 2001 on behalf of the
         Pruco Life of New Jersey Variable Appreciable Account. A Power of
         Attorney for James J. Avery, Jr. was incorporated by reference to
         Post-Effective Amendment No. 10 to Form S-1, Registration No. 33-20018,
         filed April 9, 1998 on behalf of the Pruco Life of New Jersey Variable
         Contract Real Property Account. A Power of Attorney for Ronald P.
         Joelson was incorporated by reference to Post-Effective Amendment No.
         14 to Form S-1, filed April 10, 2001 on behalf of the Pruco Life of New
         Jersey Variable Contract Real Property Account.

                                       19
<PAGE>

    99.  The following table presents sales and related expenses of the Flexible
         Premium Variable Annuity Account since February 7, 1997, the effective
         date of the registration statement (SEC file number 333-18053).
<TABLE>
<CAPTION>
                                                         For the account           For the accounts of
                                                         of the Company           the contract holders
                                              --------------------------------------------------------
                                               Aggregate offering
                                                 price of amount
                                                   registered         Amount sold      Amount sold
                                              --------------------------------------------------------
                                                                       (in thousands)
<S>                                              <C>                  <C>             <C>
Flexible Premium Variable Annuity Account *       $   150,000          $  36,951       $   9,471

Underwriting discounts and commissions **                                 (1,031)
Other expenses ***                                                        (1,466)
                                                                       ---------
    Total                                                                 (2,497)
                                                                       ---------

Net offering proceeds                                                  $  34,454
                                                                       =========
</TABLE>

*     Securities are not issued or sold in predetermined units.
**    Amount represents estimated commissions paid to affiliated parties.
***   Amount represents estimated general administrative expenses paid to the
      parent under service and lease agreement.



                                       20
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13, or 15 (d) 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, in the city of Newark, and
state of New Jersey, on the 24th day of March 2003.

                      PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
                      (Registrant)


                                      By: /s/ Andrew J. Mako
                                          --------------------------
                                          Andrew J. Mako
                                          President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on March 24, 2003.

Signature                                       Title
---------                                       -----

Vivian L. Banta    *                            Chairman of the Board
------------------------------


Vivian L. Banta


James J. Avery, Jr.  *                          Vice Chairman of the Board
------------------------------                  and Director
James J. Avery, Jr.


  /s/ Andrew J. Mako                            Director and President
------------------------------
Andrew J. Mako


Ronald Paul Joelson   *                         Director
------------------------------
Ronald Paul Joelson


Richard J. Carbone   *                          Director
------------------------------
Richard J. Carbone


Helen M. Galt   *                               Director
------------------------------
Helen M. Galt


David R. Odenath, Jr.   *                       Director
------------------------------
David R. Odenath, Jr.


  /s/ William J. Eckert, IV                     Vice President and Chief
------------------------------                  Accounting Officer
William J. Eckert, IV


                             * By: /s/ Thomas C. Castano
                                   ---------------------
                                   Thomas C. Castano
                                   (Attorney-in-Fact)


                                       21
<PAGE>

                                 CERTIFICATIONS

I, Andrew J. Mako certify that:

1. I have reviewed this annual report on Form 10-K of Pruco Life Insurance
Company of New Jersey;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 24, 2003

                               /s/ Andrew J. Mako
                               ------------------
                                 Andrew J. Mako
                             Chief Executive Officer

                                       22
<PAGE>

I, William J. Eckert, IV, certify that:

1. I have reviewed this annual report on Form 10-K of Pruco Life Insurance
Company of New Jersey;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 24, 2003

                              /s/ William J. Eckert
                              ---------------------
                              William J. Eckert, IV

                             Chief Financial Officer

                                       23
<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549





                                    FORM 10-K
                                  ANNUAL REPORT




                   PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
                            Financial Statements and
                        Report of Independent Accountants

                           December 31, 2002 and 2001


                                       24
<PAGE>

                   PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Financial Statements                                                                                 Page No.
--------------------                                                                                 --------
<S>                                                                                                 <C>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY


Report of Independent Accountants                                                                      F-2


Financial Statements:


      Statements of Financial Position - December 31, 2002 and 2001                                    F-3


      Statements of Operations and Comprehensive Income
      Years Ended December 31, 2002, 2001 and 2000                                                     F-4


      Statements of Stockholder's Equity - Years Ended December 31, 2002, 2001 and 2000                F-5


      Statements of Cash Flows - Years Ended December 31, 2002, 2001 and 2000                          F-6


      Notes to Financial Statements                                                                    F-7
</TABLE>

                                      F-1
<PAGE>
                        Report of Independent Accountants



To the Board of Directors and Stockholder of
Pruco Life Insurance Company of New Jersey

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material aspects, the financial position of Pruco Life
Insurance Company of New Jersey (an indirect, wholly-owned subsidiary of The
Prudential Insurance Company of America) at December 31, 2002 and 2001, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.


/s/ PricewaterhouseCoopers LLP

New York, New York
February 11, 2003

                                      F-2

<PAGE>
Pruco Life Insurance Company of New Jersey

Statements of Financial Position
December 31, 2002 and 2001 (in thousands)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------

                                                                2002            2001
                                                             -----------     -----------
<S>                                                          <C>             <C>
ASSETS
Fixed maturities available for sale, at fair value
   (amortized cost, 2002: $525,866; and 2001: $478,996)       $  553,901       $ 490,734
Policy loans                                                     158,431         158,754
Short-term investments                                            30,158          32,983
Other long-term investments                                        3,561           2,614
                                                             -----------     -----------
   Total investments                                             746,051         685,085
Cash and cash equivalents                                         61,482          58,212
Deferred policy acquisition costs                                137,053         118,975
Accrued investment income                                         11,291          10,399
Receivables from affiliates                                       24,686          17,270
Other assets                                                      11,644           3,919
Separate account assets                                        1,590,335       1,631,113
                                                             -----------     -----------
TOTAL ASSETS                                                 $ 2,582,542     $ 2,524,973
                                                             ===========     ===========

LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances                               $  529,333       $ 457,172
Future policy benefits and other policyholder liabilities        134,208         119,400
Cash collateral for loaned securities                             25,035          36,092
Securities sold under agreements to repurchase                    31,713          18,514
Income taxes payable                                              33,646          36,012
Other liabilities                                                  9,562          19,298
Separate account liabilities                                   1,590,335       1,631,113
                                                             -----------     -----------
Total liabilities                                              2,353,832       2,317,601
                                                             -----------     -----------

Contingencies - (See Footnote 11)

Stockholder's Equity
Common stock, $5 par value;
   400,000 shares authorized;
   issued and outstanding at
   December 31, 2002 and 2001                                      2,000           2,000
Paid-in-capital                                                  128,689         128,689
Retained earnings                                                 88,326          72,959
Accumulated other comprehensive income                             9,695           3,724
                                                             -----------     -----------
Total stockholder's equity                                       228,710         207,372
                                                             -----------     -----------
TOTAL LIABILITIES AND
    STOCKHOLDER'S EQUITY                                     $ 2,582,542     $ 2,524,973
                                                             ===========     ===========
</TABLE>
                        See Notes to Financial Statements

                                      F-3
<PAGE>
Pruco Life Insurance Company of New Jersey

Statements of Operations and Comprehensive Income
Years Ended December 31, 2002, 2001 and 2000 (in thousands)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------

                                                           2002             2001              2000
                                                         ---------        ---------         ---------
<S>                                                     <C>              <C>               <C>
REVENUES

Premiums                                                 $  28,321        $  16,284         $   5,717
Policy charges and fee income                               70,444           49,808            55,231
Net investment income                                       44,812           55,981            54,524
Realized investment losses, net                            (14,204)          (9,630)           (1,045)
Asset management fees                                        1,264              613             8,467
Other income                                                 1,709              646               331
                                                         ---------        ---------         ---------
Total revenues                                             132,346          113,702           123,225
                                                         ---------        ---------         ---------

BENEFITS AND EXPENSES

Policyholders' benefits                                     45,543           33,148            28,201
Interest credited to policyholders' account balances        20,449           20,503            19,326
General, administrative and other expenses                  56,145           37,954            39,415
                                                         ---------        ---------         ---------
Total benefits and expenses                                122,137           91,605            86,942
                                                         ---------        ---------         ---------
Income from operations before income taxes                  10,209           22,097            36,283
                                                         ---------        ---------         ---------

Income taxes:
Current                                                     (8,717)          (3,603)           15,365
Deferred                                                     3,558           10,107            (2,666)
                                                         ---------        ---------         ---------
Income tax (benefit) expense                                (5,159)           6,504            12,699
                                                         ---------        ---------         ---------

NET INCOME                                                  15,368           15,593            23,584

Other comprehensive income, net of tax:

    Unrealized gains on securities, net of
    reclassification adjustment                              5,971            4,487             5,325
                                                         ---------        ---------         ---------
TOTAL COMPREHENSIVE INCOME                               $  21,339        $  20,080         $  28,909
                                                         =========        =========         =========
</TABLE>

                        See Notes to Financial Statements

                                      F-4
<PAGE>
Pruco Life Insurance Company of New Jersey

Statements of  Stockholder's Equity
Years Ended December 31, 2002, 2001 and 2000 (in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------

                                                                             Accumulated
                                                                                other          Total
                                    Common     Paid - in -      Retained    comprehensive  stockholder's
                                    stock        capital        earnings    income (loss)      equity
                                    ------     -----------      --------    -------------  -------------
<S>                               <C>          <C>             <C>          <C>             <C>
Balance, January 1, 2000           $  2,000     $ 125,000       $ 230,057    $   (6,088)     $ 350,969

   Net income                             -             -          23,584             -         23,584
   Contribution                           -         3,689               -             -          3,689
   Change in net unrealized
   investment losses, net of
   reclassification and taxes             -             -               -         5,325          5,325
                                   --------     ---------       ---------    ----------      ---------
Balance, December 31, 2000            2,000       128,689         253,641          (763)       383,567

   Net income                             -             -          15,593             -         15,593
   Dividend to parent                     -             -        (186,000)            -       (186,000)
   Policy credits issued to
   eligible policyholders                 -             -        (10,275)             -        (10,275)
   Change in net unrealized
   investment losses, net of
   reclassification and taxes             -             -               -         4,487          4,487
                                   --------     ---------       ---------    ----------      ---------
Balance, December 31, 2001            2,000       128,689          72,959         3,724        207,372

   Net income                             -             -          15,368             -         15,368
   Adjustments to policy
   credits issued to eligible
   policyholders                          -             -              (1)            -             (1)
   Change in net unrealized
   investment gains, net of
   reclassification and taxes             -             -               -         5,971          5,971
                                   --------     ---------       ---------    ----------      ---------
Balance, December 31, 2002         $  2,000     $ 128,689       $  88,326    $    9,695      $ 228,710
                                   ========     =========       =========    ==========      =========
</TABLE>

                        See Notes to Financial Statements

                                      F-5
<PAGE>
Pruco Life Insurance Company of New Jersey

Statements of Cash Flows
Years Ended December 31, 2002, 2001 and 2000 (in thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------

                                                                             2002           2001           2000
                                                                          ----------     ---------       ---------
<S>                                                                      <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                             $   15,368     $  15,593       $  23,584
   Adjustments to reconcile net income to net cash from (used in)
      operating activities:
      Policy charges and fee income                                          (12,057)       (9,906)         (9,881)
      Interest credited to policyholders' account balances                    20,449        20,503          19,326
      Realized investment losses, net                                         14,204         9,630           1,045
      Amortization and other non-cash items                                   (7,651)      (10,883)         (9,254)
      Change in:
        Future policy benefits and other policyholders'                       14,808        11,182           3,468
        liabilities
        Accrued investment income                                               (892)        3,382          (1,289)
        Policy loans                                                             323        (6,643)         (8,296)
        Receivable from affiliates                                            (7,416)        4,995          (2,345)
        Deferred policy acquisition costs                                    (18,078)       (2,322)         12,531
        Income taxes payable                                                  (2,366)        6,099           2,084
        Other, net                                                            (8,341)       (2,244)          1,869
                                                                          ----------     ---------       ---------
Cash flows from operating activities                                           8,351        39,386          32,842
                                                                          ----------     ---------       ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
   Proceeds from the sale/maturity of:
      Fixed maturities:
        Available for sale                                                   271,401       552,931         396,117
   Payments for the purchase of:
      Fixed maturities:
        Available for sale                                                  (331,512)     (577,097)       (411,579)
   Other long term investments, net                                           (2,458)          963          (1,058)
   Cash collateral for loaned securities, net                                (11,057)      (12,217)         30,409
   Securities sold under agreements to repurchase, net                        13,199         8,760           9,754
   Short term investments, net                                                 2,822        (4,224)        (28,756)
                                                                          ----------     ---------       ---------
Cash flows used in investing activities                                      (57,605)      (30,884)         (5,113)
                                                                          ----------     ---------       ---------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
   Policyholders' account balances:
      Deposits                                                               135,163        87,261         170,978
      Withdrawals                                                            (73,518)      (76,288)       (161,060)
     Cash dividend paid to parent                                                  -       (26,500)              -
     Cash payments to eligible policyholders                                  (9,121)            -               -
                                                                          ----------     ---------       ---------
Cash flows from (used in) financing activities                                52,524       (15,527)          9,918
                                                                          ----------     ---------       ---------

Net increase (decrease) in cash and cash equivalents                           3,270        (7,025)         37,647
Cash and cash equivalents, beginning of year                                  58,212        65,237          27,590
                                                                          ----------     ---------       ---------
CASH AND CASH EQUIVALENTS, END OF YEAR                                    $   61,482     $  58,212       $  65,237
                                                                          ==========     =========       =========

SUPPLEMENTAL CASH FLOW INFORMATION
    Income taxes paid                                                     $      565     $   2,930       $  13,421
                                                                          ----------     ---------       ---------
NON-CASH TRANSACTIONS DURING THE YEAR
   Dividend paid with fixed maturities                                    $        -     $ 159,500       $       -
                                                                          ----------     ---------       ---------
   Policy credits issued to eligible policyholders                        $        -     $  10,275       $       -
                                                                          ----------     ---------       ---------
   Contribution from parent                                               $        -     $       -       $   3,689
                                                                          ----------     ---------       ---------
</TABLE>

                     See Notes to Financial Statements

                                      F-6
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

1. BUSINESS

Pruco Life Insurance Company of New Jersey ("the Company") is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
The Company is licensed to sell interest-sensitive individual life insurance,
variable life insurance, term insurance, variable annuities, and fixed annuities
("the Contracts") only in the states of New Jersey and New York.

The Company is a wholly owned subsidiary of Pruco Life Insurance Company ("Pruco
Life"), a stock life insurance company organized in 1971 under the laws of the
state of Arizona. Pruco Life, in turn, is a wholly owned subsidiary of The
Prudential Insurance Company of America ("Prudential Insurance"), an insurance
company founded in 1875 under the laws of the state of New Jersey. On December
18, 2001 ("the date of demutualization") Prudential Insurance converted from a
mutual life insurance company to a stock life insurance company and became an
indirect wholly owned subsidiary of Prudential Financial, Inc. ("Prudential
Financial"). The demutualization was completed in accordance with Prudential
Insurance's Plan of Reorganization, which was approved by the Commissioner of
the New Jersey Department of Banking and Insurance in October 2001.

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 annuities.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America ("GAAP"). The
Company has extensive transactions and relationships with Prudential Insurance
and other affiliates, as more fully described in Footnote 12. Due to these
relationships, it is possible that the terms of these transactions are not the
same as those that would result from transactions among wholly unrelated
parties.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, in particular deferred policy acquisition costs ("DAC")
and future policy benefits, and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.

Investments
Fixed maturities classified as "available for sale" are carried at estimated
fair value. The amortized cost of fixed maturities is written down to estimated
fair value if a decline in value is considered to be other than temporary. See
the discussion below on realized gains and losses for a description of the
accounting for impairment adjustments. Unrealized gains and losses on fixed
maturities "available for sale", including the effect on deferred policy
acquisition costs and policyholders' account balances that would result from the
realization of unrealized gains and losses are included in "Accumulated other
comprehensive income (loss)", net of income taxes.

Policy loans are carried at unpaid principal balances.

Short-term investments consist of highly liquid debt instruments with a maturity
of greater than three months and less than twelve months when purchased. These
investments are carried at amortized cost, which because of their short term,
approximates fair value.

Other long-term investments consist of the Company's investments in the
Company's own separate accounts, which are carried at estimated fair value.

Realized investment losses, net are computed using the specific identification
method. Costs of fixed maturities and equity securities are adjusted for
impairments, which are declines in value that are considered to be other than
temporary. Impairment adjustments are included in "Realized investment losses,
net." In evaluating whether a decline in value is other than temporary, the
Company considers several factors including, but not limited to the following:
(1) whether the decline is substantial; (2) the duration (generally greater than
six months); (3) the reasons for the decline in value (credit event, interest
related or market fluctuation); (4) the Company's ability and intent to hold the
investments for a period of time to allow for a recovery of value; and (5) the
financial condition of and near-term prospects of the issuer.

Cash and cash equivalents
Cash and cash equivalents include cash on hand, amounts due from banks, money
market instruments, and other debt issues with a maturity of three months or
less when purchased.

                                      F-7
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred Policy Acquisition Costs
The costs that vary with and that are related primarily to the production of new
insurance and annuity business are deferred to the extent such costs are deemed
recoverable from future profits. Such costs include certain commissions, costs
of policy issuance and underwriting, and variable field office expenses.
Deferred policy acquisition costs ("DAC") are subject to recoverability testing
at the end of each accounting period. DAC, for applicable products, are adjusted
for the impact of unrealized gains or losses on investments as if these gains or
losses had been realized, with corresponding credits or charges included in
"Accumulated other comprehensive (loss) income."

Policy acquisition costs related to interest-sensitive and variable life
products and certain investment-type products are deferred and amortized over
the expected life of the contracts (periods ranging from 25 to 30 years) in
proportion to estimated gross profits arising principally from investment
results, mortality and expense margins, and surrender charges based on
historical and anticipated future experience, which is updated periodically. The
effect of changes to estimated gross profits on unamortized DAC is reflected in
"General, administrative and other expenses" in the period such estimated gross
profits are revised. DAC related to non-participating term insurance are
amortized over the expected life of the contracts in proportion to premium
income.

The Company and Prudential Insurance have offered programs under which
policyholders, for a selected product or group of products, can exchange an
existing policy or contract issued by the Company or Prudential Insurance for
another form of policy or contract. These transactions are known as internal
replacements. If the terms of the new policies are not substantially similar to
those of the former policy, the unamortized DAC on the surrendered policies is
immediately charged to expense. If the new policies have terms that are
substantially similar to those of the earlier policies, the DAC is retained with
respect to the new policies and amortized over the life of the new policies.

Securities loaned
Securities loaned are treated as collateralized financing arrangements and are
recorded at the amount of cash received as collateral. The Company obtains
collateral in an amount equal to 102% and 105% of the fair value of the domestic
and foreign securities, respectively. The Company monitors the market value of
securities loaned on a daily basis with additional collateral obtained as
necessary. Non-cash collateral received is not reflected in the statements of
financial position because the debtor typically has the right to redeem the
collateral on short notice. Substantially all of the Company's securities loaned
are with large brokerage firms.

Securities sold under agreements to repurchase
Securities sold under agreements to repurchase are treated as collateralized
financing arrangements and are carried at the amounts at which the securities
will be subsequently reacquired, including accrued interest, as specified in the
respective agreements. Assets to be repurchased are the same, or substantially
the same, as the assets transferred and the transferor, through right of
substitution, maintains the right and ability to redeem the collateral on short
notice. The market value of securities to be repurchased is monitored and
additional collateral is obtained, where appropriate, to protect against credit
exposure.

Securities lending and securities repurchase agreements are used to generate net
investment income. These instruments are short-term in nature (usually 30 days
or less). Securities loaned are collateralized principally by U.S. government
and mortgage-backed securities. Securities sold under repurchase agreements are
collateralized principally by cash. The carrying amounts of these instruments
approximate fair value because of the relatively short period of time between
the origination of the instruments and their expected realization.

Separate account assets and liabilities
Separate account assets and liabilities are reported at estimated fair value and
represent segregated funds, which are invested for certain policyholders and
other customers. The assets consist of common stocks, fixed maturities, real
estate related securities, and short-term investments. The assets of each
account are legally segregated and are not subject to claims that arise out of
any other business of the Company. Investment risks associated with market value
changes are borne by the customers, except to the extent of minimum guarantees
made by the Company with respect to certain accounts. The investment income and
gains or losses for separate accounts generally accrue to the policyholders and
are not included in the Statements of Operations and comprehensive Income.
Mortality, policy administration and surrender charges on the accounts are
included in "Policy charges and fee income."

Separate accounts represent funds for which investment income and investment
gains and losses accrue directly to, and investment risk is borne by, the
policyholders, with the exception of the Pruco Life of New Jersey Modified
Guaranteed Annuity Account. The Pruco Life of New Jersey Modified Guaranteed
Annuity Account is a non-unitized separate account, which funds the Modified
Guaranteed Annuity Contract and the Market Value Adjustment Annuity Contract.
Owners of the Pruco Life of New Jersey Modified Guaranteed Annuity and the
Market Value Adjustment Annuity Contracts do not participate in the investment
gain or loss from assets relating to such accounts. Such gain or loss is borne,
in total, by the Company.

                                      F-8
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Contingencies
Amounts related to contingencies are accrued if it is probable that a liability
has been incurred and an amount is reasonably estimable. Management evaluates
whether there are incremental legal or other costs directly associated with the
ultimate resolution of the matter that are reasonably estimable and, if so, they
are included in the accrual.

Other assets and other liabilities
Other assets consist primarily of prepaid expenses, certain restricted assets,
and receivables resulting from sales of securities that had not yet settled at
the balance sheet date. Other liabilities consist primarily of accrued expenses,
technical overdrafts, demutualization consideration not yet paid to
policyholders, and payables resulting from purchases of securities that had not
yet been settled at the balance sheet date.

Insurance Revenue and Expense Recognition
Premiums from insurance policies, excluding interest-sensitive life contracts,
are generally recognized when due. Benefits are recorded as an expense when they
are incurred. For traditional life insurance contracts, a liability for future
policy benefits is recorded using the net level premium method. For individual
annuities in payout status, a liability for future policy benefits is recorded
for the present value of expected future payments based on historical
experience.

Certain annuity contracts provide the holder a guarantee that the benefit
received upon death will be no less than a minimum prescribed amount that is
based upon a combination of net deposits to the contract, net deposits to the
contract accumulated at a specified rate or the highest historical account value
on a contract anniversary. To the extent the guaranteed minimum death benefit
exceeds the current account value at the time of death, the Company incurs a
cost that is recorded as "Policyholders' benefits" for the period in which death
occurs.

Amounts received as payment for interest-sensitive life, individual annuities
and guaranteed investment contracts are reported as deposits to "Policyholders'
account balances." Revenues from these contracts reflected as "Policy charges
and fee income" consist primarily of fees assessed during the period against the
policyholders' account balances for mortality charges, policy administration
charges and surrender charges. Benefits and expenses for these products include
claims in excess of related account balances, expenses of contract
administration, interest credited and amortization of DAC.

Premiums, benefits and expenses are stated net of reinsurance ceded to other
companies. Estimated reinsurance recoverables and the cost of reinsurance are
recognized over the life of the reinsured policies using assumptions consistent
with those used to account for the underlying policies.

Asset management fees
Through December 31, 2000, the Company received asset management fee income from
policyholder account balances invested in The Prudential Series Funds ("PSF"),
which are a portfolio of mutual fund investments related to the Company's
separate account products (refer to Note 13). In addition, the Company receives
fees from policyholder account balances invested in funds managed by companies
other than Prudential Insurance. Asset management fees are recognized as income
as earned.

Derivative Financial Instruments
The Company adopted SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" as amended, on January 1, 2001. Except as noted below, the
adoption of this statement did not have a material impact on the results of
operations of the Company.

Upon its adoption of FAS 133, the Company reclassified "held to maturity"
securities with a fair value of approximately $7.3 million to "available for
sale" as permitted by the new standard. This reclassification resulted in
unrealized gains of $0.2 million, net of tax, which were recorded in
"Accumulated Other Comprehensive income (loss)."

Derivatives are financial instruments whose values are derived from interest
rates, foreign exchange rates, financial indices, or the value of securities or
commodities. Futures are the only derivative financial instruments used by the
Company. Derivative positions are carried at estimated fair value, generally by
obtaining quoted market prices or through the use of pricing models. Values can
be affected by changes in interest rates, foreign exchange rates, credit
spreads, market volatility and liquidity. Values can also be affected by changes
in estimates and assumptions used in pricing models.

                                      F-9
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Derivatives are used to manage the characteristics of the Company's
asset/liability mix, and to manage the interest rate and currency
characteristics of invested assets. Additionally, derivatives are used to seek
to reduce exposure to interest rates and foreign currency risks associated with
assets held or expected to be purchased or sold, and liabilities incurred or
expected to be incurred.

The Company designates derivatives as either (1) a hedge of the fair value of a
recognized asset or liability or unrecognized firm commitment ("fair value"
hedge), (2) a hedge of a forecasted transaction or the variability of cash flows
to be received or paid related to a recognized asset or liability ("cash flow"
hedge), (3) a foreign currency or cash flow hedge ("foreign currency" hedge),
(4) a hedge of a net investment in a foreign operation, or (5) a derivative
entered into as an economic hedge that does not qualify for hedge accounting. As
of December 31, 2002, none of the Company's derivatives qualify for hedge
accounting treatment.

If a derivative does not qualify for hedge accounting, it is recorded at fair
value in "Other long-term investments" or "Other liabilities" in the
Consolidated Statements of Financial Position. Changes in fair value are
included in "Realized investment losses net" without considering changes in fair
value of the hedged assets or liabilities.

Income Taxes
The Company is a member of the consolidated federal income tax return of
Prudential Financial and files separate company state and local tax returns.
Pursuant to the tax allocation arrangement with Prudential Financial, total
federal income tax expense is determined on a separate company basis. Members
with losses record tax benefits to the extent such losses are recognized in the
consolidated federal tax provision. Deferred income taxes are generally
recognized, based on enacted rates, when assets and liabilities have different
values for financial statement and tax reporting purposes. A valuation allowance
is recorded to reduce a deferred tax asset to that portion that is expected to
be realized.

New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (the "FASB") issued SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires that an
intangible asset acquired either individually or with a group of other assets
shall initially be recognized and measured based on fair value. An intangible
asset with a finite life is amortized over its useful life to the reporting
entity; an intangible asset with an indefinite useful life, including goodwill,
is not amortized. All intangible assets shall be tested for impairment in
accordance with the statement. As of December 31, 2002, the Company does not
have any goodwill or intangible assets.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 requires that a liability for
costs associated with an exit or disposal activity be recognized and measured
initially at fair value only when a liability is incurred. Prior to the adoption
of SFAS No. 146, such amounts were recorded upon the Company's commitment to a
restructuring plan. SFAS No. 146 is effective for exit or disposal activities
that are initiated after December 31, 2002. Accordingly, the Company will adopt
this statement for applicable transactions occurring on or after January 1,
2003.

In November 2002, the FASB issued Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." FIN No. 45 expands existing accounting
guidance and disclosure requirements for certain guarantees and requires the
recognition of a liability for the fair value of certain types of guarantees
upon issuance. FIN No. 45 is applicable to guarantees issued or modified after
December 31, 2002. The January 1, 2003 adoption of the Interpretation's guidance
did not have a material effect on the Company's financial position. The Company
did not have any guarantees to disclose in accordance with the disclosure
requirements of the Interpretation.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN No. 46 addresses whether certain types of entities, referred to
as variable interest entities ("VIEs"), should be consolidated in a company's
financial statements. A VIE is an entity that either (1) has equity investors
that lack certain essential characteristics of a controlling financial interest
(including the ability to control the entity, the obligation to absorb the
entity's expected losses or the right to receive the entity's expected residual
returns); or (2) lacks sufficient equity to finance its own activities without
financial support provided by other parties, which in turn would be expected to
absorb at least some of the expected losses of the VIE. An entity should
consolidate a VIE if it stands to absorb a majority of the VIE's expected losses
or residual returns. The Company adopted the Interpretation for relationships
with VIEs that began on or after February 1, 2003. For VIEs with which an entity
became involved in prior to February 1, 2003, the consolidation guidance is
required to be implemented by July 1, 2003. Accordingly, the Company is in the
process of determining whether it will need to consolidate previously
unconsolidated VIEs or to deconsolidate previously consolidated VIEs.

Reclassifications
Certain amounts in the prior years have been reclassified to conform to the
current year presentation.

                                      F-10
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

3. INVESTMENTS

Fixed Maturities
The following tables provide additional information relating to fixed maturities
as of December 31:
<TABLE>
<CAPTION>
                                                                                    2002
                                                            -------------------------------------------------------
                                                                             Gross           Gross        Estimated
                                                            Amortized      unrealized     unrealized         fair
                                                              cost           gains          losses          value
                                                            ---------      ----------     -----------     ---------
                                                                                (in thousands)
<S>                                                         <C>            <C>             <C>           <C>
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. Government corporations and agencies                    $ 42,149       $  1,222        $      -       $ 43,371

Foreign government bonds                                        4,027            280               -          4,307

Corporate securities                                          464,235         29,148           2,957        490,426

Mortgage-backed securities                                     15,455            342               -         15,797
                                                             --------       --------        --------      ---------

Total fixed maturities available for sale                    $525,866       $ 30,992        $  2,957      $ 553,901
                                                             ========       ========        ========      =========

                                                                                    2001
                                                            -------------------------------------------------------
                                                                             Gross           Gross        Estimated
                                                            Amortized      unrealized     unrealized         fair
                                                              cost           gains          losses          value
                                                            ---------      ----------     -----------     ---------
                                                                                (in thousands)
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. Government corporations and agencies                    $ 19,136       $    241        $     99      $  19,278

Foreign government bonds                                        4,029            259               -          4,288

Corporate securities                                          455,150         15,772           4,431        466,491

Mortgage-backed securities                                        681              -               4            677
                                                             --------       --------        --------      ---------

Total fixed maturities available for sale                    $478,996       $ 16,272        $  4,534      $ 490,734
                                                             ========       ========        ========      =========
</TABLE>

                                      F-11
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

3. INVESTMENTS (continued)

The amortized cost and estimated fair value of fixed maturities, by contractual
maturities at December 31, 2002, is shown below:

                                                   Available for Sale
                                           -----------------------------------
                                              Amortized      Estimated fair
                                                cost              value
                                           -----------------------------------
                                                     (in thousands)

Due in one year or less                        $  43,397         $   43,902

Due after one year through five years            225,800            238,111

Due after five years through ten years           199,495            212,196

Due after ten years                               41,719             43,895

Mortgage-backed securities                        15,455             15,797
                                               ---------         ----------

Total                                          $ 525,866         $  553,901
                                               =========         ==========

Actual maturities may differ from contractual maturities because issuers have
the right to call or prepay obligations.

Proceeds from the sale of fixed maturities available for sale during 2002, 2001,
and 2000 were $262.4 million, $552.4 million, and $354.4 million, respectively.
Gross gains of $4.9 million, $10.1 million, and $2.2 million, and gross losses
of $8.5 million, $10.1 million, and $5.2 million were realized on those sales
during 2002, 2001, and 2000, respectively. Proceeds from maturities of fixed
maturities available for sale during 2002, 2001, and 2000 were $9.0 million,
$0.5 million, and $41.7 million, respectively.

Due to the adoption of FAS 133, "Accounting for Derivative Instruments and
Hedging Activities", on January 1, 2001, the entire portfolio of fixed
maturities classified as held to maturity were transferred to the available for
sale category. During the year ended December 31, 2000, there were no securities
classified as held to maturity that were sold.

Writedowns for impairments that were deemed to be other than temporary for fixed
maturities were $9.0 million, $7.8 million and $1.3 million for the years 2002,
2001 and 2000, respectively.

Investment Income and Investment Gains and Losses

Net investment income arose from the following sources for the years ended
December 31:

                                                2002        2001          2000
                                              --------    --------      -------
                                                       (in thousands)

Fixed maturities                              $ 35,078    $  46,813    $ 43,972
Policy loans                                     8,715       8,647        8,053
Short-term investments and cash equivalents      1,852       4,496        5,126
Other                                              932        (418)       1,300
                                              --------    --------      -------
Gross investment income                         46,577      59,538       58,451
Less investment expenses                        (1,765)     (3,557)      (3,927)
                                              --------    --------      -------
Net investment income                         $ 44,812    $ 55,981     $ 54,524
                                              ========    ========     ========


                                      F-12
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

3. INVESTMENTS (continued)

Realized investment losses, net, including charges for other than temporary
reductions in value, for the years ended December 31, were from the following
sources:

                                           2002           2001        2000
                                         --------       --------    -------
                                                     (in thousands)

Fixed maturities                         $  (12,690)   $ (7,807)   $  (4,324)
Derivatives                                  (1,513)     (1,823)       2,924
Other                                            (1)          -          355
                                         ----------    --------    ---------
Realized investment losses, net          $  (14,204)   $ (9,630)   $  (1,045)
                                         ==========    ========    =========


Securities Pledged, Restricted Assets and Special Deposits

The Company pledges investment securities it owns to unaffiliated parties
through certain transactions including securities lending, securities sold under
agreements to repurchase, and futures contracts. At December 31, 2002 and 2001,
the carrying values of fixed maturities available for sale pledged to third
parties as reported in the Statements of Financial Position were $56.6 million
and $54.8 million, respectively.

Fixed maturities of $0.5 million at December 31, 2002 and 2001 were on deposit
with governmental authorities or trustees as required by certain insurance laws.


                                      F-13
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

3. INVESTMENTS (continued)

Net Unrealized Investment Gains (Losses)

Net unrealized investment gains on fixed maturities available for sale are
included in the Statements of Financial Position as a component of "Accumulated
other comprehensive income." Changes in these amounts include adjustments to
exclude from "Other comprehensive income (loss)" those items that are included
as part of "net income" for a period that also had been part of "Other
comprehensive income (loss)" in earlier periods. The amounts for the years ended
December 31, net of tax, are as follows:
<TABLE>
<CAPTION>
                                                                                                              Accumulated other
                                                                                                                comprehensive
                                                                                                                income (loss)
                                                                    Deferred                    Deferred       related to net
                                                    Unrealized       policy    Policyholders'  income tax        unrealized
                                                  gains (losses)  acquisition     account      (liability)       investment
                                                  on investments     costs        balances       benefit       gains (losses)
                                                  --------------  -----------  --------------  -----------    -----------------
                                                                               (in thousands)
<S>                                               <C>             <C>           <C>           <C>               <C>
Balance, December 31, 1999                         $  (18,951)     $  11,136     $  (1,512)    $   3,239         $  (6,088)

   Net investment gains on investments
    arising during the period                          12,620              -             -        (4,454)            8,166

   Reclassification adjustment for losses
    included in net income                              4,324              -             -        (1,526)            2,798

   Impact of net unrealized investment
    gains on deferred policy acquisition costs              -        (10,161)            -         3,658            (6,503)

   Impact of net unrealized investment
    gains on policyholders' account balances                -              -         1,350          (486)              864
                                                   ----------      ---------      --------     ---------         ---------
Balance, December 31, 2000                             (2,007)           975          (162)          431              (763)

   Net investment gains on investments
    arising during the period                           5,938              -             -        (2,138)            3,800

   Reclassification adjustment for losses
    included in net income                              7,807              -             -        (2,810)            4,997

   Impact of net unrealized investment
    gains on deferred policy acquisition costs              -         (8,109)            -         2,919            (5,190)

   Impact of net unrealized investment
    gains  on policyholders' account balances               -              -         1,376          (496)              880
                                                   ----------      ---------      --------     ---------         ---------

Balance, December 31, 2001                             11,738         (7,134)        1,214        (2,094)            3,724
   Net investment gains on investments
    arising during the period                           3,607              -             -        (1,299)            2,308

   Reclassification adjustment for losses
    included in net income                             12,690              -             -        (4,568)            8,122

   Impact of net unrealized investment
    gains on deferred policy acquisition costs              -         (9,128)            -         3,286            (5,842)

   Impact of net unrealized investment
    gains on policyholders' account balances                -              -         2,161          (778)            1,383
                                                   ----------      ---------      --------     ---------         ---------
Balance, December 31, 2002                         $   28,035      $(16,262)     $   3,375     $  (5,453)        $   9,695
                                                   ==========      =========     =========     =========         =========
</TABLE>

                                      F-14
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

4. DEFERRED POLICY ACQUISITION COSTS

The balance of and changes in deferred policy acquisition costs for the year
ended December 31, are as follows:
<TABLE>
<CAPTION>
                                                                 2002              2001              2000
                                                               -------            ------            ------
                                                                               (in thousands)
<S>                                                           <C>                <C>              <C>
Balance, beginning of year                                    $ 118,975          $  116,653       $ 129,184
Capitalization of commissions, sales and issue expenses          51,974              25,953          10,638
Amortization
                                                                (24,768)            (15,522)        (13,008)
Change in unrealized investment (gains) losses
                                                                 (9,128)             (8,109)        (10,161)
                                                              ---------          ----------        --------
Balance, end of year                                          $ 137,053          $  118,975       $ 116,653
                                                              =========          ==========       =========
</TABLE>

5. POLICYHOLDERS' LIABILITIES

Future policy benefits and other policyholder liabilities at December 31 are as
follows:

                                            2002               2001
                                           ------             ------
                                                 (in thousands)

Life insurance                            $ 129,607        $  114,698
Annuities                                     4,601             4,702
                                          ---------        ----------
Total future policy benefits              $ 134,208        $  119,400
                                          =========        ==========

Life insurance liabilities include reserves for death benefits and other policy
benefits. Annuity liabilities include reserves for annuities that are in payout
status.

Future policy benefits for life insurance are based on the net level premium
method, calculated using the guaranteed mortality and nonforfeiture rates, which
range from 2.50% to 7.25%.

Future policy benefits for individual annuities are equal to the aggregate of 1)
the present value of expected future payments on the basis of actuarial
assumptions established at issue, and 2) premium deficiency reserves.
Assumptions as to mortality are based on the Company's experience when the basis
of the reserve is established. The interest rates used in the determination of
the individual annuities reserves range from 6.25% to 8.75%, with less than 15%
of the reserves based on an interest rate in excess of 8%.

Policyholders' account balances at December 31 are as follows:

                                            2002               2001
                                           ------             ------
                                                 (in thousands)

Interest-sensitive life contracts         $ 367,832         $ 345,344
Individual annuities                        161,501           111,828
                                          ---------         ---------
Total policyholders' account balances     $ 529,333         $ 457,172
                                          =========         =========

Policyholders' account balances for interest-sensitive life and individual
annuities represent an accumulation of account deposits plus credited interest
less withdrawals, expenses and mortality charges. Interest crediting rates range
from 4.00% to 6.75% for interest-sensitive life contracts. Interest crediting
rates for individual annuities range from 3.00% to 15.00%, with less than 1% of
policyholders' account balances with interest crediting rates in excess of 8%.

                                      F-15
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

6. REINSURANCE

The Company participates in reinsurance, with Prudential Insurance and other
companies, in order to provide greater diversification of business, provide
additional capacity for future growth and limit the maximum net loss potential
arising from large risks. Life reinsurance is accomplished through various plans
of reinsurance, primarily yearly renewable term and coinsurance. Reinsurance
ceded arrangements do not discharge the Company as the primary insurer. Ceded
balances would represent a liability of the Company in the event the reinsurers
were unable to meet their obligations to the Company under the terms of the
reinsurance agreements. The likelihood of a material reinsurance liability
reassumed by the Company is considered to be remote.

Reinsurance premiums, commissions, expense reimbursements, benefits and reserves
related to reinsured long-duration contracts are accounted for over the life of
the underlying reinsured contracts using assumptions consistent with those used
to account for the underlying contracts. Amounts recoverable from reinsurers are
estimated in a manner consistent with the claim liabilities and policy benefits
associated with the reinsured policies.

Reinsurance amounts included in the Statement of Operations and Comprehensive
Income for the years ended December 31 are below.
<TABLE>
<CAPTION>
                                                          2002              2001             2000
                                                         ------            ------           ------
                                                                       (in thousands)
<S>                                                     <C>                <C>              <C>
Direct premiums and policy charges and fee income       $ 104,180          $ 68,889         $ 61,412
     Reinsurance ceded                                     (5,415)           (2,797)            (464)
                                                        ---------          --------         --------
Premiums and policy charges and fee income              $  98,765          $ 66,092         $ 60,948

Policyholders' benefits ceded                           $  12,929          $    762         $    110
</TABLE>


Reinsurance ceded for interest-sensitive life products is accounted for as a
reduction of policy charges and fee income. Reinsurance ceded for term insurance
products is accounted for as a reduction of premiums.

Reinsurance recoverables, included in "Other assets" in the Company's Statements
of Financial Position, at December 31, 2002 and 2001 were $8.2 million and $2.4
million, respectively.

The gross and net amounts of life insurance in force at December 31, were as
follows:
<TABLE>
<CAPTION>
                                                          2002              2001             2000
                                                         ------            ------           ------
                                                                       (in thousands)
<S>                                                     <C>                <C>              <C>
     Life insurance face amount in force             $ 21,119,708       $  11,071,045     $7,874,501
     Ceded to other companies                          (9,866,510)         (3,697,344)      (673,474)
                                                     ------------       -------------     ----------
     Net amount of life insurance in force           $ 11,253,198       $   7,373,701     $7,201,027
                                                     ============       =============     ==========
</TABLE>



                                      F-16
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

7. INCOME TAXES

The components of income taxes for the years ended December 31, are as follows:
<TABLE>
<CAPTION>
                                               2002              2001             2000
                                              ------            ------           ------
                                                            (in thousands)
<S>                                          <C>                <C>              <C>
Current tax (benefit) expense:
   U.S.                                     $  (8,975)        $  (3,756)       $  15,365
   State and local                                258               153                -
                                            ---------         ---------        ---------
   Total                                       (8,717)           (3,603)          15,365
                                            ---------         ---------        ---------


Deferred tax expense (benefit):
   U.S.                                         3,918            10,019           (3,211)
   State and local                               (360)               88              545
                                            ---------         ---------        ---------
   Total                                        3,558            10,107           (2,666)
                                            ---------         ---------        ---------
Total income tax (benefit) expense          $  (5,159)        $   6,504        $  12,699
                                            =========         =========        =========
</TABLE>

The income tax expense for the years ended December 31, differs from the amount
computed by applying the expected federal income tax rate of 35% to income from
operations before income taxes for the following reasons:
<TABLE>
<CAPTION>
                                               2002              2001             2000
                                              ------            ------           ------
                                                            (in thousands)
<S>                                          <C>                <C>              <C>
Expected federal income tax expense         $   3,573         $   7,734        $  12,699
State and local income taxes                      (66)              157              354
Non taxable investment income                  (8,505)           (1,558)            (843)
Other                                            (161)              171              489
                                            ---------         ---------        ---------
Total income tax (benefit) expense          $  (5,159)        $   6,504        $  12,699
                                            =========         =========        =========
</TABLE>

Deferred tax assets and liabilities at December 31, resulted from the items
listed in the following table:

                                              2002             2001
                                             ------           ------
                                                 (in thousands)
Deferred tax assets
   Insurance reserves                       $  2,124         $  7,331
   Net operating loss                          1,938               64
   Investments                                 4,180            1,061
                                            --------         --------
   Deferred tax assets                         8,242            8,456
                                            --------         --------

Deferred tax liabilities
   Deferred acquisition costs                 35,778           35,233
   Net unrealized gains on securities         10,093            4,226
   Other                                       2,189            1,899
                                            --------         --------
   Deferred tax liabilities                   48,060           41,358
                                            --------         --------

Net deferred tax liability                  $ 39,818         $ 32,902
                                            ========         ========

Management believes that based on its historical pattern of taxable income, the
Company will produce sufficient income in the future to realize its deferred tax
assets after valuation allowance. Adjustments to the valuation allowance will be
made if there is a change in management's assessment of the amount of the
deferred tax asset that is realizable. At December 31, 2002 the Company had $4.6
million of federal and state capital loss carryforwards for tax purposes, which
expire by 2007. At December 31, 2002 and 2001, the Company had state operating
loss carryforwards for tax purposes of $17 million and $4 million, which expire
by 2017 and 2016, respectively.

                                      F-17
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

7. INCOME TAXES (continued)

The Internal Revenue Service (the "Service") has completed all examinations of
the consolidated federal income tax returns through 1992 as well as 1996. The
Service has examined the years 1993 through 1995 and the Company is in the
process of finalizing an agreement with the Service with respect to proposed
adjustments for those tax years. The Service has begun its examination of 1997
through 2001. Management believes sufficient provisions have been made for
potential adjustments.

8. STATUTORY NET INCOME AND SURPLUS AND DIVIDEND RESTRICTIONS

The Company is required to prepare statutory financial statements in accordance
with accounting practices prescribed or permitted by the New Jersey Department
of Banking and Insurance. Statutory accounting practices primarily differ from
GAAP by charging policy acquisition costs to expense as incurred, establishing
future policy benefit liabilities using different actuarial assumptions and
valuing investments, deferred taxes, and certain assets on a different basis.

Statutory net income (loss) of the Company amounted to $(45.0) million, $(12.1)
million, and $21.3 million for the years ended December 31, 2002, 2001, and
2000, respectively. Statutory surplus of the Company amounted to $63.8 million
and $111.5 million at December 31, 2002 and 2001, respectively.

In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles guidance ("Codification"), which replaced the current Accounting
Practices and Procedures manual as the NAIC's primary guidance on statutory
accounting as of January 1, 2001. Codification provided guidance for areas where
statutory accounting had been silent and changed current statutory accounting in
certain areas. The Company adopted the Codification guidance effective January
1, 2001. As a result of these changes, the Company reported an increase to
statutory surplus of $7 million, primarily relating to the recognition of
deferred tax assets.

The Company is subject to New Jersey law. The maximum amount of dividends, which
can be paid by State of New Jersey insurance companies to shareholders without
prior approval of the Insurance Commissioner, is subject to
N.J.S.A.17:27A-4.c(2)(b). Based on 2002 earnings, there is no capacity to pay a
dividend without prior approval in 2003.

The Company received approval from the New Jersey Commissioner of Insurance to
pay an extraordinary dividend to Pruco Life in 2001 of $186 million.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values presented below have been determined using available
market information and by applying valuation methodologies. Considerable
judgment is applied in interpreting data to develop the estimates of fair value.
Estimates of fair values may not be realized in a current market exchange. The
use of different market assumptions and/or estimation methodologies could have a
material effect on the estimated fair values. The following methods and
assumptions were used in calculating the estimated fair values (for all other
financial instruments presented in the table, the carrying value approximates
estimated fair value).

Fixed maturities
Estimated fair values for fixed maturities, other than private placement
securities, are based on quoted market prices or estimates from independent
pricing services. Generally, fair values for private placement securities are
estimated using a discounted cash flow model which considers the current market
spreads between the U.S. Treasury yield curve and corporate bond yield curve,
adjusted for the type of issue, its current credit quality and its remaining
average life. The estimated fair value of certain non-performing private
placement securities is based on amounts estimated by management.

Policy loans
The estimated fair value of policy loans is calculated using a discounted cash
flow model based upon current U.S. Treasury rates and historical loan repayment
patterns.

Investment contracts
For individual deferred annuities and other deposit liabilities, fair value
approximates carrying value.

Derivative financial instruments
See note 10 for disclosure of fair value on these instruments.

                                      F-18
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

9. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

The following table discloses the carrying amounts and estimated fair values of
the Company's financial instruments at December 31:
<TABLE>
<CAPTION>
                                                              2002                                     2001
                                               ----------------------------------    -----------------------------------
                                                     Carrying         Estimated            Carrying         Estimated
                                                      value          fair value              value         fair value
                                               ---------------- -----------------    ----------------- -----------------
                                                                            (in thousands)
<S>                                             <C>                <C>                 <C>                <C>
Financial assets:
   Fixed maturities available for sale            $  553,901        $  553,901           $  490,734        $  490,734
   Policy loans                                      158,431           185,715              158,754           169,701
   Short-term investments                             30,158            30,158               32,983            32,983
   Cash and cash equivalents                          61,482            61,482               58,212            58,212
   Separate accounts assets                        1,590,335         1,590,335            1,631,113         1,631,113

Financial liabilities:
   Investment contracts                           $  178,086        $  178,086           $  117,694        $  117,694
   Cash collateral for loaned securities              25,035            25,035               36,092            36,092
   Securities sold under agreements
       to repurchase                                  31,713            31,713               18,514            18,514
   Separate accounts liabilities                   1,590,335         1,590,335            1,631,113         1,631,113
</TABLE>

10. DERIVATIVE AND OFF-BALANC E SHEET CREDIT-RELATED INSTRUMENTS

Futures
Exchange-traded treasury futures are used by the Company to reduce market risks
from changes in interest rates, to alter mismatches between the duration of
assets in a portfolio and the duration of liabilities supported by those assets.
As an example, the Company agrees to purchase or sell a specified number of
contracts, the value of which are determined by the value of designated classes
of securities, and to post variation margin on a daily basis in an amount equal
to the difference in the daily market values of those contracts. The Company
enters into exchange-traded futures with regulated futures commissions merchants
who are members of a trading exchange.

Treasury futures are used to manage duration mismatches between assets and
liabilities by replicating Treasury performance. Treasury futures move
substantially in value as interest rates change and can be used to modify
existing interest rate risk. This strategy protects against the risk that cash
flow requirements may necessitate liquidation of investments at unfavorable
prices resulting from increases in interest rates. This strategy can be a more
cost effective way of temporarily reducing the Company's exposure to a market
decline that selling fixed income securities and purchasing a similar portfolio
when such a decline is believed to be over.

The notional and fair value of futures contracts was $12.4 million and $.4
million at December 31, 2002, respectively. The notional and fair value of
futures contracts was $37.0 million and $.03 million at December 31, 2001,
respectively.

Credit Risk
The Company is exposed to credit-related losses in the event of nonperformance
by counterparties to derivative financial instruments. Generally, the current
credit exposure of the Company's derivative contracts is limited to the fair
value at the reporting date. The credit exposure of the Company's swaps
transactions is represented by the fair value (market value) of contracts with a
positive fair value (market value) at the reporting date. Because
exchange-traded futures are effected through regulated exchanges, and positions
are marked to market on a daily basis, the Company has little exposure to
credit-related losses in the event of nonperformance by counterparties to such
financial instruments. The credit exposure of exchange-traded instruments is
represented by the negative change, if any, in the fair value (market value) of
contracts from the fair value (market value) at the reporting date.

The Company manages credit risk by entering into transactions with creditworthy
counterparties and obtaining collateral where appropriate and customary. In
addition, the Company enters into over-the-counter swaps pursuant to master
agreements that provide for a single net payment to be made by one counterparty
to another at each due date and upon termination. Likewise, the Company effects
exchange-traded futures and options through regulated exchanges and these
positions are marked to market on a daily basis.

                                      F-19
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

11. CONTINGENCIES AND LITIGATION

Contingencies
On an ongoing basis, our internal supervisory and control functions review the
quality of our sales, marketing and other customer interface procedures and
practices and may recommend modifications or enhancements. In certain cases, if
appropriate, we may offer customers remediation and may incur charges, including
the cost 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 depending, in part,
upon the results of operations or cash flow for such period. Management
believes, however, that the ultimate payments in connection with these matters
should not have a material adverse effect on the Company's financial position.

Litigation
The Company and Prudential Insurance are subject to legal and regulatory actions
in the ordinary course of their businesses, including class actions. Pending
legal and regulatory actions include proceedings relating to aspects of the
businesses and operations that are specific to the Company and Prudential
Insurance and that are typical of the businesses in which the Company and
Prudential Insurance operate. Class action and individual lawsuits involve a
variety of issues and/or allegations, which include sales practices,
underwriting practices, claims payment and procedures, premium charges, policy
servicing and breach of fiduciary duties to customers. We are also subject to
litigation arising out of our general business activities, such as our
investments and third party contracts. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or
exemplary damages.

The Company and Prudential Insurance have been subject to substantial regulatory
actions and civil litigation, including class actions, involving individual life
insurance sales practices from 1982 through 1995. As of January 31, 2003, the
Company and Prudential Insurance have resolved those regulatory actions, its
sales practices class action litigation and virtually all of the individual
sales practices actions filed by policyholders who "opted out" of the sales
practices class action. Prudential Insurance has indemnified the Company for any
liabilities incurred in connection with sales practices litigation covering
policyholders of individual permanent life insurance policies issued in the
United States from 1982 to 1995.

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

12. RELATED PARTY TRANSACTIONS

The Company has extensive transactions and relationships with 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
wholly unrelated parties.

Expense Charges and Allocations
All of the Company's expenses are allocations or charges from Prudential
Insurance or other affiliates. These expenses can be grouped into the following
categories: general and administrative expenses, agency distribution expenses
and asset management fees.

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 and
Prudential Insurance operate under service and lease agreements whereby services
of officers and employees, supplies, use of equipment and office space are
provided by Prudential Insurance.

The Company is allocated estimated distribution expenses from Prudential
Insurance's agency distribution network for both its domestic life and annuity
products. The Company has capitalized certain of these distribution expenses as
deferred policy acquisition costs. Beginning April 1, 2000, the Company and
Prudential Insurance agreed to revise the estimate of allocated distribution
expenses to reflect a market based pricing arrangement.

                                      F-20
<PAGE>
Pruco Life Insurance Company of New Jersey

Notes to Financial Statements
--------------------------------------------------------------------------------

12. RELATED PARTY TRANSACTIONS (Continued)

In accordance with a profit sharing agreement with Prudential Insurance that was
in effect through December 31, 2000, the Company received fee income from
policyholder account balances invested in the Prudential Series Funds ("PSF").
These revenues were recorded as "Asset management fees" in the Statements of
Operations and Comprehensive Income. The Company was charged an asset management
fee by Prudential Global Asset Management ("PGAM") and Jennison Associates LLC
("Jennison") for managing the PSF portfolio. These expenses are a component of
general, administrative and other expenses.

On September 29, 2000, the Board of Directors for the Prudential Series Fund,
Inc. ("PSFI") adopted resolutions to terminate the existing management agreement
between PSFI and Prudential Insurance, and has appointed another subsidiary of
Prudential Insurance as the fund manager for PSF. The change was approved by the
shareholders of the PSFI during early 2001 and effective January 1, 2001, the
Company will no longer receives fees associated with the PSF. In addition, the
Company will no longer incur the asset management expense from PGAM and Jennison
associated with the PSF.

Corporate Owned Life Insurance
The Company has sold two Corporate Owned Life Insurance ("COLI") policies to
Prudential Insurance. The cash surrender value included in separate accounts was
$359.6 million and $165.7 million at December 31, 2002 and December 31, 2001,
respectively. The second policy was issued in December 2002 and has a cash
surrender value of $180.8 million at December 31, 2002. Income earned for the
year on this policy is $7.1 million consisting of $12.0 million in policy fees
offset by $2.4 million in reserves and $2.5 million in DAC amortization.

Reinsurance with Affiliates
The Company currently has a reinsurance agreement in place with Prudential
Insurance ("the reinsurer"). The reinsurance agreement is a yearly renewable
term agreement in which the Company may offer and the reinsurer may accept
reinsurance on any life in excess of the Company's maximum limit of retention.
The Company is not relieved of its primary obligation to the policyholder as a
result of these reinsurance transactions.

Affiliated premiums ceded from these life reinsurance agreements for the periods
ended December 31, 2002, 2001, and 2000 were $.5 million, $.3 million, and $0
million, respectively. Affiliated benefits ceded for the periods ended December
31, 2002, 2001, and 2000 from these life reinsurance agreements are $7.5 million
in 2002, and $0 in 2001 and 2000.

Debt Agreements
The Company and its parent, Pruco Life, have a revolving line of credit facility
of up to $700 million with Prudential Funding LLC, a wholly owned subsidiary of
Prudential Insurance. The total of asset-based financing and borrowing under
this credit facility for the Company and its parent cannot be more than $700
million. There is no outstanding debt relating to this credit facility as of
December 31, 2002 or December 31, 2001.

                                      F-21