FORM 10‐Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

         OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

     OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ................ to ................

Commission File Number 0‐5486

                         PRESIDENTIAL LIFECORPORATION                        

              (Exact name of registrant as specified in its charter)

          Delaware                                 13‐2652144               

(State or other jurisdiction of           (I.R.S. Employer Identification No.)

  incorporation or organization)

69 Lydecker Street, Nyack, New York                           10960          

(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code       845 ‐ 358‐2300        

                                                                              

(Former name, former address and former fiscal year, if changed since last report)

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 suchreports), and (2) has been subject to such filing requirements for the past 90 days.    YES    X        NO      

There were 29,334,668 shares of common stock, par value $.01 per share of the issuer's common stock outstanding as of the close of business on November 7, 2003.

      **INDEX**

Part I ‐ Financial Information                                  Page No.

Item 1.  Consolidated Financial Statements

Consolidated Balance Sheets (Unaudited) September 30, 2003

and December 31, 2002........................................       3

Consolidated Statements of Income (Unaudited) ‐ For

the Nine months Ended September 30, 2003 and 2002..............      4

      Consolidated Statements of Income (Unaudited) - For

      the Three Months Ended September 30, 2003 and 2002..............        5

Consolidated Statements of Shareholders'

Equity (Unaudited) ‐ For the Nine months Ended

September 30, 2003 and 2002.......................................  6

Consolidated Statements of Cash Flows (Unaudited) ‐ For

the Nine months Ended September 30, 2003 and 2002................   7

      Condensed Notes to (Unaudited) Consolidated Financial Statements.. 8‐12

Independent Accountants' Review Report............................  13

Item 2.  Management's Discussion and Analysis of

Financial Condition and Results of Operations...........    14-24

Part II ‐ Other Information.........................................      25

Item 1.  Legal Proceedings

Item 2.  Changes in Securities

Item 3.  Defaults Upon Senior Securities

Item 4.  Submission of Matters to a Vote of Security Holders

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8‐K

Signatures..........................................................      26

Certification of Chief Executive Officer ...........................     27

Certification of Principal Accounting Officer ......................      28

          

2.

PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
|                                                                                                                          | September 30,

2003

(Unaudited) |  | December 31,

2002 |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------|--|--------------------|
| ASSETS:                                                                                                                  |                                  |  |                    |
| Investments:                                                                                                             |                                  |  |                    |
|     Fixed maturities:                                                                                     |                                  |  |                    |
|      Available for sale at market (Cost of                                                           |                                  |  |                    |
|        $3,705,238 and 3,596,774, respectively)                                             | $3,851,769                       |  | $3,642,582    |
|      Common stocks (Cost of $29,493 and                                                              |                                  |  |                    |
|        $16,757, respectively)                                                              | 34,360                           |  | 16,886             |
|     Mortgage loans                                                                                        | 9,161                            |  | 9,289              |
|     Real estate                                                                                           | 415                              |  | 415                |
|     Policy loans                                                                                          | 18,356                           |  | 17,633             |
|     Short-term investments                                                                                | 8,170                            |  | 288,822            |
|     Other invested assets                                                                                 | 328,166                          |  | 254,659            |
|              Total Investments                               | 4,250,397                        |  | 4,230,286          |
|                                                                                                                          |                                  |  |                    |
| Cash and cash equivalents                                                                                                | 21,979                           |  | 13,101             |
| Accrued investment income                                                                                                | 54,508                           |  | 48,589             |
| Amounts due from security transactions                                                                                   | 461                              |  | 1,033              |
| Deferred federal income taxes                                                                                            | 0                                |  | 9,319              |
| Federal income tax recoverable                                                                                           | 22,455                           |  | 30,245             |
| Deferred policy acquisition costs                                                                                        | 111,510                          |  | 113,039            |
| Furniture and equipment, net                                                                                             | 219                              |  | 309                |
| Amounts due from reinsurers                                                                                              | 14,758                           |  | 18,617             |
| Other assets                                                                                                             | 5,137                            |  | 5,450              |
| Assets held in separate account                                                                                          | 2,654                            |  | 2,196              |
|               TOTAL ASSETS                              | $ 4,484,078                      |  | $ 4,472,184        |
|                                                                                                                          |                                  |  |                    |
| LIABILITIES AND SHAREHOLDERS' EQUITY:                                                                                    |                                  |  |                    |
| Liabilities:                                                                                                             |                                  |  |                    |
| Policy Liabilities:                                                                                                      |                                  |  |                    |
|    Policyholders' account balances                                                                             | $ 3,069,876                      |  | $ 2,911,554        |
|    Future policy benefits:                                                                                     |                                  |  |                    |
|     Annuity                                                                                               | 645,018                          |  | 636,789            |
|     Life and accident and Health                                                                          | 65,788                           |  | 68,812             |
|    Other policy liabilities                                                                                    | 5,131                            |  | 5,284              |
|               Total Policy Liabilities                  | 3,785,813                        |  | 3,622,439          |
|                                                                                                                          |                                  |  |                    |
| Dollar repurchase agreements                                                                                             | 0                                |  | 262,518            |
| Short-term note payable                                                                                                  | 50,000                           |  | 50,000             |
| Notes Payable                                                                                                            | 100,000                          |  | 100,000            |
| Deferred federal income taxes                                                                                            | 28,851                           |  | 0                  |
| Deposits on policies to be issued                                                                                        | 2,215                            |  | 6,375              |
| General expenses and taxes accrued                                                                                       | 3,231                            |  | 6,380              |
| Other liabilities                                                                                                        | 30,520                           |  | 23,585             |
| Liabilities related to separate account                                                                                  | 2,654                            |  | 2,196              |
|               Total Liabilities                         | 4,003,284                        |  | 4,073,493          |
|                                                                                                                          |                                  |  |                    |
| Shareholders' Equity:                                                                                                    |                                  |  |                    |
|    Capital stock ($.01 par value; authorized                                                                   |                                  |  |                    |
|     100,000,000 shares; issued and outstanding,                                                           |                                  |  |                    |
|     29,334,668 shares in 2003 and 29,334,668                                                              |                                  |  |                    |
|     shares in 2002                                                                                        | 293                              |  | 293                |
|     Accumulated other comprehensive gain                                                                  | 86,275                           |  | 17,820             |
|    Retained earnings                                                                                           | 394,226                          |  | 380,578            |
|                Total Shareholders' Equity          | 480,794                          |  | 398,691            |
|                TOTAL LIABILITIES AND SHAREHOLDERS' |                                  |  |                    |
|                     EQUITY     | $ 4,484,078                      |  | $ 4,472,184        |
|                                                                                                                          |                                  |  |                    |
| The accompanying notes are an integral part of these Unaudited Consolidated                                              |
| Financial Statements.                                                                                                    |

          3.

PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)
|                                                                                         |    NINE MONTHS ENDED

    SEPTEMBER 30

    (UNAUDITED) |
|-----------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|
| REVENUES:                                                                               | 2003                                                                                            |  | 2002 |
|   Insurance Revenues:                                                              |                                                                                                 |  |  |
|      Premiums                                                       | $                                                                                               |   7,232 |  | $ | 7,400  |
|      Annuity considerations                                         | 24,849                                                                                          |  | 52,920  |
|      Universal life and investment type policy                      |                                                                                                 |  |  |
|          fee income                                  | 1,052                                                                                           |  | 812  |
|   Net investment income                                                            | 207,383                                                                                         |  | 201,196  |
|   Realized investment gains (losses)                                               | 6,329                                                                                           |  | (118,346) |
|   Other income                                                                     | 1,234                                                                                           |  | 2,196  |
|                                                                                         |                                                                                                 |  |  |
|            TOTAL REVENUES             | 248,079                                                                                         |  | 146,178  |
|                                                                                         |                                                                                                 |  |  |
| BENEFITS AND EXPENSES:                                                                  |                                                                                                 |  |  |
|   Death and other life insurance benefits                                          | 12,711                                                                                          |  | 9,768  |
|   Annuity benefits                                                                 | 53,633                                                                                          |  | 47,523  |
|   Interest credited to policyholders' account                                      |                                                                                                 |  |  |
|         balances                                     | 120,400                                                                                         |  | 106,610  |
|   Interest expense on notes payable                                                | 7,248                                                                                           |  | 8,179  |
|   Other interest and other charges                                                 | 541                                                                                             |  | (4) |
|   Increase in liability for future policy benefits                                 | 7,254                                                                                           |  | 41,443  |
|   Commissions to agents, net                                                       | 9,760                                                                                           |  | 25,637  |
|   General expenses and taxes                                                       | 10,339                                                                                          |  | 8,243  |
|   Change in deferred policy acquisition costs                                      | (5,985)                                                                                         |  | (25,439) |
|                                                                                         |                                                                                                 |  |  |
|            TOTAL BENEFIT AND EXPENSES | 215,901                                                                                         |  | 221,960  |
|                                                                                         |                                                                                                 |  |  |
| Income before income taxes                                                              | 32,178                                                                                          |  | (75,782) |
|                                                                                         |                                                                                                 |  |  |
| Provision (benefit) for income taxes                                                    |                                                                                                 |  |  |
|   Current                                                                          | 8,148                                                                                           |  | 15,669  |
|   Deferred                                                                         | 1,582                                                                                           |  | (38,335) |
|                                                                                         | 9,730                                                                                           |  | (22,666) |
|                                                                                         |                                                                                                 |  |  |
| NET INCOME (LOSS)                                                                       | $                                                                                               | 22,448 |  | $ | (53,116) |
|                                                                                         |                                                                                                 |  |  |
| Earnings per common share                                                               | .77                                                                                             |  | (1.81) |
|                                                                                         |                                                                                                 |  |  |
| Weighted average number of shares outstanding                                           |                                                                                                 |  |  |
| During the period                                                                       | 29,334,668                                                                                      |  | 29,331,262  |
|                                                                                         |                                                                                                 |  |  |
| The accompanying notes are an integral part of these Unaudited Consolidated             |
| Financial Statements.                                                                   |

          

         4.

PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)
|                                                                                         |    THREE MONTHS ENDED

    SEPTEMBER 30

    (UNAUDITED) |
|-----------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
| REVENUES:                                                                               | 2003                                                                                             |  | 2002 |
|   Insurance Revenues:                                                              |                                                                                                  |  |  |  |
|      Premiums                                                       | $                                                                                                | 2,698 |  | $ | 3,444  |
|       Annuity considerations                                        | 6,339                                                                                            |  | 20,822  |
|      Universal life and investment type policy                      |                                                                                                  |  |  |
|         fee income                                   | 500                                                                                              |  | 536  |
|   Net investment income                                                            | 71,734                                                                                           |  | 70,041  |
|   Realized investment gains (losses)                                               | (2,194)                                                                                          |  | (88,339) |
|   Other income                                                                     | (46)                                                                                             |  | 654  |
|                                                                                         |                                                                                                  |  |  |
|             TOTAL REVENUES            | 79,031                                                                                           |  | 7,158  |
|                                                                                         |                                                                                                  |  |  |
| BENEFITS AND EXPENSES:                                                                  |                                                                                                  |  |  |
|   Death and other life insurance benefits                                          | 2,946                                                                                            |  | 3,860  |
|   Annuity benefits                                                                 | 18,049                                                                                           |  | 16,103  |
|   Interest credited to policyholders' account                                      |                                                                                                  |  |  |
|         balances                                     | 40,736                                                                                           |  | 38,164  |
|   Interest expense on notes payable                                                | 2,376                                                                                            |  | 1,849  |
|   Other interest and other charges                                                 | 329                                                                                              |  | 207  |
|   Increase in liability for future policy benefits                                 | (197)                                                                                            |  | 17,608  |
|   Commissions to agents, net                                                       | 2,163                                                                                            |  | 9,522  |
|   General expenses and taxes                                                       | 3,834                                                                                            |  | 2,080  |
|   Change in deferred policy acquisition costs                                      | (611)                                                                                            |  | (12,019) |
|                                                                                         |                                                                                                  |  |  |
|            TOTAL BENEFIT AND EXPENSES | 69,625                                                                                           |  | 77,374  |
|                                                                                         |                                                                                                  |  |  |
| Income before income taxes                                                              | 9,406                                                                                            |  | (70,216) |
|                                                                                         |                                                                                                  |  |  |
| Provision (benefit) for income taxes                                                    |                                                                                                  |  |  |
|   Current                                                                          | (1,028)                                                                                          |  | 10,659  |
|   Deferred                                                                         | 3,879                                                                                            |  | (31,655) |
|                                                                                         | 2,851                                                                                            |  | (20,996) |
|                                                                                         |                                                                                                  |  |  |
| NET INCOME (LOSS)                                                                       | $                                                                                                | 6,555 |  | $ | (49,220) |
|                                                                                         |                                                                                                  |  |  |
| Earnings per common share                                                               | .22                                                                                              |  | (1.68) |
|                                                                                         |                                                                                                  |  |  |
| Weighted average number of shares outstanding                                           |                                                                                                  |  |  |
| During the period                                                                       | 29,334,668                                                                                       |  | 29,334,668  |
|                                                                                         |                                                                                                  |  |  |
| The accompanying notes are an integral part of these Unaudited Consolidated             |
| Financial Statements.                                                                   |                                                                                                  |

         5.

PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

                         (in thousands except shared data)

                                    (unaudited)
|                                                  | Capital Stock     |  | Additional

Paid-in-

Capital                         |  | Retained

Earnings |  | Accumulated

Other

Comprehensive

Income(Loss) |  | Total          |
|--------------------------------------------------|-------------------|--|-------------------------------------------------------|--|--------------------|--|-------------------------------------------------|--|----------------|
| Balance at

January 1, 2002                      | $  293  |  |       

$  0  |  | $461,353      |  | $  (34,552)                                |  | $427,094  |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Comprehensive Income:                            |                   |  |                                                       |  |                    |  |                                                 |  |                |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Net Loss                                         |                   |  |                                                       |  | (53,116)           |  |                                                 |  | (53,116)       |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Transition Adjustment                            |                   |  |                                                       |  |                    |  |      (4,310)                |  | (4,310)        |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Net Unrealized                                   |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Investment Gains                                 |                   |  |                                                       |  |                    |  | 27,244                                     |  | 27,244    |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Comprehensive Income(Loss)                       |                   |  |                                                       |  |                    |  |                                                 |  | (30,182)       |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Purchase & Retirement of Stock               | 0                 |  | 0                                                |  | 225           |  |                                                 |  | 225       |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Dividends Paid to

Shareholders ($.10 per share) |                   |  |                                                       |  | (8,798)            |  |                                                 |  | (8,798)        |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Balance at

  September 30,2002             | $ 293   |  | $ 0                                              |  | $399,664      |  | $  (11,618)                           |  | $388,339  |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Balance at

January 1, 2003                      | $  293       |  |      $0                           |  | $380,577           |  |   $  17,820                           |  | $398,690       |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Comprehensive Income:                            |                   |  |                                                       |  |                    |  |                                                 |  |                |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Net Income                                       |                   |  |                                                       |  | 22,448             |  |                                                 |  | 22,448         |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Transition Adjustment                            |                   |  |                                                       |  |                    |  | (3,639)                                         |  | (3,639)        |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Net Unrealized Investment Gains                  |                   |  |                                                       |  |                    |  | 72,094                                          |  | 72,094         |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Comprehensive Income                             |                   |  |                                                       |  |                    |  |                                                 |  | 90,903         |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Dividends paid to Shareholders ($.10 per share)  |                   |  |                                                       |  | (8,799)            |  |                                                 |  | (8,799)        |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |
| Balance at

September 30, 2003                   | $  293       |  |     $0                                 |  | $394,226           |  |   $  86,275                           |  | $480,794       |
|                                                  |                   |  |                                                       |  |                    |  |                                                 |  |                |

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

                                    6.

PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
|                                                                 NINE MONTHS ENDED

                                                                 SEPTEMBER 30, 2003

                                                                   (UNAUDITED) |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        | 2003 |  | 2002 |   |
| OPERATING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |  |  |  |   |
|     Net Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        | $ | 22,448 |  | $ | (53,116) |   |
|     Adjustments to reconcile net income to net cash              provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |  |  |  |   |
|         Benefit for deferred income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        | 1,582 |  | (38,335) |   |
|         Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | 604 |  | 339  |   |
|         Net accrual of discount on fixed maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        | (19,575) |  | (14,293) |   |
|         Realized investment (gains) losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        | (6,329) |  | 118,346  |   |
|     Changes in:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        |  |  |  |   |
|         Accrued investment income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        | (5,919) |  | (9,384) |   |
|         Deferred policy acquisition cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        | (5,985) |  | (25,439) |   |
|         Federal income tax recoverable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        | 7,790 |  | 10,885  |   |
|         Liability for future policy benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        | 5,205 |  | 41,222  |   |
|         Other items                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        | 7,910 |  | (11,385) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        |  |  |  |   |
|           Net Cash Provided By

          Operating Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | 7,731 |  | 18,840  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
| INVESTING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |  |  |  |   |
|     Fixed Maturities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        |  |  |  |   |
|       Available for Sale:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |  |  |  |   |
|         Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |        | (990,288) |  | (858,445) |   |
|          Maturities, calls and repayments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        | 499,939 |  | 243,989  |   |
|         Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        | 406,919 |  | 67,476  |   |
|     Common Stocks:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |  |  |  |   |
|         Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |        | (25,548) |  | (9,061) |   |
|         Sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        | 13,502 |  | 15,163  |   |
|     Increase (decrease) in short-term investments         and policy loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        | 279,929 |  | (13,446) |   |
|     Other Invested Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |  |  |  |   |
|        Additions to other invested assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |        | (121,352) |  | (60,030) |   |
|        Distributions from other invested assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        | 54,572 |  | 54,112  |   |
|     Mortgage loan on real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        | 128 |  | 1,217  |   |
|     Amount due from security transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | 572 |  | (325) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
|          Net Cash Provided By (Used In)

              Investing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        | 118,373 |  | (559,350) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
| FINANCING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |  |  |  |   |
|     Proceeds from dollar repurchase agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        | 1,057,901 |  | 2,329,807  |   |
|     Repayment of dollar repurchase agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        | (1,320,419) |  | (2,328,888) |   |
|     Increase in policyholders' account balances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        | 158,322 |  | 603,170  |   |
|     Repurchase of Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        | 0 |  | 225  |   |
|     Bank overdrafts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        | (71) |  | (13,768) |   |
|     Deposits on policies to be issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        | (4,160) |  | (38,525) |   |
|     Dividends paid to shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        | (8,799) |  | (8,798) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
|          Net Cash (Used In) Provided By

             Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        | (117,226) |  | 543,223  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
|     Increase in Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | 8,878 |  | 2,713  |   |
| Cash and Cash Equivalents at Beginning of Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        | 13,101 |  | 1,921  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
| Cash and Cash Equivalents at End of Period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |        | $ | 21,979 |  | $ | 4,634 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  | $   (2,512) |
| Supplemental Cash Flow Disclosure:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |  |  |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
|     Income Taxes Paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        | $ | 359 |  | $ | 4,784  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |  |  |  |   |
|     Interest Paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        | $ | 8,664 |  | $ | 8,822  |   |

 

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

   7.

****

**PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES**

**  CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**A.   Business**

Presidential Life Corporation ("the Company"), through its wholly‐owned subsidiary, Presidential Life Insurance Company ("Insurance Company"), is engaged in the sale of life insurance and annuities.

**B. Basis of Presentation and Principles of Consolidation**

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable to stock life insurance companies for interim financial statements andwith the requirements of Form 10‐Q.  Accordingly, they do not include all of the information and footnotes required by GAAP applicable to stock life insurance companies for complete financial statements.  In the opinion of management, all adjustments,consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Interim results for the nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31,2003. Management believes that, although the disclosures are adequate to make the information presented not misleading, the consolidated financial statements should be read in conjunction with the footnotes contained in the Company's audited consolidated financialstatements for the year ended December 31, 2002. 

**C.   Investments**

Fixed maturity investments available for sale represent investments, which may be sold in response to changes in various economic conditions.  These investments are carried at market value and unrealized gains (losses), net of the effects of amortization ofdeferred policy acquisition costs of approximately $19.8 million and $12.1 million, and deferred federal income taxes of approximately $39.2 million and $10.0 million, at September 30, 2003 and December 31, 2002, respectively, are credited or charged directly toshareholders' equity, unless a decline in market value is considered to be other than temporary in which case the investment is reduced to its fair value. Common stocks are carried at market, with the related unrealized gains and losses, net of deferred income taxes,if any, credited or charged directly to shareholders' equity, unless a decline in market value is deemed to be other than temporary in which case the investment is reduced to its net realizable value.

"Other invested assets" are recorded at equity and primarily include interests in limited partnerships which principally are engaged in real estate, international opportunities, acquisitions of private growth companies, debt restructuring and merchantbanking.  In general, risks associated with such limited partnerships include those related to their underlying investments (i.e., equity securities, debt securities and real estate), plus a level of illiquidity, which is mitigated by the ability of the Companyto take annual distributions of partnership earnings.  To evaluate the appropriateness of the carrying value of a limited partnership interest, management maintains ongoing discussions with the investment managers and considers the limited partnership'soperation, its current and near term projected financial condition, earnings capacity and distributions received by the Company during the year.  As of September 30, 2003, the Company was committed to contribute, if called upon, an aggregate amount ofapproximately $102.7 million of additional capital to certain of these limited partnerships.  However, management does not expect the entire amount to be drawn down as certain of these limited partnerships are nearing the end of the period during which investorsare required to make contributions.  $9.3 million in commitments will expire in 2003, $17.7 million in 2004, $23.0 in 2005, $23.6 in 2006, $29.1 in 2007. Management believes that the fair value of such limited partnership

       8.

**C. Investments - continued**

interests, in the aggregate, exceed their related carrying value as of September 30, 2003 and December 31, 2002. ****

        In evaluating whether an investment security or other investment has suffered an impairment in value which is deemed to be "other than temporary", management

considers all available evidence.  When a decline in the value of an investment security or other investment is considered to be other than temporary, the investment is reduced to its net realizable value, which becomes the new cost basis.  The amount ofreduction is recorded as a realized loss.  A recovery from the adjusted cost basis is recognized as a realized gain only at sale.

As of May 2003, the Company no longer participates in "dollar roll" repurchase agreement transactions.  Dollar roll transactions involve the sale of certain mortgage-backed securities to a holding institution and a simultaneous agreement to purchasesubstantially similar securities for forward settlement at a lower dollar price.  The proceeds are invested in short‐term securities at a positive spread until the settlement date of the similar securities.  During this period, the holding institutionreceives all income and prepayments for the security.  Dollar roll repurchase agreement transactions are treated as financing transactions for financial reporting purposes.

**D. Federal Income Taxes**

The Company and its subsidiaries file a consolidated federal income tax return. The asset and liability method in recording income taxes on all transactions that have been recognized in the financial statements is used. SFAS 109 provides that deferred income taxesare adjusted to reflect tax rates at which future tax liabilities or assets are expected to be settled or realized.

**E.   Earnings Per Common Share  “EPS”**

Basic EPS is computed based upon the weighted average number of common shares outstanding during the quarter.  Diluted EPS is computed based upon the weighted average number of common shares including contingently issuable shares and other dilutiveitems.  The weighted average number of common shares used to compute diluted EPS for the nine months ended September 30, 2003 and 2002 was 29,334,668 and  29,331,262 respectively.  The dilution from the potential exercise of stock options outstandingdid not change basic EPS.      

**F. New Accounting Pronouncements**

  In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets.” SFAS No. 141 requires that all businesscombinations be accounted for under the purchase method only and that certain acquired intangible assets in a business combination be recognized as assets apart from goodwill.  SFAS No. 142 requires that ratable amortization of goodwill be replaced with periodictests of the goodwill's impairment and identifiable intangible assets other than goodwill be amortized over their useful lives.   SFAS No. 141 is effective for acquisitions made after June 30, 2001.  The provisions of SFAS No. 142 were effective for fiscalyears beginning after December 15, 2001.  Adoption of SFAS 141 and SFAS 142 did not have an impact on the Company's consolidated financial statements.

In October 2001, the FASB issued SFAS No.144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144").  SFAS provides a single model for accounting for long-lived assets to be disposed by superceding SFAS No. 121, Accounting for theImpairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ("SFAS 121"), and the accounting and reporting provisions of Accounting Principles Board Opinion No.30, Reporting the Results of Operations - Reporting the Effects of

Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently occurring Events and Transactions ("APB 30").  Under SFAS 144, discontinued operations are measured at the lower of carrying value or fair value less cost to sell rather than ona net realizable value basis.  Future operating losses relating to discontinued operations are also no longer recognized before they occur.  SFAS 144 broadens the definition of a discontinued operation to include a component of an entity (rather than asegment of a business.)  SFAS 144 also requires long-lived assets to be disposed of

               9.

****

**F. New Accounting Pronouncements – continued**

other than by sale to be considered held and used until disposed.  SFAS 144 retains the basic provisions of (i) APB 30 regarding the presentation of discontinued operations in the income statement, (ii) SFAS 121 relating to recognition and measurement ofimpaired long-lived assets classified as held for sale.  SFAS 144 was effective beginning January 1, 2002.  The adoption of SFAS 144 by the Company did not have an impact on the Company's consolidated financial statements.

      In August 2002, the FASB issued SFAS No.146, Accounting for Costs Associated with Exit or Disposal Activities (2SFAS 1462).  The standard requires companies to recognize costs associated with exit or disposalactivities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  Previous accounting guidance was provided by EITF 94-3, 2Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit anActivity (including Certain Costs Incurred in a Restructuring)2. SFAS 146 replaces EITF 94-3. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002.

The adoption of SFAS 146 did not have an impact on the Company¢s consolidated financial statements.

      In October 2002, the FASB issued SFAS No.147, Acquisitions of Certain Financial Institutions (2SFAS 1472).  This statement, which provides guidance on the accounting for the acquisition of a financial institution,applies to all acquisitions except those between two or more mutual enterprises. The standard is effective for acquisitions for which the date of acquisition is on or after October 1, 2002. The adoption of SFAS 147 did not have an impact on the Company¢sconsolidated financial statements.

      In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness of Others (2FIN 452).  FIN 45 requiresentities to establish liabilities for certain types of guarantees, and expands financial statement disclosures for others.   Disclosure requirements under FIN 45 are effective for financial statements of annual periods ending after December 15, 2002 and areapplicable to all guarantees issued by the guarantor subject to the provisions of FIN 45.  The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 had no  impact on the Company’s consolidated financial statements.

      In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (2FIN 462). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entityif the equity investors in the entity do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all new variable interest entities createdor acquired after January 31, 2003. For variable interest entities entered into prior to February 1, 2003, FIN 46 is effective for the first interim or annual period beginning after June 15, 2003. In October 2003, the FASB issued FASB Staff Position(“FSP”) FIN 46-6, *Effective Date of FASB Interpretation, No. 46 Consolidation of Variable Interest Entities.* This FSP provides a deferral of interests held by public entities in a variable interest entity or potential variable interest entity untilthe end of the first interim or annual period after December 15, 2003, if (a) the variable interest entity was created before February 1, 2003 and (b) the public entity has not issued financial statements reporting the variable interest entity that was created beforeFebruary 1, 2003, in accordance with FIN 46, other than in the disclosure required by FIN 46. The FSP is effective for financial statements issued after October 9, 2003. The adoption of FIN 46 for variable entities created after February 1, 2003 did not have animpact on the consolidated financial statement of the company as of September 30, 2003. Management does not expect the adoption of the provision of FSP FIN 46-6 to have a material impact on the Company’s consolidated financial statements.

     

      In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 149, **Amendment of Statement 133 on Derivative **Instruments and Hedging Activities.  Statement No. 149amends Statement 133 for decisions made (1) as part of the Derivatives Implementation Group process that effectively required amendments to Statement 133, (2) in connection with other Board projects dealing with financial instruments, and (3) in connection withimplementation

         10.

issues raised in relation to the application of the definition of a derivative.  The Statement clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative discussed in paragraph 6(b) of Statement 133,clarifies when a derivative contains a financing component, amends the definition of an underlying to conform it to language used in FASB Interpretation No.45, **Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of**Indebtedness of Others, and amends certain other existing pronouncements. Those changes will result in more consistent reporting of contracts as either derivatives or hybrid instruments. This statement is effective for contracts entered into or modified afterSeptember 30, 2003 and for hedging relationships designated after September 30, 2003. Management does not expect that the adoption of Statement No. 149 to have a material impact on the Company's consolidated financial statements.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 150,**Accounting for Certain Financial Instruments **with Characteristics of Both Liabilities and Equity. Statement No. 150 establishes standardsfor how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. In addition, the Statement requires an issuer to classify certain instruments with specific characteristics described in it as liabilities.This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  The adoption of Statement No. 150 did not have animpact on the Company's consolidated financial statements.

In March 1999, the National Association of Insurance Commissioners (“NAIC”) adopted the Codification of Statutory Accounting Principles (the “Codification”). The Codification, which is intended to standardize regulatory accounting andreporting to state insurance departments, was effective January 1, 2002.  However, statutory accounting principles will continue to be established by individual state laws and permitted practices.  The New York State Insurance Department ("NYSID") requiredadoption of the Codification with certain modifications, for the preparation of statutory financial statements, effective January 1, 2001.  On October 1, 2002 NYSID modified its original adoption of Codification to allow for the recognition of Deferred

Tax Assets (2DTA2) and Deferred Tax Liabilities (2DTL2), with certain restrictions.  This change allowed the Insurance Company to recognize a net DTA of approximately $26.0 and $22.4 million at September 30, 2003 and December 31, 2002respectively for statutory reporting purposes. The adoption of Codification by the NAIC and the Codification as modified by the NYSID, as currently interpreted, did not adversely affect statutory capital and surplus as of September 30, 2003 or December 31, 2002.

****

**2.    INVESTMENTS**

     There were no investments in any one issuer that aggregate 10% or more of Shareholder's Equity as of September 30, 2003.

Securities with a carrying value of approximately $14.0 million were on deposit with various state insurance departments to comply with applicable insurance laws.

**3.   NOTES PAYABLE**

Notes payable at September 30, 2003 and December 31, 2002 consist of $100 million, 7 7/8% Senior Notes ("Senior Notes") due February 15, 2009.  Interest is payable February 15 and August 15.  Debt issue costs are being amortized on the interest methodover the term of the notes.  As of September 30, 2003, such unamortized costs were $1.20 million.  The total principal is due on February 15, 2009. In addition, the Company had deferred losses of approximately $3.6 million recorded in accumulated othercomprehensive income as of September 30, 2003, related to an interest rate lock agreement used to hedge the issuance of the Senior Notes.

****

****

****

**              ** 11.

****

**4.   INCOME TAXES**

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, (b) operating loss carryforwards and (c) avaluation allowance.

The valuation allowance relates principally to investment write downs recorded for financial reporting purposes, which have not been recognized for income tax purposes, due to the uncertainty associated with their realizability for income tax purposes. Changes inthe valuation allowance for the nine months ended September 30, 2003 reflect the reduction in the deferred income tax asset as of September 30, 2003.  The Company's effective tax rate for each of the nine months ended September 30, 2003 and 2002 was 30.2% and29.9%, respectively. 

**COMPREHENSIVE INCOME (LOSS)**

****
|    

For the nine months ended September 30, 2003        | Pre Tax

Amount |  | Tax Expense/

(Benefit)

(in thousands) |  | After-Tax

Amount |
|-------------------------------------------------------------------------|-----------------|--|-----------------------------------------|--|-------------------|
| Net unrealized gains (losses) on                                        |                 |  |                                         |  |                   |
| investment securities:                                                  |                 |  |                                         |  |                   |
|   Net unrealized holding gains arising during year                 | 116,933         |  | 35,080                                  |  | 81,853            |
|   Less: reclassification adjustment for losses                     |                 |  |                                         |  |                   |
|          realized in net income | (6,329)         |  | (1,899)                                 |  | (4,430)           |
|    Change related to deferred acquisition costs               | (7,613)         |  | (2,284)                                 |  | (5,329)           |
| Net unrealized investment gains                                         | 102,991         |  | 30,897                                  |  | 72,094            |
|                                                                         |                 |  |                                         |  |                   |
| 2002                                                                    |                 |  |                                         |  |                   |
| Net unrealized gains (losses)on                                         |                 |  |                                         |  |                   |
| investment securities:                                                  |                 |  |                                         |  |                   |
|   Net unrealized holding gains arising during year                 |   165,509  |  | 49,653                                  |  |   115,856    |
|   Less: reclassification adjustment for losses                     |                 |  |                                    |  |              |
|          Realized in net income | (118,346)       |  |   (35,504)                         |  |   (82,842)   |
|    Change related to deferred acquisition costs               |   (8,243)  |  |   (2,473)                          |  | (5,770)           |
| Net unrealized investment (losses)                                      |   38,920   |  |   11,676                           |  |   27,244     |

                 12.

INDEPENDENT ACCOUNTANTS REVIEW REPORT

The Board of Directors and Shareholders

Presidential Life Corporation

Nyack, New York 10960

We have reviewed the accompanying consolidated balance sheet of Presidential Life Corporation and subsidiaries ("the Company") as of September 30, 2003, and the related consolidated statements of income, for the nine-month and three-month periods ended September30, 2003 and 2002 and the consolidated statement of stockholders' equity and cash flows for the nine month period ended September 30, 2003 and 2002. These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants.  A review of interim financial information consists principally of applying analytical procedures to financial data and of makinginquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expressionof an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Presidential Life Corporation and subsidiaries as of December 31, 2002, and the related consolidated statementsof income, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 14, 2003, we expressed an unqualified opinion on those consolidated financial statements.  In our opinion, the information set forthin the accompanying consolidated balance sheet as of December 31, 2002 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Deloitte & Touche LLP

New York, New York

November 12, 2003

           

13.

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

**General**

The Company operates principally in a single business segment with two primary lines of business‐individual life insurance and individual annuities.  Operating segments are defined as components of an enterprise about which separate financialinformation is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.  Premiums shown on the Company's consolidated financial statements in accordance with GAAP consist ofpremiums received for whole or term life insurance products, as well as that portion of the Company's single premium immediate annuities, which have life contingencies.  With respect to that portion of single premium annuity contracts without life contingencies,as well as single premium deferred annuities and universal life insurance products, premiums collected by the Company are not reported as premium revenues, but rather are reported as additions to policyholder account balances.  With respect to products that areaccounted for as policyholder account balances, revenues are recognized over time in the form of policy fee income, surrender charges and mortality and other charges deducted from the policyholder's account balance.  The Company's operating earnings are derivedprimarily from these revenues, plus the Company's investment results, including realized investment gains (losses), less interest credited, benefits to policyholders and expenses.

Certain costs related to the sale of new business are deferred as "deferred policy acquisition costs" ("DAC") and amortized into expenses in proportion to the recognition of earned revenues.  Costs deferred include principally commissions, certain expenses ofthe policy issue and underwriting departments and certain variable sales expenses.  Under certain circumstances, DAC will be expensed earlier than originally estimated, including those circumstances where the policy terminations are higher than originallyestimated with respect to certain annuity products.  Most of the Company's annuity products have surrender charges, which are designed to discourage and mitigate the effect of early terminations.

     During 2002, The Insurance Company’s rating was lowered to "B+" (Very Good) from an "A-"(Excellent) by A.M. Best Company.

**Results of Operations**

Comparison of nine months ended September 30, 2003 compared to nine months ended

September 30, 2002.

# Revenues

Annuity Considerations and Life Insurance Premiums

Total annuity considerations and life insurance premiums decreased to approximately $32.1 million for the nine months ended September 30, 2003 from approximately $60.3 million for the nine months ended September 30, 2002, a decrease of approximately $28.2million.  Of this amount, annuity considerations decreased to approximately $24.8 million for the nine months ended September 30, 2003 from approximately $52.9 million for the nine months ended September 30, 2002 a decrease of approximately $28.1 million. In accordance with GAAP, sales of single premium deferred annuities are not reported as insurance revenues, but rather as additions to policyholder account balances. Based on statutory accounting, revenue from sales of single premium annuities were approximately$189.1 million and approximately $657.1 million during the nine months ended September 30, 2003 and September 30, 2002, respectively. The decrease is attributable to many factors, including recent rating agency actions and managements intent to preserve and build theInsurance Company’s capital and surplus ratios.

14.

**     Policy Fee Income**

Universal life and investment type policy fee income was approximately $1,052 thousand for the nine months ended September 30, 2003, as compared to approximately $812 thousand for the nine months ended September 30, 2002.  This represents approximately a $240thousand increase. 

**Net Investment Income**

Net investment income totaled approximately $207.4 million during the first nine months of 2003, as compared to approximately $201.2 million during the first nine months of 2002.  This represents an increase of approximately $6.2 million. This increase is dueprincipally to the increase in fixed maturities from September 30, 2002 of approximately $394.8 million. Investment income from other invested assets totaled approximately $14.8 million during the first nine months of 2003, as compared to approximately $18.3 millionduring the first nine months of 2002. The Company's ratio of net investment income to average cash and invested assets less net investment income for the periods ended September 30, 2003 and September 30, 2002 was approximately 6.87% and 7.75%, respectively.

**Net Realized Investment Gains and Losses**

Realized investment gains amount to approximately $6.3 million during the first nine months of 2003, as compared to approximately $118.3 million of losses during the first nine months of 2002. Realized investment gains and losses for the nine months endedSeptember 30, 2003 and 2002 respectively, include realized investment losses or writedowns of approximately $28.4 million and $125.0 million, respectively, attributable to other than temporary impairments in the value of certain securities contained in the Company'sinvestment portfolio.  Investment securities with unrealized losses are placed on an internal watch list and are carefully evaluated to determine whether such losses are other than temporary.  Evaluations of watch list securities are monitored on an ongoingbasis.  Various criteria are utilized in the evaluation of the financial performance of the issuer, including capital structure, debt maturities, earnings trends, asset quality, industry trends, regional and economic trends and specific events including: a)company specific event, such as missed interest payments, accounting issues, gain or loss of major revenue generating contract(s), significant change in availability and cost of raw material or labor; and, b) specific market-driven events such as dramatic changes ininterest rates or geo-political events. The result of this analysis is then evaluated in the context of the Company’s intent to hold to maturity barring any significant adverse change in credit conditions, as well as the Company’s need for liquidity. Whenimpairments are determined to be other than temporary, the Company adjusts the book value to reflect the fair value, as appropriate, on a quarterly basis. Realized investment gains (losses) also result from sales of certain equities and convertible securities, andcalls and sales of fixed maturity investments in the Company's investment portfolio.

  15.

     The following table presents the amortized cost and gross unrealized losses for fixed maturities where the estimated fair value had declined and remained below amortized cost by less than 20%, or 20% or more for September 30, 2003:
|                                                                                                          |      Amortized Cost |  |    Gross Unrealized              Losses |  | Gross Unrealized Losses    Net of Principal        Protected Notes |
|----------------------------------------------------------------------------------------------------------|-----------------------------------------|--|--------------------------------------------------------------------------------------------------------------------|--|----------------------------------------------------------------------------------------------------------------------|
|                                                                                                          | Less than     20%   |  |   20% or

  More                                                                                         |  | Less than     20%                                                                                |  | 20% or

  More |  | Less than     20% |  |   20% or

  More |
|                                                                                                          |                                         |  |                                                                                                                    |  | (in thousands)                                                                                                       |  |  |  |  |
| Less than six months                                                                                     | 712,819                                 |  | 63,504                                                                                                             |  | 39,263                                                                                                               |  | 14,841 |  | 39,233 |  | 2,275 |
| Six months or greater but less than nine months                                                          | 0                                       |  | 0                                                                                                                  |  | 0                                                                                                                    |  | 0 |  | 0 |  | 0 |
| Nine months or greater     but less than twelve      months | 142,534                                 |  | 9,500                                                                                                              |  | 15,404                                                                                                               |  | 2,552 |  | 10,489 |  | 2,552 |
| Twelve months or greater                                                                                 | 101,164                                 |  | 245,641                                                                                                            |  | 4,747                                                                                                                |  | 60,682 |  | 4,747 |  | 5,288 |
|                                                                                                          |                                         |  |                                                                                                                    |  |                                                                                                                      |  |  |  |  |  |  |
| Total                                                                                                    | 956,517                                 |  | 318,645                                                                                                            |  | 59,414                                                                                                               |  | 78,075 |  | 54,469 |  | 10,115 |
|                                                                                                          |                                         |  |                                                                                                                    |  |                                                                                                                      |  |  |  |  |  |  |

The following table presents the total gross unrealized losses for fixed maturities where the estimated fair value had declined and remained below amortized cost by September 30, 2003.
|                                       |   

    Gross      Unrealized     Losses |                                               |   

   % Of

   Total | Gross Unrealized Losses Net of Principal Protected Notes |   % Of

  Total |               |
|---------------------------------------|----------------------------------------------------------------------------------------------------------------|-----------------------------------------------|-----------------------------------------------------|----------------------------------------------------------|---------------------------|--------------------|
|                                       |                                                                                                                |       (in thousands) |       (in thousands)            |                                                          |
| Less than 20%                         |                                                                                                                |   59,414                                 |                                                     | 43.2                                                     | 54,469                    | 84.4               |   |
| 20% or more for less than six months  |                                                                                                                |   14,841                                 |                                                     | 10.8                                                     |   2,275              | 3.5                |   |
| 20% or more for six months or greater |                                                                                                                |   63,234                                 |                                                     |   46.0                                              |                           |    7,840 |  | 12.1 |   |
|                                       |                                                                                                                |                                               |                                                     |                                                          |                           |                    |   |
| Total                                 |                                                                                                                | 137,489                                       |                                                     |   100.0                                             |                           |   64,584      |  | 100.0 |   |
|                                       |                                                                                                                |                                               |                                                     |                                                          |                           |                    |   |

Approximately 91% of the securities with an unrealized loss of 20% or more for a period equal to or greater than twelve months are Principal Protected Notes.  This structure utilizes AAA collateral such as U.S Treasury Strips, in conjunction with a variablerate coupon.  The AAA rated collateral accretes to par at maturity, defeasing the security and thereby insulating the holder from any negative credit events, which might interfere with the repayment of principal.

  

     As of September 30, 2003, the Company had approximately $285 million of gross unrealized gains in fixed maturities.

**Total Benefits and Expenses**

Total benefits and expenses for the nine months ended September 30, 2003 aggregated approximately $215.9 million, as compared to approximately $222.0 million for the nine months ended September 30, 2002.  This represents a decrease of $6.1 million from thefirst nine months of 2002.

****

**Interest Credited and Benefits to Policyholders**

Interest credited and other benefits to policyholders amounted to approximately $194.5 million for the nine months ended September 30, 2003, as compared to approximately $205.3 million for the nine months ended September 30, 2002. The decrease is attributable to areduction in the increase in the liability for future policy benefits, which is a result of the lower level of premium income.  This reduction is offset by an increase in interest credited to policyholder account balances.

          16.

     The Insurance Company's average credited rate for reserves and account balances for the nine months ended September 30, 2003 and 2002 were less than the Company's ratio of net investment income to mean assets for the same period as notedabove under "Net Investment Income". Although management does not currently expect material declines in the spread between the Company's average credited rate for reserves and account balances and the Company's ratio of net investment income to mean assets (the"Spread"), there can be no assurance that the Spread will not decline in future periods or that such decline will not have a material adverse effect on the Company's financial condition and results of operations.  Depending, in part, upon competitive factorsaffecting the industry in general, and the Company, in particular, the Company may, from time to time, change the average credited rates on certain of its products.  There can be no assurance that the Company will reduce such rates or that any such reductionswill broaden the Spread.    

**Interest Expense on Notes Payable**

The interest expense on the Company's notes payable amounted to approximately $7.2 million for the nine months ended September 30, 2003, and approximately $8.2 million for the nine months ended September 30, 2002. 

 

**General Expenses, Taxes and Commissions**

     General expenses, taxes and commissions to agents totaled approximately $20.1 million for the nine months ended September 30, 2003, as compared to approximately $33.9 million for the nine months ended September 30, 2002.  Thisrepresents a decrease of approximately $13.8 million.  The decrease principally is attributable to lower commissions incurred in the first nine months of 2003 associated with the lower level of sales.

**Deferred Policy Acquisition Costs**

The change in deferred policy acquisition costs for the nine months ended September 30, 2003 resulted in a credit of approximately $6.0 million, as compared to a credit of approximately $25.4 million for the nine months ended September 30, 2002. The change is dueto the decrease in costs associated with lower level of sales, which have been deferred and are amortized in proportion to the recognition of earned revenue.

**Income Before Income Taxes**

For the reasons discussed above, income before income taxes amounted to approximately $32.2 million for the nine months ended September 30, 2003, as compared to a loss of approximately $75.8 million for the nine months ended September 30, 2002.

**Income Taxes**

Income tax expense was $9.7 million for the first nine months of 2003 as compared to an income tax benefit of approximately $22.7 million for the first nine months of 2002.  This increase is primarily attributable to higher income before income taxes.

**Net Income**

For the reasons discussed above, the Company had net income of approximately $22.4 million during the nine months ended September 30, 2003 and a net loss of approximately $53.1 million during the nine months ended September 30, 2002.

       

**Liquidity and Capital Resources**

The Company is an insurance holding company and its primary uses of cash are debt service obligations, operating expenses and dividend payments.  The Company's principal source of cash is rent from its real estate, interest on its investments and dividendsfrom the Insurance Company.  During the third quarter of 2003, the Company's Board of Directors declared a quarterly cash dividend of $.10 per share payable on October 1, 2003.  During the first nine months of 2003 the Company purchased and retired 0 sharesof common stock.

               17.

     The Insurance Company is subject to various regulatory restrictions on the maximum amount of payments, including loans or cash advances that it may make to the Company without obtaining prior regulatory approval. Under the New YorkInsurance Law, the Insurance Company is permitted without prior insurance regulatory clearance to pay a stockholder dividend to the Company as long as the aggregate amount of all such dividends in any calendar year does not exceed the lesser of (i) 10% of its surplusas of the immediately preceding calendar year and (ii) its net gain from operations for the immediately preceding calendar year (excluding realized capital gains).  The Insurance Company will be permitted to pay a stockholder dividend to the Company in excess ofthe lesser of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Superintendent and the Superintendent does not disapprove the distribution.  Under the New York Insurance Law, the Superintendenthas broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.  The NYSID has established informal guidelines for such determinations. The guidelines, amongother things, focus on the insurer's overall financial condition and profitability under statutory accounting practices.  Management of the Company cannot provide assurance that the Insurance Company will have statutory earnings to support payment of dividendsto the Company in an amount sufficient to fund its cash requirements and pay cash dividends or that the Superintendent will not disapprove any dividends that the Insurance Company must submit for the Superintendent's consideration. The Company's other insurancesubsidiary is also subject to restrictions on the payment of dividends to their respective parent companies. During the first nine months of 2003 and 2002, the Insurance Company paid no dividends to the Company.

Principal sources of funds at the Insurance Company are premiums and other considerations paid, contract charges earned, net investment income received and proceeds from investments called, redeemed or sold.  The principal uses of these funds are the paymentof benefits on life insurance policies and annuity contracts, operating expenses and the purchase of investments.  Net cash provided by the Company's operating activities (reflecting principally: (i) premiums and contract charges collected less (ii) benefitspaid on life insurance and annuity products plus (iii) income collected on invested assets less (iv) commissions and other general expenses paid) was approximately $7.7 million and $18.8 million during the nine months ended September 30, 2003 and 2002,respectively.  Net cash used in the Company's investing activities (principally reflecting investments purchased less investments called, redeemed or sold) was approximately $(118.3) million, and $559.4 million during the nine months ended September 30, 2003 and2002, respectively.

For purposes of the Company's consolidated statements of cash flows, financing activities relate primarily to sales and surrenders of the Company's universal life insurance and annuity products.  The payment of dividends by the Company is also considered tobe a financing activity.  In addition, as previously discussed, the Company no longer participates in dollar roll repurchase agreements, which are considered to be a financing activity.  Net cash provided by the Company's financing activities amounted toapproximately $(117.2) million and $543.2 million during the nine months ended September 30, 2003 and 2002, respectively.  This fluctuation is primarily attributable to higher policyholder account balances and lower levels in deposits of policies to be issued atSeptember 30, 2003.

The indenture governing the Senior Notes contains covenants relating to limitations on liens and sale or issuance of capital stock of the Insurance Company. In the event the Company violates such covenants as defined in the indenture, the Company may be obligatedto offer to repurchase the entire outstanding principal amount of such notes.  The Company believes that it is in compliance with all of the covenants. 

Given the Insurance Company's historic cash flow and current financial results, management believes that, for the next twelve months and for the reasonably foreseeable future, the Insurance Company's cash flow from operating activities will provide sufficientliquidity for the operations of the Insurance Company, as well as provide sufficient funds to the Company, so that the Company will be able to make dividend payments, satisfy its debt service obligations and pay its other operating expenses.

               18.

To meet its anticipated liquidity requirements, the Company purchases investments taking into account the anticipated future cash flow requirements of its underlying liabilities.  In managing the relationship between assets and liabilities, the Companyanalyzes the cash flows necessary to correspond with the expected cash needs on the underlying liabilities under various interest rate scenarios.  In addition, the Company invests a portion of its total assets in short-term investments (approximately .2% and6.5% as of September 30, 2003 and December 31, 2002, respectively).  The weighted average duration of the Company's debt portfolio was approximately 6.6 years as of September 30, 2003.  The Company's fixed maturity investments are all classified asavailable for sale and includes those securities available to be sold in response to, among other things, changes in market interest rates, changes in the security's prepayment risk, the Company's need for liquidity and other similar factors.  Fixed maturityinvestments available for sale represent investments, which may be sold in response to changes in various economic conditions.  These investments are carried at estimated market value and unrealized gains and losses, net of the effects of amortization ofdeferred policy acquisition costs and deferred federal income taxes, are charged directly to shareholders' equity, unless a decline in market value is considered to be other than temporary in which event the Company recognizes a loss.  Equity securities includecommon stocks and non‐redeemable preferred stocks and are carried at market, with the related unrealized gains and losses, net of federal income taxes, if any, charged directly to shareholders' equity, unless a decline in market value is considered to be otherthan temporary, in which event, the Company recognizes a loss.

The Insurance Company is subject to Regulation 130 adopted and promulgated by the New York State Insurance Department ("NYSID").  Under this Regulation, the Insurance Company's ownership of below investment grade debt securities is limited to 20.0% of totaladmitted assets, as calculated under statutory accounting practices.  As of September 30, 2003 and December 31, 2002, approximately 7.4% and 7.9%, respectively, of the Insurance Company's total admitted assets were invested in below investment grade debtsecurities.

The Company maintains a portfolio, which includes below investment grade fixed maturity debt securities, which were purchased to achieve a more favorable investment yield, all of which are classified as available for sale and reported at fair value. As ofSeptember 30, 2003 and December 31, 2002, the carrying value of these securities was approximately $220.4 million and $223.8 million, respectively, (representing approximately 4.9% and 5.0% of the Company's total assets and 45.8% and 56.1%, respectively, ofshareholders' equity).

Investments in below investment grade securities have different risks than investments in corporate debt securities rated investment grade.  Risk of loss upon default by the borrower is significantly greater with respect to below investment grade securitiesthan with other corporate debt securities because below investment grade securities generally are unsecured and often are subordinated to other creditors of the issuer.  Also, issuers of below investment grade securities usually have high levels of indebtednessand often are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than are investment grade issuers.  Typically, there is only a thinly traded market for such securities and recent market quotations may not be availablefor some of these securities.  Market quotes generally are available only from a limited number of dealers and may not represent firm bids of such dealers or prices for actual sales.  The Company attempts to reduce the overall risk in its below investmentgrade portfolio, as in all of its investments, through careful credit analysis, investment policy limitations, and diversification by company and by industry.

As of September 30, 2003, approximately 7.7% of the Company's total invested assets were invested in limited partnerships.  Such investments are included in the Company's consolidated balance sheet under the heading "Other invested assets."  See "Note 2to the Notes to Consolidated Financial Statements."  The Company is committed, if called upon during a specified period, to contribute an aggregate of approximately $102.7 million of additional capital to certain of these limited partnerships. However,management does not expect the entire amount to be drawn down as certain of these limited partnerships are nearing the end of the period during which investors are required to make contributions. $9.3 million in commitments will expire in 2003, $17.7 million in 2004,$23.0 in 2005, $23.6 in 2006, $29.1

          19.

in 2007.  Pursuant to NYSID regulations, the Company's investments in equity securities, including limited partnership interests, may not exceed 20% of the Company's total invested assets.  The Company may make selective investments in additional limitedpartnerships as opportunities arise.  In general, risks associated with such limited partnerships include those related to their underlying investments (i.e., equity securities, debt securities and real estate), plus a level of illiquidity, which is mitigated bythe ability of the Company to take annual distributions of partnership earnings.  There can be no assurance that the Company will continue to achieve the same level of returns on its investments in limited partnerships as it has historically or that the Companywill achieve any returns on such investments at all.  Further, there can be no assurance that the Company will receive a return of all or any portion of its current or future capital investments in limited partnerships.  The failure of the Company toreceive the return of a material portion of its capital investments in limited partnerships, or to achieve historic levels of return on such investments, could have a material adverse effect on the Company's financial condition and results of operations.

As previously discussed, the Company no longer participates in "dollar roll" repurchase agreements.  Amounts outstanding to repurchase securities under such agreements were $0 and $262.5 million at September 30, 2003 and December 31, 2002,respectively. 

All 50 states of the United States, the District of Columbia and Puerto Rico have insurance guaranty fund laws requiring all life insurance companies doing business within the jurisdiction to participate in guaranty associations, which are organized to paycontractual obligations under insurance policies (and certificates issued under group insurance policies) issued by impaired or insolvent life insurance companies.  These associations levy assessments (up to prescribed limits) on all member insurers in aparticular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired or insolvent insurer is engaged.  Some states permit member insurers to recover assessments paid through full orpartial premium tax offsets.  These assessments may be deferred or forgiven under most guaranty laws if they would threaten an insurer's solvency.  The amount of these assessments in prior years has not been material, however, the amount and timing of anyfuture assessment on the Insurance Company under these laws cannot be reasonably estimated and are beyond the control of the Company and the Insurance Company.  Recent failures of substantially larger insurance companies could result in future assessments inmaterial amounts.

           

     **Effects of Inflation and Interest Rate Changes**

Management does not believe that inflation has had a material adverse effect on the Company's consolidated results of operations.  The Company seeks to manage its investment portfolio in part to reduce its exposure to interest rate fluctuations.  Ingeneral, the market value of the Company's fixed maturity portfolio increases or decreases in an inverse relationship with fluctuations in interest rates, and the Company's net investment income increases or decreases in direct relationship with interest ratechanges.  For example, if interest rates decline, the Company's fixed maturity investments generally will increase in market value, while net investment income will decrease as fixed income investments mature or are sold and proceeds are reinvested at thedeclining rates, and vice versa.  Management is aware that prevailing market interest rates frequently shift and, accordingly, the Company has adopted strategies, which are designed to address either an increase or decrease in prevailing rates.  In a risinginterest rate environment, the Company's average cost of funds would be expected to increase over time as it prices its new and renewing annuities to maintain a generally competitive market rate.  Concurrently, the Company would attempt to place new funds ininvestments, which were matched in duration to, and higher yielding than, the liabilities assumed.  Management believes that liquidity necessary to fund withdrawals would be available through income, cash flow, and the Company's cash reserves or from the sale ofshort-term investments. In a declining interest rate environment, the Company's cost of funds would be expected to decrease over time, reflecting lower interest crediting rates on its fixed annuities.  Should increased liquidity be required for withdrawals,management believes that the portion of the Company's investments, which are designated as available

          20.

for sale in the Company’s consolidated balance sheet, could be sold without materially adverse consequences in light of the general strengthening which would be expected in the fixed maturity security market.

Interest rate changes also may have temporary effects on the sale and profitability of the universal life and annuity products offered by the Company. For example, if interest rates rise, competing investments (such as annuity or life insurance products offered bythe Company's competitors, certificates of deposit, mutual funds and similar instruments) may become more attractive to potential purchasers of the Company's products until the Company increases the rates credited to holders of its universal life and annuityproducts. In contrast, as interest rates fall, the Company attempts to lower its credited rates to compensate for the corresponding decline in its net investment income. As a result, changes in interest rates could materially adversely affect the financial conditionand results of operations of the Company depending on the attractiveness of alternative investments available to the Company's customers. In that regard, in the current interest rate environment, the Company has attempted to maintain its credited rates at competitivelevels which are designed to discourage surrenders and which may be considered attractive to purchasers of new annuity products.  In addition, because the level of prevailing interest rates impacts the Company as well as its competition, management does notbelieve that the current interest rate environment has materially affected the Company's competitive position visavis other life insurance companies that emphasize the sale of annuity products.  Notwithstanding the foregoing, if interestrates continue at current levels, there can be no assurance that this segment of the life insurance industry, including the Company, would not experience increased levels of surrenders and reduced sales and thereby be materially adversely affected.

**Recent Accounting Pronouncements**

         

In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets.” SFAS No. 141 requires that all businesscombinations be accounted for under the purchase method only and that certain acquired intangible assets in a business combination be recognized as assets apart from goodwill.  SFAS No. 142 requires that ratable amortization of goodwill be replaced with periodictests of the goodwill's impairment and identifiable intangible assets other that goodwill be amortized over their useful lives. SFAS No. 141 is effective for acquisitions made after June 30, 2001.  The provisions of SFAS No. 142 were effective for fiscal yearsbeginning after December 15, 2001.  Adoption of SFAS 141 and SFAS 142 did not have an impact on the Company's consolidated financial statements.

In October 2001, the FASB issued SFAS No.144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144").  SFAS provides a single model for accounting for long-lived assets to be disposed by superceding SFAS No. 121, Accounting for theImpairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ("SFAS 121"), and the accounting and reporting provisions of Accounting Principles Board Opinion No.30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment ofa Business, and Extraordinary, Unusual and Infrequently occurring Events and Transactions ("APB 30").  Under SFAS 144, discontinued operations are measured at the lower of carrying value or fair value less cost to sell rather than on a net realizable valuebasis.  Future operating losses relating to discontinued operations are also no longer recognized before they occur.  SFAS 144 broadens the definition of a discontinued operation to include a component of an entity (rather than a segment of abusiness.)  SFAS 144 also requires long-lived assets to be disposed of other than by sale to be considered held and used until disposed.  SFAS 144 retains the basic provisions of (i) APB 30 regarding the presentation of discontinued operations in the incomestatement, (ii) SFAS 121 relating to recognition and measurement of impaired long-lived assets classified as held for sale.  SFAS 144 was effective beginning January 1, 2002.  The adoption of SFAS 144 by the Company did not have an impact on the Company'sconsolidated financial statements.

       21.

      In August 2002, the FASB issued SFAS No.146, Accounting for Costs Associated with Exit or Disposal Activities (2SFAS 1462).  The standard requires companies to recognize costs associated with exit or disposalactivities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  Previous accounting guidance was provided by EITF 94-3, 2Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit anActivity (including Certain Costs Incurred in a Restructuring)2. SFAS 146 replaces EITF 94-3. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS 146 did not have animpact on the Company¢s consolidated financial statements.           

      In October 2002, the FASB issued SFAS No.147, Acquisitions of Certain Financial Institutions (2SFAS 1472).  This statement, which provides guidance on the accounting for the acquisition of a financial institution,applies to all acquisitions except those between two or more mutual enterprises. The standard is effective for acquisitions for which the date of acquisition is on or after October 1, 2002. The adoption of SFAS 147 did not have an impact on the Company¢sconsolidated financial statements.

      In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness of Others (2FIN 452).  FIN 45 requiresentities to establish liabilities for certain types of guarantees, and expands financial statement disclosures for others.   Disclosure requirements under FIN 45 are effective for financial statements of annual periods ending after December 15, 2002 and areapplicable to all guarantees issued by the guarantor subject to the provisions of FIN 45.  The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 had no impact on the Company’s consolidated financial statements.

      In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (2FIN 462). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entityif the equity investors in the entity do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all new variable interest entities createdor acquired after January 31, 2003. For variable interest entities entered into prior to February 1, 2003, FIN 46 is effective for the first interim or annual period beginning after June 15, 2003.  In October 2003, the FASB issued FASB Staff Position(“FSP”) FIN 46-6, *Effective Date of FASB Interpretation, No. 46 Consolidation of Variable Interest Entities.* This FSP provides a deferral of interests held by public entities in a variable interest entity or potential variable interest entity untilthe end of the first interim or annual period after December 15, 2003, if (a) the variable interest entity was created before February 1, 2003 and (b) the public entity has not issued financial statements reporting the variable interest entity that was created beforeFebruary 1, 2003, in accordance with FIN 46, other than in the disclosure required by FIN 46. The FSP is effective for financial statements issued after October 9, 2003. The adoption of FIN 46 for variable entities created after February 1, 2003 did not have animpact on the consolidated financial statement of the company as of September 30, 2003. Management does not expect the adoption of the provision of FSP FIN 46-6 to have a material impact on the Company’s consolidated financial statements.

     

     In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 149, **Amendment of Statement 133 on DerivativeInstruments and Hedging Activities. Statement No. 149 amends Statement 133for decisions made (1) as part of the Derivatives Implementation Group process that effectively required amendments to Statement 133, (2) in connection with other Board projects dealing with financial instruments, and (3) in connection with implementation issuesraised in relation to the application of the definition of a derivative. The Statement clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative discussed in paragraph 6(b) of Statement 133, clarifies whena derivative contains a financing component, amends the

         22.

definition of an underlying to conform it to language used in FASB Interpretation No.45, **Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of **Indebtedness of Others, and amends certain other existingpronouncements.  Those changes will result in more consistent reporting of contracts as either derivatives or hybrid instruments. This statement is effective for contracts entered into or modified after September 30, 2003 and for hedging relationships designatedafter September 30, 2003. Management does not expect that the adoption of Statement No. 149 to have a material impact on the Company's consolidated financial statements.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 150, **Accounting for Certain Financial Instruments **with Characteristics of Both Liabilities and Equity. Statement No. 150 establishes standardsfor how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. In addition, the Statement requires an issuer to classify certain instruments with specific characteristics described in it as liabilities.This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  The adoption of Statement No. 150 did not an impact onthe Company's consolidated financial statements.

In March 1999, the National Association of Insurance Commissioners (“NAIC”) adopted the Codification of Statutory Accounting Principles (the “Codification”). The Codification, which is intended to standardize regulatory accounting andreporting to state insurance departments, was effective January 1, 2002.  However, statutory accounting principles will continue to be established by individual state laws and permitted practices.  The New York State Insurance Department ("NYSID") requiredadoption of the Codification with certain modifications, for the preparation of statutory financial statements, effective January 1, 2001.  On October 1, 2002 NYSID modified its original adoption of Codification to allow for the recognition of Deferred TaxAssets (2DTA2) and Deferred Tax Liabilities (2DTL2), with certain restrictions.  This change allowed the Insurance Company to recognize a DTA of approximately $22.4 million at December 31, 2002 for statutory reporting purposes. The adoptionof Codification by the NAIC and the Codification as modified by the NYSID, as currently interpreted, did not adversely affect statutory capital and surplus as of September 30, 2003 and December 31, 2002.

          

###### SUMMARY OF CRITICAL ACCOUNTING ESTIMATES

****

**     ** The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (2GAAP2) requires management to adopt accounting policies and make estimates andassumptions that affect amounts reported in the consolidated financial statements.  The critical accounting policies, estimates and related judgments underlying the Company¢s consolidated financial statements are summarized below.  In applying theseaccounting policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain.  Many of these policies, estimates and related judgments are common in the insurance and financial servicesindustries; others are specific to the Company¢s business and operations.

###### INVESTMENTS

     The Company¢s principal investments are in fixed maturities, all of which are exposed to at least one of three primary sources of investment risk: credit, interest rate and market valuation.  The financial statement risks arethose associated with the recognition of impairments and income, as well as the determination of fair values. Management evaluates whether impairments have occurred case-by-case.  Management considers a wide range of factors about the security issuer and usesits best judgment in evaluating the cause and decline in the estimated fair value of the security and in assessing the prospects for near-term recovery.   Inherent in management¢s evaluation of the security are assumptions and estimates about theoperations of the issuer and its future earnings potential.  Considerations used by the Company in the impairment evaluation process include, but are not limited to: (i) the

         23.

length of time and the extent to which the market value has been below amortized cost; (ii) the potential for impairments of securities when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industrysector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments of securities where the issuer, series of issuers or industry has a catastrophic type of loss or has exhausted naturalresources; and (vi) other subjective factors, including concentrations and information obtained from regulators and rating agencies. In addition, the earnings on certain investments are dependent upon market conditions, which could result in prepayments and changesin amounts to be earned due to changing interest rates or equity markets.  The determination of fair values in the absence of quoted market values is based on valuation methodologies, securities the Company deems to be comparable and assumptions deemedappropriate given the circumstances.  The use of different methodologies and assumptions may have a material effect of the estimated fair value amounts.

#### DEFERRED POLICY ACQUISITION COSTS

****

**     ** The ****Company incurs significant costs in connection with acquiring new business. These costs, which vary with and are primarily related to the production of new ****business, are deferred. ****The recovery of suchcosts is dependent upon the future profitability of the related product, which in turn is dependent mainly on investment returns in excess of interest credited, as well as, persistency and expenses.  These factors enter into management¢s estimate of futuregross profits, which generally are used to amortize such costs.  Changes in these estimates result in changes to the amounts expensed in the reporting period in which the revisions are made and could result in the impairment of the deferred acquisition asset anda charge to income if estimated future gross profits are less than amounts deferred.

#### FUTURE POLICY BENEFITS

         The Company establishes liabilities for amounts payable under life and health insurance policies and annuity contracts.  Generally, these amounts are payable over a long period of time and the profitability of theproducts is dependent on the pricing.  Principal assumptions used in pricing policies and in the establishment of liabilities for future policy benefits are investment returns, mortality, expenses and persistency.

**EMPLOYEE BENEFIT PLANS**

****

**        ** The Company sponsors a defined benefit plan covering employees who meet specified eligibility requirements.  The reported expense and liability associated with these plans requires use of assumptions whichinclude the discount rate, expected return on plan assets and rate of future compensation increases as determined by the Company. Management determines these assumptions based upon currently available market and industry data, historical performance of the plans andits assets. The actuarial assumptions used by the Company may differ materially from actual assets due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of the participants.  These differences may have asignificant effect on the Company¢s consolidated financial statements.

         The actuarial assumptions used in the calculation of the Company’s projected benefit obligation include the expected rate of compensation increases of 3.00%, a discount rate of 6.50% and an expected return onassets of 7.50%.  The projected benefit obligation at December 31, 2002 was $8.7 million.

CONTROLS AND PROCEDURES

****

       The Chairman and Chief Executive Officer and the Principal Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of a datewithin 90 days prior to the date of the

filing of this Report, that the Company’s disclosure controls and procedures are effective to

ensure that information required to be disclosed by the Company in reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed,

         24.

summarized and reported within the time periods in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to theCompany’s management, including the Chairman and Chief Executive Officer and the Principal Financial Officer of the Company, as appropriate to allow timely decisions regarding required disclosure.

      There are no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of such evaluation.

        

## PART II ‐ OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time, the Company is involved in litigation relating to claims arising out of its operations in the normal course of business.  As of November 12, 2003, the Company is not a party to any legal proceedings, the adverse outcome of which, inmanagement's opinion, individually or in the aggregate, would have a material adverse effect on the Company's financial condition or results of operations.

Item 2.  Changes in Securities

None

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Submission of Matters to a Vote of Security Holders

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8‐K

a)  Exhibits

None

b)  Reports on Form 8‐K

During the quarter ended September 30, 2003, the Company did not file a current report on Form 8-K.

        25.

PRESIDENTIAL LIFE CORPORATION

November 12, 2003

  SIGNATURES

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

   Presidential Life Corporation   

(Registrant)

Date:  November 12, 2003          /s/ Herbert Kurz                  

Herbert Kurz, President and Duly

Authorized Officer of the Registrant

Date:  November 12, 2003          /s/ Charles J. Snyder            

Charles J. Snyder, Principal

Accounting Officer of the Registrant

        26.

PRESIDENTIAL LIFE CORPORATION

November 12, 2003

SIGNATURES

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

   Presidential Life Corporation  

(Registrant)

Date:  November 12, 2003        /s/Herbert Kurz 

                                   

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

Herbert Kurz, President and Duly

Authorized Officer of the Registrant

Date:  November 12, 2003        /s/ Charles Snyder

                                    

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

                                    Charles J. Snyder, Principal

Accounting Officer of the Registrant

        26.

###                                   Exhibit 99.01

### 

### Certification of Chief Executive Officer

###                         Pursuant to Exchange Act Rule 13a-14

****

I, Herbert Kurz, Chief Executive Officer of Presidential Life Corporation (the 2Company2) certify that:

I have reviewed this quarterly report on Form 10-Q of the Company.;

        2.  Based on my knowledge, this quarterly 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 circumstancesunder which such statements were made, not misleading with respect to the period covered by this quarterly report;

        3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cashflows of the registrant as of, and for, the periods presented in this quarterly 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 registrantand we have:

                   a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, ismade known to us by others within those entities, particularly during the period, which this quarterly 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 quarterly report (the2Evaluation Date2); and 

             c)  presented in this quarterly 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 audit committee of registrant¢s board of directors (or personsperforming 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 reportfinancial 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 quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affectinternal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:November 12, 2003                              /s/Herbert Kurz

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

                                 Herbert Kurz

                               Chief Executive Officer

        27.

### 

### 

###                                                              Exhibit 99.02

### 

### Certification of Principal Financial Officer

       Pursuant to Exchange Act Rule 13a-14

    

I, Charles Snyder, Principal Financial Officer and Treasurer of Presidential Life Corporation (the 2Company2) certify that:

  I have reviewed this quarterly report on Form 10-Q of the Company.;

        2.  Based on my knowledge, this quarterly 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 quarterly report;

        3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cashflows of the registrant as of, and for, the periods presented in this quarterly 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 registrantand we have:

                   a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, ismade known to us by others within those entities, particularly during the period, which this quarterly 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 quarterly report (the2Evaluation Date2); and 

             c) presented in this quarterly 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 personsperforming 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 reportfinancial 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 quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internalcontrols subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:November 12, 2003                      /s/Charles Snyder

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

                 Charles Snyder                      

                                          Treasurer andPrincipal Accounting Officer

        28.

                                                                                            Exhibit 99.03

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Presidential Life Corporation (the "Company") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Herbert Kurz, Chief ExecutiveOfficer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

  

        (1)    Report fully complies with the requirements of section 13(a) or 15(d)                     of the Securities Exchange Act of 1934; and

 The information contained in the Report fairly presents, in all material   respects, the financial condition and result of operations of  the Company.

/s/Herbert Kurz

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

Herbert Kurz

Chief Executive Officer

November 12, 2003

 

 

                                                                                                          29.

Exhibit 99.04

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Presidential Life Corporation (the "Company") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Charles Snyder, Treasurer andPrincipal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

  

        (1)    Report fully complies with the requirements of section 13(a) or 15(d)                     of theSecurities Exchange Act of 1934; and

(2)       The information contained in the Report fairly presents, in all       material respects, the financial condition and result of operations of  the Company.

/s/Charles Snyder

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

Charles Snyder

Treasurer and Principal Accounting Officer

November 12, 2003

        30.