MONY CLOSED BLOCK OF BUSINESS

6 Months Ended

Jun. 30, 2020

In 1998, MONY Life Insurance Company (“MONY”) converted from a mutual insurance company to a stock corporation (“demutualization”). In connection with its demutualization, an accounting mechanism known as a closed block (the “Closed Block”) was established for certain individuals’ participating policies in force as of the date of demutualization. Assets, liabilities, and earnings of the Closed Block are specifically identified to support its participating policyholders. The Company acquired the Closed Block in conjunction with the acquisition of MONY in 2013.

Assets allocated to the Closed Block inure solely to the benefit of each Closed Block’s policyholders and will not revert to the benefit of MONY or the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of MONY’s general account, any of MONY’s separate accounts or any affiliate of MONY without the approval of the Superintendent of The New York State Department of Financial Services (the “Superintendent”). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the general account.

Summarized financial information for the Closed Block as of June 30, 2020 and December 31, 2019 is as follows:


	As of
	June 30, 2020		December 31, 2019
	(Dollars In Thousands)
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$	5,488,114	$	5,836,815
Policyholder dividend obligation	431,327		278,505
Other liabilities	6,952		11,247
Total closed block liabilities	5,926,393		6,126,567
Closed block assets
Fixed maturities, available-for-sale, at fair value	$	4,775,877	$	4,682,731

Commercial mortgage loans	70,151		72,829
Policy loans	641,872		640,134
Cash and other invested assets	49,784		44,877
Other assets	95,613		107,177
Total closed block assets	5,633,297		5,547,748
Excess of reported closed block liabilities over closed block assets	293,096		578,819
Portion of above representing accumulated other comprehensive income:
Net unrealized gains (losses) - investments/derivatives net of policyholder dividend obligation: $(333,775) and $167,285; and net of income tax: $(70,093) and $(35,130)	—		—
Future earnings to be recognized from closed block assets and closed block liabilities	$	293,096	$	578,819

Reconciliation of the policyholder dividend obligation is as follows:


	For The Six Months Ended June 30,
	2020		2019
	(Dollars In Thousands)
Policyholder dividend obligation, beginning balance	$	278,505	$	—
Applicable to net revenue (losses)	(13,668)		(15,953)
Change in net unrealized gains (losses) - investments/derivatives allocated to the policyholder dividend obligation	166,490		189,100
Policyholder dividend obligation, ending balance	$	431,327	$	173,147

Closed Block revenues and expenses were as follows:


	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2020		2019		2020		2019
	(Dollars In Thousands)
Revenues
Premiums and other income	$	37,926	$	40,105	$	73,260	$	77,549
Net investment income	51,038		51,663		102,053		102,791
Net gains (losses) - investments/derivatives	(859)		43		(784)		(411)
Total revenues	88,105		91,811		174,529		179,929
Benefits and other deductions
Benefits and settlement expenses	84,084		87,213		161,677		165,879
Other operating expenses	270		247		594		606
Total benefits and other deductions	84,354		87,460		162,271		166,485
Net revenues before income taxes	3,751		4,351		12,258		13,444
Income tax expense	385		913		2,153		2,823
Net revenues	$	3,366	$	3,438	$	10,105	$	10,621