NYLIAC MFA SEPARATE ACCOUNT I

497 1 d655333d497.htm NYLIAC MFA SEPARATE ACCOUNT I NYLIAC MFA SEPARATE ACCOUNT I

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the shareholder reports of the funds described herein will no longer be sent by mail, unless you specifically request paper copies of the reports from the Cleveland Service Center or the Dallas Service Center, as applicable. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from NYLIAC electronically by contacting the Cleveland Service Center or the Dallas Service Center, as applicable.

You may elect to receive all future reports in paper free of charge. You can inform NYLIAC that you wish to continue receiving paper copies of your shareholder reports by contacting the Cleveland Service Center or the Dallas Service Center, as applicable. Your election to receive reports in paper will apply to all funds described herein.

PROSPECTUS DATED May 1, 2019

NYLIAC MFA SEPARATE ACCOUNT I

NYLIAC MFA SEPARATE ACCOUNT II

PROSPECTUS

for the

FACILITATOR^®*

MULTI-FUNDED RETIREMENT ANNUITY POLICIES

Issued By

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A Delaware Corporation)

51 Madison Avenue, New York, New York 10010

This prospectus describes the multi-funded retirement annuity policies which New York Life Insurance and Annuity Corporation (“NYLIAC”) issues. We designed the policies primarily to assist individuals with their long-term retirement planning or other long-term needs.

This prospectus describes two types of policies: a single premium policy and a flexible premium policy. We have discontinued sales of both types of policies. However, we will still accept purchase payments under outstanding policies. We will allocate purchase payments to NYLIAC MFA Separate Account I for both types of policies issued under plans that qualify for special federal income tax treatment. We will allocate purchase payments to the NYLIAC MFA Separate Account II for both types of policies issued under plans that do not qualify for special federal income tax treatment.

Prior to the date your income payments begin, you may direct that purchase payments accumulate on a fixed basis. When you decide to start receiving income payments from a policy issued in connection with an employee plan that qualifies for special federal income tax treatment, you may receive them on a fixed basis. For a policy that is not issued in connection with an employee retirement plan that qualifies for special federal income tax treatment, you may also receive income payments on a fixed basis. You also have significant flexibility in determining the frequency and amount of each purchase payment and the date income payments begin. You can withdraw money from your policy before income payments begin. In certain circumstances, withdrawals may be subject to a surrender charge and penalty tax.

Both separate accounts invest their assets in shares of the MainStay VP Funds Trust (the “Fund”). The Fund offers three separate portfolios available for investment under your policy: MainStay VP MacKay Common Stock—Initial Class (formerly MainStay VP Common Stock—Initial Class), MainStay VP Bond—Initial Class and MainStay VP U.S. Government Money Market—Initial Class (the “Eligible Portfolios” or the “Portfolios”). Each Investment Division of the separate accounts invests in shares of a corresponding fund portfolio. Your policy’s value will vary in accordance with the investment performance of the Portfolios you select. You also bear the entire investment risk for any amounts allocated to the separate accounts.

You should read this prospectus carefully and keep it for future reference. To learn more about the policies, you can obtain a copy of the Statement of Additional Information (“SAI”) dated May 1, 2019. The SAI has been filed with the Securities and Exchange Commission and is incorporated by reference into this prospectus. The table of contents for the SAI appears at the end of this prospectus. For a free copy of the SAI, you should call the Service Center that services

your policy. The Facilitator Prospectus and Statement of Additional Information are also posted on our website, www.newyorklife.com. We have listed the phone numbers for our Service Centers on page 10 of this Prospectus. The SEC maintains a website (http://www.sec.gov) that contains the SAI and other information that is filed electronically with the SEC.

The SEC has not approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The policies involve risks, including potential loss of principal invested. The policies are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not federally insured by the FDIC, the Federal Reserve Board, or any other agency.

*	Facilitator^® is NYLIAC’S registered service mark for the policies and is not meant to connote performance.

TABLE OF CONTENTS


	Page
DEFINITIONS		4
POLICYOWNER AND FUND EXPENSES		6
QUESTIONS AND ANSWERS ABOUT THE FACILITATOR		8
How Do I Contact NYLIAC?		12
FINANCIAL STATEMENTS		14
CONDENSED FINANCIAL INFORMATION		15
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION AND THE SEPARATE ACCOUNT		19
New York Life Insurance and Annuity Corporation		19
The Separate Account		19
The Portfolios		19
Additions, Deletions, or Substitutions of Investments		20
Reinvestment		21
THE POLICIES		21
Purpose of Policies		21
Purchase Payments		22
Tax-Free Section 1035 Exchanges		22
Payments Returned for Insufficient Funds		22
Total Disability Benefit Rider		23
Transfers		23
Limits on Transfers		23
Speculative Investing		24
Accumulation Period		24
(a) Crediting of Premium Payments		24
(b) Valuation of Accumulation Units		24
Policyowner Inquiries		25
CHARGES AND DEDUCTIONS		25
Surrender Charges		25
Exceptions to Surrender Charge		26
Other Charges		26
(a) Mortality and Expense Risk Charges		26
(b) Administrative Fee		26
(c) Policy Service Charge		27
(d) Fund Charges		27
Taxes		27
DISTRIBUTIONS UNDER THE POLICY		27
Surrenders and Withdrawals		27
(a) Surrenders		28
(b) Partial Withdrawals		28
(c) Periodic Partial Withdrawals		28
(d) Hardship Withdrawals		28
Cancellations		28
Retirement Date		29
Death Before Retirement Date		29
Income Payments		30
(a) Election of Income Payment Options		30
(b) Fixed Income Payments		30
(c) Other Methods of Payment		31
(d) Proof of Survivorship		31
Delay of Payments		31
Designation of Beneficiary		31
Restrictions Under the Texas Optional Retirement Program		32
Restrictions Under Code Section 403(b)(11)		32
THE FIXED ACCOUNT		32
(a) Interest Crediting		32
(b) Surrender Charges		33
(c) Transfers to Investment Divisions		33
(d) General Matters		33
FEDERAL TAX MATTERS		33
Introduction		33
Taxation of Annuities in General		34
3.8 Percent Tax on Certain Investment Income		35
Partial Section 1035 Exchanges		35
Qualified Policies		35
(a) 403(b) Plans		36
(b) Individual Retirement Annuities		36
(c) Roth Individual Retirement Annuities		37
(d) Deferred Compensation Plans		37
Taxation of Death Benefits		37
DISTRIBUTION AND COMPENSATION ARRANGEMENTS		37
VOTING RIGHTS		38
STATEMENT OF ADDITIONAL INFORMATION		39

This Prospectus is not considered an offering in any state where the sale of the policy cannot lawfully be made. We do not authorize any information or representations regarding the offering other than as described in this Prospectus or in any accompanying supplement to this Prospectus or in any authorized supplemental sales material.

DEFINITIONS

Accumulation Unit—An accounting unit used to calculate the value of a policy prior to the date Income Payments begin. Each Investment Division of the Separate Accounts has a distinct Accumulation Unit value.

Allocation Options—The Investment Divisions of the applicable Separate Account(s) and the Fixed Account.

Annuitant—A person named on the Policy Data Page and whose life determines the duration of Income Payments involving life contingencies, and upon whose death, prior to the date Income Payments are to begin, we pay benefits under the policy.

Beneficiary—The person or entity having the right to receive the death benefit proceeds set forth in the policy. In the event a Beneficiary is not designated, you or your estate is the Beneficiary.

Business Day—Generally, any day on which the New York Stock Exchange (“NYSE”) is open for trading. Our Business Day ends at 4:00 p.m. Eastern Time or the close of regular trading of the NYSE, if earlier.

Code—The Internal Revenue Code of 1986, as amended.

Fixed Account—An account that is credited with a fixed interest rate which NYLIAC declares and is not part of the Separate Accounts.

Fixed Income Payments—Income Payments having a guaranteed amount.

General Office—A New York Life field office.

Good Order—We consider a transaction to be in “Good Order” if it complies generally with our administrative procedures and all relevant laws and regulations, and the required information is complete and correct. We may delay or reject a request if it is not in Good Order. Good Order generally means the actual receipt by us of instructions relating to the requested transaction in writing (or, if permitted, by telephone or electronically), along with all forms and other information or documentation necessary to complete the request. We may, in our sole discretion, determine whether any particular request is in Good Order. If you have any questions, you should contact us or your registered representative before submitting a form or request.

Income Payments—Periodic payments NYLIAC makes to the Payee.

Investment Division (“Division”)—The variable investment options available under your policy. There will be a separate Investment Division in each Separate Account for single and flexible premium policies corresponding to each Eligible Portfolio. Each Investment Division invests exclusively in shares of a specified Eligible Portfolio.

Non-Qualified Policies—Policies that are not available for use by individuals in connection with employee retirement plans intended to qualify for special federal income tax treatment under Sections 403(b), 408, 408A and 457 of the Code. Non-Qualified Policies include policies issued for other retirement plans or arrangements, including plans qualifying under Section 401(a) of the Code.

NYLIAC, we, our or us—New York Life Insurance and Annuity Corporation.

Owner (you, your)—The individual(s) or entity(ies) designated as the Owner in the policy or as subsequently changed after issue, who is entitled to exercise all rights under the policy and upon whose death, prior to the date Income Payments are to begin, we pay benefits under the policy.

Payee—The person designated to receive payments under an Income Payment option. The Payee may be you, the Annuitant, a Beneficiary or any person you designate.

Policy Anniversary—An anniversary of the Policy Date.

Policy Date—The date established when we issue your policy, from which subsequent Policy Years, months, and anniversaries are measured.

Policy Year—A year starting on the Policy Date. Subsequent Policy Years begin on each Policy Anniversary, unless otherwise indicated.

Purchase Date—The Business Day on which we receive and credit a purchase payment under the policy.

Qualified Policies—Policies for use by individuals under employee retirement plans that are intended to qualify for special federal income tax treatment under Sections 403(b), 408, 408A and 457 of the Code. Qualified Policies do not

include policies issued for any other retirement plans or arrangements, including plans qualifying under Section 401(a) of the Code.

Separate Account(s)—NYLIAC MFA Separate Account I and NYLIAC MFA Separate Account II, the segregated asset accounts we established to receive and invest purchase payments under the policies.

Suitability Standards—The criteria used to evaluate whether a recommended transaction, relating to your policy, is suitable for the policyowner.

POLICYOWNER AND FUND EXPENSES

NYLIAC MFA SEPARATE ACCOUNTS

Flexible Premium Policies

(Sales of Flexible Premium Policies were discontinued as of September 1, 1989)


	MainStay VP MacKay Common Stock- Initial Class		MainStay VP Bond- Initial Class		MainStay VP U.S. Government Money Market- Initial Class
Owner Transaction Expenses
Maximum Contingent Deferred Sales Load^(a) (as a % of amount withdrawn)		7.00%		7.00%		7.00%
Annual Policy Service Charge		Lesser of $30 Per Policy or 1% of the Policy’s Value.
Separate Account Annual Expenses
(as a % of average account value)
Mortality and Expense Risk Fees		1.25%		1.25%		1.25%
Administration Fees		0.50%		0.50%		0.50%
Total Separate Account Annual Expenses		1.75%		1.75%		1.75%
MainStay VP Series Fund Annual Expenses
(as a % of the average account value for the fiscal year ended December 31, 2018)
Management Fees		0.54%		0.49%		0.40%
Other Expenses		0.03%		0.04%		0.04%
Total Fund Annual Expenses		0.57%		0.53%		0.44%

(a)	The sales load percentage declines from 7% in the first four Policy Years to 1% in the tenth Policy Year with no charge after the tenth Policy Year. (See “Surrender Charges”)

Please refer to the applicable fund prospectuses for additional information.

The table below will help you understand the various costs and expenses that you will bear directly and indirectly. The table reflects charges and expenses of the Separate Accounts and the Funds. However, the table does not reflect optional charges under the policy, such as the charge for the Total Disability Benefit Rider, which will vary based on a number of factors. Charges and expenses may be higher or lower in future years. For more information on the charges reflected in this table see Charges and Deductions on page 23 and the Fund prospectus which accompanies this prospectus. We may deduct premium taxes from some policies, where premium taxes are imposed by state law.

Examples

You would pay the following expenses on a $10,000 investment, assuming a 5% annual return on assets:

If you surrender your policy at the end of the applicable time period.


	1 year		3 years		5 years		10 years
Common Stock Portfolio – Initial Class	$	962.52	$	1,507.86	$	1,967.96	$	2,876.32
Bond Portfolio – Initial Class	$	957.64	$	1,493.24	$	1,943.40	$	2,824.51
U.S. Government Money Market Portfolio	$	948.85	$	1,466.90	$	1,899.06	$	2,730.58

If you do NOT surrender or annuitize your policy


	1 year		3 years		5 years		10 years
Common Stock Portfolio – Initial Class	$	244.65	$	752.85	$	1,287.34	$	2,747.65
Bond Portfolio – Initial Class	$	239.40	$	737.08	$	1,261.03	$	2,695.17
U.S. Government Money Market Portfolio	$	229.95	$	708.65	$	1,213.55	$	2,600.05

You should not consider these examples to be representations of past or future expenses and the actual expenses that you pay may be greater or less than those shown.

POLICYOWNER AND FUND EXPENSES

NYLIAC MFA SEPARATE ACCOUNTS

Single Premium Policies

(Sales of Single Premium Policies were discontinued as of December 19, 1994)


	MainStay VP MacKay Common Stock- Initial Class			MainStay VP Bond- Initial Class			MainStay VP U.S. Government Money Market- Initial Class
Owner Transaction Expenses
Maximum Contingent Deferred Sales Load^(a) (as a % of amount withdrawn)		7.00	%		7.00	%		7.00	%
Separate Account Annual Expenses (as a % of average account value)
Mortality and Expense Risk Fees		1.25	%		1.25	%		1.25	%
Total Separate Account Annual Expenses		1.25	%		1.25	%		1.25	%
MainStay VP Series Fund Annual Expenses
(as a % of the average account value for the fiscal year ended December 31, 2018)
Management Fees		0.54	%		0.49	%		0.40	%
Other Expenses		0.03	%		0.04	%		0.04	%
Total Fund Annual Expenses		0.57	%		0.53	%		0.44	%

(a)	The sales load percentage declines from 7% in the first Policy Year that a Purchase Payment is made to 1% in the seventh Policy Year with no charge after the seventh Policy Year. (See “Surrender Charges”)

Please refer to the applicable fund prospectuses for additional information.

The table below will help you understand the various costs and expenses that you will bear directly and indirectly. The table reflects charges and expenses of the Separate Account and the Funds. However, the table does not reflect optional charges under the policy. Charges and expenses may be higher or lower in future years. For more information on the charges reflected in this table see Charges and Deductions on page 23 and the Fund prospectus which accompanies this prospectus. We may deduct premium taxes from some policies, where premium taxes are imposed by state law.

Examples

You would pay the following expenses on a $10,000 investment, assuming a 5% annual return on assets:

If you surrender your policy at the end of the applicable time period.


	1 year		3 years		5 years		10 years
Common Stock Portfolio – Initial Class	$	843.70	$	1,088.87	$	1,336.99	$	2,210.76
Bond Portfolio – Initial Class	$	838.82	$	1,073.71	$	1,310.94	$	2,155.57
U.S. Government Money Market Portfolio	$	830.03	$	1,046.39	$	1,263.91	$	2,055.52

If you do NOT surrender or annuitize your policy


	1 year		3 years		5 years		10 years
Common Stock Portfolio – Initial Class	$	192.15	$	594.38	$	1,021.75	$	2,210.76
Bond Portfolio – Initial Class	$	186.90	$	578.44	$	994.88	$	2,155.57
U.S. Government Money Market Portfolio	$	177.45	$	549.71	$	946.36	$	2,055.52

You should not consider these examples to be representations of past or future expenses and the actual expenses that you pay may be greater or less than those shown.

QUESTIONS AND ANSWERS ABOUT THE FACILITATOR^®

NOTE: The following section contains brief questions and answers about the Facilitator. You should refer to the body of this prospectus for more detailed information.

1. What is the Facilitator?

Facilitator is the name of the Multi-Funded Retirement Annuity policies offered by NYLIAC. These policies may be either single premium or flexible premium policies. (See “The Policies”). Depending upon the type of policy (single premium or flexible premium) and its purpose (Qualified or Non-Qualified), you may allocate purchase payments to one or more of the Investment Divisions of each of the Separate Accounts and the Fixed Account. The Separate Accounts in turn invest in shares of the Fund. The policy’s value will fluctuate according to the performance of the Investment Divisions selected.

2. What is a retirement annuity and why may benefits vary?

A retirement annuity provides payments for the life of an Annuitant (or an Annuitant and another person, the “Joint Annuitant”) with a guaranteed number of Income Payments or for a set dollar amount. In this prospectus, we refer to annuity payments which remain the same throughout the payment period as “Fixed Income Payments”. Fixed Income Payments will always be the same specified amount. (See “Income Payments”.)

3. What are the available Allocation Options?

You can allocate your purchase payments to one or more of the following Allocation Options:

(a)

Separate Accounts

Each of the Separate Accounts consists of three Investment Divisions for single premium policies and three for flexible premium policies.

The Investment Divisions of the Separate Accounts invest exclusively in shares of the Fund. The Fund is a diversified, open-end management investment company. The three Investment Divisions and their corresponding Eligible Portfolios are as follows:


Investment Division		Corresponding Eligible Portfolio
MainStay VP MacKay Common Stock - Initial Class		MainStay VP MacKay Common Stock - Initial Class
MainStay VP Bond - Initial Class		MainStay VP Bond - Initial Class
MainStay VP U.S. Government Money Market - Initial Class		MainStay VP U.S. Government Money Market - Initial Class

When you allocate a purchase payment to one of the Investment Divisions, the Separate Account will invest your payment exclusively in shares of the corresponding Eligible Portfolio of the Fund.

(b)

Fixed Account

Purchase Payments allocated to the Fixed Account will reflect a fixed interest rate. (See “The Fixed Account”)

4. Can amounts be transferred among the Allocation Options?

You can transfer all or part of your Accumulation Unit value between Investment Divisions or from the Investment Divisions to the Fixed Account any time prior to 30 days before the date Income Payments are scheduled to begin. The minimum amount you can transfer generally is $1,000 for single premium policies or $500 for flexible premium policies. We reserve the right to limit the number of transfers to no more than four in any one Policy Year. (See “Transfers”)

You may also make transfers from the Fixed Account to the Investment Divisions, but only in certain situations. (See “The Fixed Account”)

5. What charges are assessed against the policy?

The policies are also subject to a daily charge for certain mortality and expense risks NYLIAC assumes (“M&E Charge”). This charge is equal, on an annual basis, to 1.25% of the daily net asset value of the applicable Separate Account. (See “Other Charges”)

For single premium policies, there is no annual charge for policy services or daily charges for administrative services.

For flexible premium policies, we will deduct an annual charge for policy services once each year on the Policy Anniversary if on that date the total cash value is below $10,000. This charge will be the lesser of $30 or 1% of the policy’s value at the end of the Policy Year. In addition, we will deduct a daily charge for administrative services equal to 0.50%, on an annual basis, of the daily asset value of the applicable Separate Account. (See “Other Charges”)

We also impose a surrender charge on partial withdrawals or surrenders of the policies. This charge is assessed as a percentage of the amount withdrawn or surrendered. For single premium policies, we keep track of each purchase payment and assess a charge based on the length of time such payment is in your policy before it is withdrawn. You may make up to four additional purchase payments each Policy Year on a single premium policy. The surrender charge is 7% of the amount withdrawn or surrendered during the first Policy Year that a purchase payment is in your policy. The surrender charge declines 1% for each additional Policy Year that a purchase payment is in your policy, as shown in the following chart:


Policy Year of Purchase Payment		Surrender Charge
1		7%
2		6%
3		5%
4		4%
5		3%
6		2%
7		1%
8 and later		0%

For purposes of calculating the surrender charge, we treat withdrawals as coming from the oldest purchase payment first (on a first-in, first-out basis).

For flexible premium policies, the surrender charge is 7% of the amount withdrawn or surrendered during the first four Policy Years. The surrender charge declines 1% for each Policy Year until the tenth Policy Year. There is no charge after the tenth Policy Year, as shown in the following chart:


Policy Year		Surrender Charge
1-4		7%
5		6%
6		5%
7		4%
8		3%
9		2%
10		1%
11 and later		0%

(See “Surrender Charges” at page 23 and “Exceptions to Surrender Charges” at page 24)

Charges will also be deducted for options such as the Total Disability Benefit Rider.

Finally, the value of the Fund shares reflects management fees, administration fees and other expenses deducted from the assets of the Fund. (See the Fund prospectus for details.)

In no event will the aggregate service charge applied under the policy exceed eight and one half percent (8.5%) of the total Premium Payments.

6. What are the minimum and maximum additional purchase payments?

Unless we permit otherwise, additional purchase payments under a Non-Qualified or Qualified single premium policy are limited to a maximum of $8,000 per policy year. The minimum dollar amount per additional purchase payment must be at least $2,000. Payments are only accepted on inforce policies up to age 65. We may limit additional purchase payments to four in any one Policy Year.

For a flexible premium policy, you can make purchase payments of at least $40 each at any time. Payments are only accepted on inforce policies up to age 65. You have a choice of sending purchase payments directly to NYLIAC or through pre-authorized monthly deductions from bank checking accounts and employee payroll deductions. For Non-

Qualified flexible premium policies, the maximum purchase payments we accept in each Policy Year (excluding any amounts for riders) is the greater of (a) twice the purchase payments scheduled to be paid in the first Policy Year, or (b) $7,500. In effect, you set the maximum payment when you apply for the policy. However, you cannot schedule total purchase payments for the first Policy Year that exceed $4,999.

Purchase payments under Qualified flexible premium policies, and purchase payments and subsequent purchase payments under Qualified single premium policies, may not be more than the amount permitted by law for the plan.

Acceptance of subsequent premium payments is subject to our Suitability Standards.

7. How are purchase payments allocated among the Allocation Options?

When you make a purchase payment, you may allocate it to any of the Allocation Options (except in New York where the MainStay VP MacKay Common Stock—Initial Class Investment Division is not available for Non-Qualified Policies.) You do not need to make allocations to each Allocation Option. You may also raise or lower the percentages (which must be in whole number percentages) that you allocate to each Allocation Option when you make a purchase payment. The minimum amount which you can allocate to any one Investment Division or the Fixed Account is $1,000 for a single premium policy and $10 for a flexible premium policy. Acceptance of subsequent premium payments is subject to our Suitability Standards.

8. What happens if purchase payments for a flexible premium policy are not made?

If we do not receive a purchase payment for a period of two years and both (a) the total purchase payments for the policy, less any partial withdrawals and any surrender charges, and (b) the policy’s value, are less than $2,000, we reserve the right to terminate the policy. We will notify you in your annual report of our intention to exercise this right on the 90th day following that Policy Anniversary if we do not receive a purchase payment from you before the end of that 90-day period. If we terminate your policy, we will pay you the policy’s value in one lump sum.

9. Can I withdraw money from the policy before my Income Payments are scheduled to begin?

You may make withdrawals from your policy before your Income Payments are scheduled to begin and while the Annuitant is alive. Your withdrawal requests must be in Good Order before we will process it. Under most circumstances, the minimum partial withdrawal is $100. Withdrawals may be subject to a surrender charge. In addition, you may have to pay income tax and if you are under age 59¹⁄₂, a 10% penalty tax may apply. (See “DISTRIBUTIONS UNDER THE POLICY” and “FEDERAL TAX MATTERS””)

10. How will Income Payments be made?

Income Payments under Qualified Policies and Non-Qualified Policies can be received on a fixed basis. Fixed Income Payments will always be in the same specified amount. (See “Income Payments”)

11. What if the Annuitant became totally disabled?

If you have a Total Disability Benefit rider included in your flexible premium policy, we will credit benefit amounts as purchase payments to your policy during the period of the Annuitant’s total disability. There is an additional charge for this rider. (See “Total Disability Benefit Rider”)

12. What happens if the Annuitant dies before Income Payments begin?

If the Annuitant dies before Income Payments begin, we will pay the Beneficiary under the policy an amount equal to the greater of:

(a)

the policy’s value as of the day we receive a claim form in Good Order, or

(b)

the total of all purchase payments made, less any partial withdrawals, surrender charges, and premium amounts paid for riders.

However, if you are the Annuitant and your spouse is the Beneficiary and Contingent Annuitant, see Questions & Answers 13 & 14. (Also see “DISTRIBUTIONS UNDER THE POLICY—Death Before Retirement Date” and “FEDERAL TAX MATTERS”)

13. What happens if I die before Income Payments begin?

In the event you or the Annuitant dies before Income Payment begins, we will pay the Beneficiary(ies) under the policy an amount equal to the greater of:

(a)

the policy’s value; or

(b)

the total of all purchase payments made, less any partial withdrawals, surrender charges, and premium amounts paid for riders.

If you are not the Annuitant but your spouse is the sole primary Beneficiary of the Policy, or if your spouse or the Annuitant’s spouse is the Beneficiary and Contingent Annuitant, we can pay the proceeds to the surviving spouse (as defined under Federal law) on your death prior to the date Income Payments are scheduled to begin. The surviving spouse (as defined under Federal law) can also choose to continue as the new Owner. (See “DISTRIBUTIONS UNDER THE POLICY—Death Before Retirement Date” and “FEDERAL TAX MATTERS”)

14. What is a Contingent Annuitant?

Previously, in the application for a Non-Qualified Policy, you could name a Contingent Annuitant. The Contingent Annuitant, who generally must be the spouse of the Annuitant, is the person who becomes the new Annuitant at the death of the Annuitant if (a) Income Payments have not begun and (b) you are still living. Currently, the policies do not provide for the naming of Contingent Annuitants.

15. What about voting rights?

You can instruct NYLIAC how to vote shares of the Funds in which you have a voting interest through the Separate Accounts. (See “Voting Rights”)

16. How is the past investment performance of the Separate Accounts calculated?

We may advertise yields and total returns for the Investment Divisions. In addition, we may advertise the effective yield of the MainStay VP U.S. Government Money Market—Initial Class Investment Division. We base these figures on historical information for various periods of time measured from the date the Investment Division commenced operations. They are not intended to indicate future performance.

Yields. The yield of the MainStay VP U.S. Government Money Market—Initial Class Investment Division refers to the annualized income generated by an investment in that Investment Division over a specified seven-day period. We calculate the yield by assuming that the income generated for that seven-day period is generated each seven-day period over a 52-week period. The current yield is shown as a percentage of the investment. We calculate the effective yield similarly but, when annualized, we assume the income earned by an investment in the MainStay VP U.S. Government Money Market—Initial Class Investment Division is reinvested. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment.

The yield of a MainStay VP Bond—Initial Class Investment Division refers to the annualized income generated by an investment in that Investment Division over a specified thirty-day period. We calculate the yield by assuming that the income generated by the investment during that thirty-day period is generated each thirty-day period over a 12-month period. The current yield is shown as a percentage of the investment.

The yield calculations do not reflect the effect of any surrender charge that may be applicable to a particular policy. To the extent that the surrender charge is applicable to a particular policy, the yield of that policy will be reduced. For additional information regarding the yield calculations, please refer to the SAI.

Total Return Calculations. The total return of a MainStay VP Bond—Initial Class or MainStay VP MacKay Common Stock—Initial Class Investment Division refers to return quotations assuming an investment has been held in the MainStay VP Bond—Initial Class or MainStay VP MacKay Common Stock—Initial Class Investment Division for various periods of time including, but not limited to, one year, five years, ten years and a period measured from the date the Investment Division commenced operations. The total return quotations will represent the average annual compounded rates of return, assuming an initial investment of $1,000 is surrendered at the end of the periods shown. The figures will reflect all Separate Account and Fund annual expenses.

We may from time to time also calculate average annual total return and cumulative total return for the Investment Divisions that does not reflect the deduction of any surrender charges. We may from time to time also calculate yields, standard total returns, and non-standard total returns for the Portfolios of the MainStay VP Series Fund, Inc. but only if the

performance data for the Portfolios is accompanied by comparable data for the corresponding Investment Division in equal prominence.

We will show non-standard performance data only if the standard performance data for the same period, as well as for the required periods, are also shown. For additional information regarding the calculation of other performance data, please refer to the SAI.

17. How do I contact NYLIAC?

For general inquiries and written requests, you can contact your agent or the Service Center that services your policy. The Service Center for your policy is listed on your quarterly or confirmation statements. Policy information is also available through the online service on the Internet at www.newyorklife.com.


Service Center	Address	Phone Number

Cleveland Service Center	Regular Mail New York Life Cleveland Service Center P.O. Box 6916 Cleveland, OH 44101-1916 Attn: Annuity Service Team Overnight Mail New York Life Cleveland Service Center 200 Public Square, Suite 500 Cleveland, OH 44114-2316 Attn: Annuity Service Team	(800) 695-9873

Dallas Service Center Death Claim forms may also be submitted to this address	Regular Mail New York Life Dallas Service Center P.O. Box 130539 Dallas, TX 75313-0539 Attn: Annuity Service Team Overnight Mail New York Life Dallas Service Center Two Energy Square 4849 Greenville Avenue, Suite 700 Dallas, TX 75206 Attn: Annuity Service Team	(800) 695-1314

We may choose to accept forms you have completed that your registered representative or your local General Office transmits to us electronically via our internal secured network. We will accept electronically-transmitted service forms only. For information on how to initiate a transfer between investment divisions, or request a withdrawal, please refer to “THE POLICIES — Transfers” or “DISTRIBUTIONS UNDER THE POLICY — Partial Withdrawals”.

Faxed and e-mailed requests are not currently accepted, however, we reserve the right to accept them at our discretion. Please note that you must send any remitted purchase payments to the address noted on your remittance coupon. We do not accept overnight mail at this address. All other purchase payments must be sent to one of the addresses noted in Question 18.

Online service enables you to sign-up to receive future prospectuses and annual and semi-annual reports electronically for your Policy online at www.newyorklife.com. Electronic delivery is not available for policies that are owned by corporations, trusts or organizations at this time.

18. Where do I send subsequent premium payments?

Subsequent premium payments should be sent to one of the following addresses:


Regular Mail		NYLIAC P.O. Box 742545 Cincinnati, OH 45274-2545

Express Mail		NYLIAC 8120 Penn Avenue South Suite 300 Bloomington, MN 55431

If in Good Order, subsequent premium payments will be credited as of the close of the Business Day on which they are received at one of the addresses noted in this question 18.

Acceptance of subsequent premium payments is subject to our Suitability Standards.

FINANCIAL STATEMENTS

The statutory statements of financial position of NYLIAC as of December 31, 2018 and 2017, and the related statutory statements of operations, of changes in capital and surplus, and of cash flows for each of the three years in the period ended December 31, 2018 (including the report of the independent registered public accounting firm) and each Separate Account’s statement of assets and liabilities as of December 31, 2018, and the statements of operations and of changes in net assets and the financial highlights for each of the periods indicated in the Financial Statements (including the report of the independent registered public accounting firm) are included in the SAI. The independent registered public accounting firm is PricewaterhouseCoopers LLP.

CONDENSED FINANCIAL INFORMATION

The following Accumulation Unit values and the number of Accumulation Units outstanding for each Investment Division for the fiscal years ended December 31 presented below are derived from the financial statements audited by PricewaterhouseCoopers LLP, independent registered public accounting firm. Values and units shown are for full year periods beginning January 1 except where indicated. You should read this information in conjunction with the Separate Account’s audited financial statements and related notes that are included in the Statement of Additional Information.


	Single Premium Policies
	Accumulation unit value				Number of accumulation units
Separate Account I	Beginning of period		End of period		Number of accumulation units
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
2018		63.99		62.56		50
2017		62.39		63.99		56
2016		61.02		62.39		72
2015		61.65		61.02		78
2014		58.99		61.65		90
2013		60.84		58.99		101
2012		58.87		60.84		112
2011		55.58		58.87		127
2010		52.18		55.58		145
2009		49.03		52.18		164
MainStay VP MacKay Common Stock – Initial Class
2018		158.50		147.37		116
2017		130.65		158.50		129
2016		121.24		130.65		151
2015		121.72		121.24		165
2014		107.61		121.72		186
2013		80.32		107.61		204
2012		69.69		80.32		229
2011		69.47		69.69		270
2010		62.47		69.47		308
2009		51.68		62.47		350
MainStay VP U.S. Government Money Market – Initial Class
2018		22.60		22.63		8
2017		22.79		22.60		9
2016		23.07		22.79		11
2015		23.36		23.07		20
2014		23.65		23.36		24
2013		23.94		23.65		26
2012		24.24		23.94		30
2011		24.55		24.24		34
2010		24.86		24.55		37
2009		25.15		24.86		44


	Flexible Premium Policies
	Accumulation unit value				Number of accumulation units
Separate Account I	Beginning of period		End of period		Number of accumulation units
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
2018		53.99		52.51		196
2017		52.90		53.99		216
2016		52.00		52.90		243
2015		52.80		52.00		273
2014		50.77		52.80		305
2013		52.63		50.77		337
2012		51.17		52.63		369
2011		48.56		51.17		409
2010		45.82		48.56		455
2009		43.27		45.82		492
MainStay VP MacKay Common Stock – Initial Class
2018		133.72		123.71		408
2017		110.78		133.72		449
2016		103.31		110.78		502
2015		104.24		103.31		571
2014		92.62		104.24		634
2013		69.48		92.62		693
2012		60.58		69.48		769
2011		60.70		60.58		875
2010		54.85		60.70		977
2009		45.61		54.85		1,105
MainStay VP U.S. Government Money Market – Initial Class
2018		19.07		18.99		26
2017		19.32		19.07		28
2016		19.65		19.32		33
2015		20.00		19.65		38
2014		20.35		20.00		43
2013		20.71		20.35		45
2012		21.07		20.71		52
2011		21.45		21.07		63
2010		21.83		21.45		77
2009		22.20		21.83		92

CONDENSED FINANCIAL INFORMATION


	Single Premium Policies
	Accumulation unit value				Number of accumulation units
Separate Account II	Beginning of period		End of period		Number of accumulation units
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
2018		64.23		62.79		84
2017		62.63		64.23		96
2016		61.25		62.63		113
2015		61.89		61.25		127
2014		59.22		61.89		141
2013		61.07		59.22		162
2012		59.09		61.07		185
2011		55.79		59.09		208
2010		52.38		55.79		248
2009		49.21		52.38		297
MainStay VP MacKay Common Stock – Initial Class
2018		158.50		147.37		163
2017		130.66		158.50		175
2016		121.24		130.66		212
2015		121.72		121.24		230
2014		107.61		121.72		251
2013		80.32		107.61		272
2012		69.69		80.32		309
2011		69.47		69.69		338
2010		62.47		69.47		398
2009		51.68		62.47		480
MainStay VP U.S. Government Money Market – Initial Class
2018		22.60		22.63		8
2017		22.79		22.60		9
2016		23.07		22.79		12
2015		23.36		23.07		15
2014		23.65		23.36		20
2013		23.94		23.65		27
2012		24.24		23.94		30
2011		24.55		24.24		38
2010		24.86		24.55		37
2009		25.16		24.86		48


	Flexible Premium Policies
	Accumulation unit value				Number of accumulation units
Separate Account II	Beginning of period		End of period		Number of accumulation units
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
2018		54.07		52.60		25
2017		52.98		54.07		27
2016		52.08		52.98		33
2015		52.88		52.08		36
2014		50.85		52.88		39
2013		52.71		50.85		45
2012		51.25		52.71		49
2011		48.63		51.25		54
2010		45.89		48.63		58
2009		43.33		45.89		62
MainStay VP MacKay Common Stock – Initial Class
2018		133.72		123.71		51
2017		110.78		133.72		56
2016		103.31		110.78		66
2015		104.24		103.31		71
2014		92.62		104.24		79
2013		69.48		92.62		85
2012		60.58		69.48		93
2011		60.70		60.58		101
2010		54.85		60.70		112
2009		45.61		54.85		125
MainStay VP U.S. Government Money Market – Initial Class
2018		19.07		18.99		3
2017		19.32		19.07		4
2016		19.65		19.32		5
2015		20.00		19.65		5
2014		20.35		20.00		6
2013		20.71		20.35		6
2012		21.07		20.71		6
2011		21.45		21.07		8
2010		21.83		21.45		9
2009		22.20		21.83		14

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION AND THE SEPARATE ACCOUNTS

New York Life Insurance and Annuity Corporation

New York Life Insurance and Annuity Corporation (“NYLIAC”) is a stock life insurance company incorporated in Delaware in 1980. NYLIAC is licensed to sell life, accident and health insurance and annuities in the District of Columbia and all states. In addition to the policies we describe in this prospectus, NYLIAC offers life insurance policies and other annuities.

NYLIAC is a wholly-owned subsidiary of New York Life Insurance Company, a mutual life insurance company doing business in New York since 1845. NYLIAC held assets of $158.4 billion at the end of 2018. New York Life Insurance Company has invested in NYLIAC, and will occasionally make additional contributions to NYLIAC to the extent necessary to maintain capital and surplus in accordance with state requirements.

The Separate Accounts

Each of the Separate Accounts was established in May 1983, pursuant to resolutions of the NYLIAC Board of Directors. The Separate Accounts are registered as unit investment trusts with the Securities and Exchange Commission under the Investment Company Act of 1940. The Securities and Exchange Commission, however, does not supervise the management, or the investment practices or policies, of the Separate Accounts.

Although the assets of each of the Separate Accounts belong to NYLIAC, these assets are held separately from our other assets. The Separate Account assets are not chargeable with liabilities incurred in any of NYLIAC’s other business operations (except to the extent that assets in the Separate Accounts exceed the reserves and other liabilities of that Separate Account). The income, capital gains and capital losses incurred on the assets of each Separate Account is credited to or charged against the assets of that Separate Account, without regard to the income, capital gains or capital losses arising out of any other business NYLIAC may conduct. Therefore, the investment performance of the Separate Accounts is entirely independent on both the investment performance of the Fixed Account and any other separate account of NYLIAC.

Each of the Separate Accounts consists of three Investment Divisions for flexible premium policies and three for single premium policies. Premium payments allocated to the Investment Divisions are invested solely in the corresponding Eligible Portfolios of the Fund. The Eligible Portfolios are MainStay VP MacKay Common Stock—Initial Class, MainStay VP Bond—Initial Class and MainStay VP U.S. Government Money Market—Initial Class.

The Portfolios

The assets of each Eligible Portfolio are separate from the others and each such Portfolio has different investment objectives and policies. As a result, each Eligible Portfolio operates as a separate investment fund and the investment performance of one Portfolio has no effect on the investment performance of any other Portfolio. Portfolios described in this prospectus are different from portfolios available to the general public. The funds available directly to the general public may have the same adviser, same name, same investment objectives and policies, and substantially similar portfolio securities, but the investment performance may not be the same.

We offer no assurance that any of the Eligible Portfolios will attain their respective stated objectives.

The Funds also may make their shares available to certain other separate accounts funding variable life insurance policies offered by NYLIAC. This is called “mixed funding”. Although we do not anticipate any inherent difficulties arising from mixed funding, it is theoretically possible that, due to differences in tax treatment or other considerations, the interest of owners of various policies participating in the Fund might at some time be in conflict. The Board of Directors of the Fund, the Fund’s investment advisers, and NYLIAC are required to monitor events to identify any material conflicts that arise from the use of the Fund for mixed funding. For more information about the risks of mixed funding, please refer to the Fund prospectus.

The Funds and Eligible Portfolios offered through this product are selected by NYLIAC based on several criteria, including asset class coverage, the strength of the manager’s reputation and tenure, brand recognition, performance, and the capability and qualification of each sponsoring investment firm. An affiliate of NYLIAC manages the MainStay VP Funds Trust and that was a factor in its selection. Another factor that NYLIAC considers during the selection process is whether the Fund or Eligible Portfolio or an affiliate of the Fund will compensate NYLIAC for providing administrative, marketing, and support services that would otherwise be provided by the Fund, the Fund’s investment adviser, or its distributor.

We may receive payments or compensation from the Funds or their investment advisers, or from other service providers of the Funds (who may be affiliates of NYLIAC) in connection with administration, distribution and other services we provide with respect to the Eligible Portfolios and their availability through the policies. These payments may be derived, in whole or in part, from the advisory fee charged by the Fund and deducted from Fund assets. NYLIAC may use these payments for any corporate purpose, including payment of expenses that NYLIAC and/or its affiliates incur in administering the Policies, and in its role as an intermediary of the funds. Policyowners, through their indirect investment in the Funds, bear the costs of these advisory fees.

The amounts we receive may be substantial, may vary by Eligible Portfolio, and may depend on how much policy value is invested in the particular Eligible Portfolio or Fund. NYLIAC and its affiliates may profit from these payments. Currently, we receive payments or revenue under various arrangements in amounts ranging from 0.15% to 0.25% annually of the aggregate net asset value of the shares of some of the Eligible Portfolios held by the Investment Divisions. The compensation that your Registered Representative receives remains the same regardless of which Investment Divisions you choose or the particular arrangements applicable to those Investment Divisions.

The Eligible Portfolios, along with their investment advisers, are listed in the following table:

FUND

INVESTMENT ADVISERS

ELIGIBLE PORTFOLIOS

MainStay VP Funds Trust

New York Life Investment

Management LLC

Subadviser:

New York Life Investors LLC (“NYL Investors”)

Subadviser: MacKay Shields LLC (“MacKay”)

MainStay VP Bond

MainStay VP U.S. Government Money Market

MainStay VP MacKay Common Stock

Please refer to the attached prospectus of the Fund for a complete description of the Fund, the investment advisers, and the Portfolios. You should read the Fund prospectus before any decision is made concerning the allocation of purchase payments to an Investment Division corresponding to an Eligible Portfolio.

NYLIAC does not provide investment advice and does not recommend or endorse any Eligible Portfolio or Portfolios. NYLIAC is not responsible for choosing the Investment Divisions or the amounts allocated to each. You are responsible for determining that these decisions are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Decisions regarding investment allocations should be carefully considered. You bear the risk of any decline in the value of your policy resulting from the performance of the Portfolios you have chosen.

Investment decisions should be based on a thorough investigation of all the information regarding the Eligible Portfolios that are available to you, including each Fund’s prospectus, statement of additional information, and annual and semi-annual reports. Other sources, such as the Fund’s website or newspapers and financial and other magazines, provide more current information, including information about any regulatory actions or investigations relating to a Fund or Eligible Portfolio. After you select Investment Divisions for your premium, you should monitor and periodically re-evaluate your allocations to determine if they are still appropriate.

Additions, Deletions, or Substitutions of Investments

NYLIAC retains the right, subject to any applicable law, to make additions to, deletions from, or substitutions for, the Eligible Portfolio shares held by any Investment Division. NYLIAC reserves the right to eliminate the shares of any of the Eligible Portfolios and to substitute shares of another portfolio of the Fund, or of another registered open-end management investment company. We may do this if the shares of the Eligible Portfolios are no longer available for investment, or, if we believe, investment in any Eligible Portfolio would become inappropriate in view of the purposes of the Separate Accounts, which is to serve as the funding vehicle for the Policy and certain other variable annuity policies issued by NYLIAC. An investment in an Eligible Portfolio could become inappropriate if, for example, that Eligible Portfolio performs poorly, undergoes a significant management change, or changes its investment objective or investment policies such that they are no longer consistent with the purposes of the policies funded by the Separate Account.

To the extent required by law, substitutions of shares attributable to your interest in an Investment Division will not be made until you have been notified of the change. This does not prevent the Separate Accounts from purchasing other securities for other series or classes of policies, or from processing a conversion between series or classes of policies on the basis of requests made by policyowners.

We may establish additional Investment Divisions for each of the Separate Accounts. Each additional Investment Division will purchase shares in a new portfolio of the Fund or in another mutual fund. We may establish new Investment

Divisions, in our sole discretion, due to marketing, tax, investment, or other conditions. We will make any new Investment Divisions available to existing policyowners on a basis we determine. We may also eliminate one or more Investment Divisions, if, in our sole discretion, marketing, tax, investment or other conditions so warrant.

In the event of any substitution or change, NYLIAC may, by appropriate endorsement, make such changes in the policies to reflect such substitution or change. We also reserve the right to: (a) operate the Separate Account as a management company under the Investment Company Act of 1940, (b) deregister it under such Act in the event such registration is no longer required, (c) combine the Separate Account with one or more other separate accounts, and (d) restrict or eliminate the voting rights of persons having voting rights as to the Separate Accounts, as permitted by law.

Reinvestment

All dividends and capital gain distributions from Eligible Portfolios are automatically reinvested in shares of the distributing Portfolio at their net asset values on the payable date.

THE POLICIES

Purpose of Policies

The policies are variable. This means that to the extent amounts under the policies are allocated to the Investment Divisions, the policy’s value will fluctuate based on the performance of the Investment Divisions you select. NYLIAC does not guarantee the performance of the Separate Accounts or of the Eligible Portfolios, and you bear the entire investment risk with respect to amounts allocated to the Investment Divisions. We provide no assurance that the investment objectives of the Investment Divisions will be achieved. Accordingly, amounts you allocate to the Investment Divisions are subject to the risks inherent in the securities markets and, specifically, to price fluctuations of the shares of the Eligible Portfolio.

As the Owner of the policy, you have the right to (a) change a revocable Beneficiary, (b) name a new Owner (on Non-Qualified Policies only), (c) receive Income Payments, (d) name a payee to receive Income Payments, and (e) transfer funds among the Investment Divisions. You cannot lose these rights. However, all rights of ownership cease upon your death.

We designed the policies described in this prospectus primarily to establish retirement benefits for two types of purchasers.

The first type of purchaser is one, other than those described below, who purchases a policy to provide supplemental retirement income. Policies purchased by these individuals are referred to as “Non-Qualified Policies.”

The current Owner of a Non-Qualified Policy has the right to transfer ownership to another person(s) or entity. To transfer ownership, you must complete our approved “Transfer of Ownership” form in effect at the time of the request. This change will take effect as of the date we receive your signed form in Good Order at the Service Center that services your policy noted in Question 17 of this Prospectus, subject to any payment we made or other action we took before recording the change. Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that becomes the Owner of an existing policy. This means the new Owner(s) will be required to provide their name, address, date of birth, and other identifying information. To complete a transfer of ownership, the new Owner(s) may also be required to submit financial and suitability information.

The second type of purchaser is one who is eligible to participate in, and purchases a policy for use with, any one of the following:

(1)

annuity purchase plans adopted by certain private tax-exempt organizations and certain state-supported educational institutions under certain circumstances under Section 403(b) of the Code, in each case in accordance with the employer’s plan document and/or applicable tax requirements (see FEDERAL TAX MATTERS—Qualified Policies—Important Information Regarding Final Code Section 403(b) Regulations);

(2)

individual retirement annuities (“IRAs”) meeting the requirements of Section 408(b), 408(k), or 408A of the Code; or

(3)

deferred compensation plans with respect to service for state and local governments (and certain other entities), under Section 457 of the Code.

We refer to policies purchased by these individuals for use with these plans as “Qualified Policies.” (See “FEDERAL TAX MATTERS”)

Certain provisions of the policies may be different than the general description in this prospectus, and certain riders and options may not be available, because of legal requirements or restrictions in your state. See your policy for specific variations because any such state variations will be included in your policy or in riders or endorsements attached to your policy. See your Registered Representative or contact us for specific information that may be applicable to your state.

Purchase Payments

For single premium policies, you can make up to four additional purchase payments in any Policy Year. Each additional purchase payment must be at least $2,000. Payments are only accepted on inforce policies up to age 65.

For flexible premium policies, you can make purchase payments of at least $40 each at any time. Payments are only accepted on inforce policies up to age 65. The currently available methods of payment are direct payments to NYLIAC, pre-authorized monthly deductions from bank checking accounts and employee payroll deductions. Although you plan a schedule of purchase payments for Non-Qualified flexible premium policies, you can make purchase payments at any time before the date Income Payments are scheduled to begin and while the Annuitant and the Owner are living. You can increase or decrease your purchase payments at any time as long as the total amount of purchase payments for any Policy Year (excluding any amounts for riders), are not more than the greater of: (a) twice the purchase payments scheduled to be paid in the first Policy Year or (b) $7,500. However, you may not schedule total purchase payments for the first Policy Year that exceed $4,999. Please note that you must send any remitted purchase payments to the address noted on your remittance coupon. We do not accept overnight mail at this address. All other purchase payments must be sent to the Service Center that services your policy as noted in Question 17 of this Prospectus.

For Qualified Policies, the purchase payments made in any Policy Year may not be more than the amount permitted by the plan or law for the plan as indicated in the application for the policy. We reserve the right to limit the dollar amount of any purchase payment.

If we do not receive purchase payments under a flexible premium policy for a period of two Policy Years, and both (a) the total purchase payments made, less any partial withdrawals and any surrender charges, and (b) the policy’s value, are less than $2,000, then we may, in our sole discretion, subject to any applicable state insurance law or regulation, cancel the policy. If we terminate your policy, we will pay you the policy’s value in one lump sum. (See “Cancellations”)

Tax-Free Section 1035 Exchanges

Subject to certain restrictions, you can make a tax-free exchange under Section 1035 of the Code of all or a portion of one annuity contract, or all of a life insurance policy for an annuity contract. Section 1035 also provides that an annuity contract may be exchanged in a tax-free transaction for a long-term care insurance policy. Before making an exchange, you should compare both contracts carefully. Remember that if you exchange a life insurance policy or annuity contract for the Contract described in this prospectus:

•

you might have to pay a withdrawal charge on your previous contract,

•

there may be a new withdrawal charge period for this Contract,

•

other charges under this Contract may be higher (or lower),

•

the benefits may be different,

•

you will no longer have access to any benefits from your previous contract (or the benefits may be different), and

•

access to your cash value following a partial exchange may be subject to tax-related limitations.

If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax, including a 10 percent federal penalty tax, on the exchange. You should not exchange an existing life insurance policy or another annuity contract for this Contract unless you determine that the exchange is in your best interest. New York Life may accept electronically transmitted instructions from your Registered Representative or from another insurance carrier for the purpose of effecting a 1035 exchange. If you contemplate such an exchange, you should consult a tax advisor to discuss the potential tax effects of such a transaction.

Payments Returned for Insufficient Funds

If your premium payment is returned for insufficient funds, we reserve the right to reverse your allocation(s) and charge you a $20.00 fee for each returned payment. In addition, the Fund may also redeem shares to cover any losses it incurs as a result of a returned payment. If a payment is returned for insufficient funds for two consecutive periods, the privilege to pay by check or electronically will be suspended until the Service Center that services your policy receives a written request to reinstate it in Good Order at one of the addresses in Question 17 of this prospectus, and we agree.

Total Disability Benefit Rider

If you applied for and have a Total Disability Benefit Rider included in, and in force under, your flexible premium policy, we will credit a benefit amount as a purchase payment for your policy when you provide proof to us that the Annuitant has been totally disabled for at least 6 consecutive months. We will not credit benefit amounts to the policy after Income Payments begin or, if earlier, after the Policy Anniversary on which the Annuitant is age 65. Currently, we are not offering this rider and the information here and in the Statement of Additional Information relates only to existing riders.

Transfers

You may transfer amounts between Investment Divisions of the same Separate Account or to the Fixed Account, without charge any time prior to 30 days before Income Payments are scheduled to begin. The minimum amount that may be transferred from one Investment Division to another Investment Division, or to the Fixed Account, is the lesser of:

(i)

$1,000 for single premium policies or $500 for flexible premium policies or

(ii)

the total value of the Accumulation Units in the Investment Division.

The remaining Accumulation Units in the Investment Division must have a value of at least $100. If the value of the remaining Accumulation Units in an Investment Division would be less than $100 after you make a transfer, we will transfer the entire value unless we determine otherwise. We limit the number of transfers to four in any one Policy Year. Transfers into the Fixed Account may be subject to restrictions.

Depending on state requirements, you may also make transfers from the Fixed Account to the Investment Divisions in certain situations. (See “The Fixed Account”)

Transfer requests must be in writing in Good Order on a form we provide. We will make transfers from Investment Divisions based on the Accumulation Unit values at the end of the Business Day on which we receive the transfer request at the Service Center that services your policy in Question 17 of this prospectus. (See “DISTRIBUTIONS UNDER THE POLICY—Delay of Payments”) We do not currently accept faxed or e-mailed transfer requests, however, we reserve the right to accept them at our discretion.

Limits on Transfers

Procedures Designed to Limit Potentially Harmful Transfers—This policy is not intended as a vehicle for market timing. Currently, we require that all transfer requests must be submitted in writing through the U.S. mail or an overnight courier and received by the Service Center that services your policy listed in Question 17 of this Prospectus. We limit the number of transfers to no more than four in any one policy year. These requirements are designed to limit potentially harmful transfers.

We may change these limitations or add new ones at any time without prior notice; your policy will be subject to these changes regardless of the issue date of your policy. All transfers are subject to the limits set forth in this Prospectus in effect on the date of the transfer request, regardless of when your policy was issued. Note, also, that any applicable transfer rules, either as indicated above or that we may utilize in the future, will be applied even if we cannot identify any specific harmful effect from any particular transfer.

We apply our limits on transfers procedures to all Owners of this policy without exception.

Orders for the purchase of Fund portfolio shares are subject to acceptance by the relevant Fund. We will reject or reverse, without prior notice, any transfer request into an Investment Division if the purchase of shares in the corresponding Fund portfolio is not accepted by the Fund for any reason. For transfers into multiple Investment Divisions, the entire transfer request will be rejected or reversed if any part of it is not accepted by any one of the Funds. We will provide you with written notice of any transfer request we reject or reverse. You should read the Fund prospectus for more details regarding the Fund portfolios’ ability to refuse or restrict purchases or redemptions of their shares. In addition, a Fund may require us to share specific policyowner transactional data with them, such as taxpayer identification numbers and transfer information.

Risks Associated with Potentially Harmful Transfers—The procedures described herein are designed to limit potentially harmful transfers. However, we cannot guarantee that these procedures will be effective in detecting and preventing all transfer activity that could disadvantage or potentially hurt the rights or interests of other policyowners. The risks described below apply to policyowners and other persons having material rights under the policies.

•

We do not currently impose redemption fees on transfers or expressly limit the size of transfers in a given period. Redemption fees, transfer size limits, and other procedures or restrictions may be more or less successful than our procedures in deterring or preventing potentially harmful transfer activity.

•

Our ability to detect and deter potentially harmful transfer activity may be limited by policy provisions.

•

(1) The underlying fund portfolios may have adopted their own policies and procedures with respect to trading of their respective shares. The prospectus for the underlying fund portfolios, in effect at the time of any trade, describes any such policies and procedures. The trading policies and procedures of an underlying fund portfolio may vary from Ours and be more or less effective at preventing harm. Accordingly, the sole protection you may have against potentially harmful frequent transfers is the protection provided by the procedures described herein.

(2) The purchase and redemption orders received by the underlying fund portfolios reflect the aggregation and netting of multiple orders from owners of this policy and other variable policies issued by us. The nature of these combined orders may limit the underlying fund portfolios’ ability to apply their respective trading policies and procedures. In addition, if an underlying fund portfolio believes that a combined order we submit may reflect one or more transfer requests from owners engaged in potentially harmful transfer activity, the underlying fund portfolio may reject the entire order and thereby prevent us from implementing any transfers that day. We do not generally expect this to happen. Alternatively, Funds may request information on individual policyowner transactions and may impose restrictions on individual policyowner transfer activity.

•

Potentially harmful transfer activity could result in reduced performance results for one or more Investment Divisions, due to among other things:

(1)

an adverse effect on portfolio management, such as:

(a)

impeding a portfolio manager’s ability to sustain an investment objective;

(b)

causing the underlying fund portfolio to maintain a higher level of cash than would otherwise be the case; or

(c)

causing an underlying fund portfolio to liquidate investments prematurely (or at an inopportune time) in order to pay withdrawals or transfers out of the underlying fund portfolio.

(2)

increased administrative and Fund brokerage expenses.

(3)

dilution of the interests of long-term investors in an Investment Division if purchases or redemptions into or out of an underlying fund portfolio are made when, and if, the underlying fund portfolio’s investments do not reflect an accurate value (sometimes referred to as “time-zone arbitrage” and “liquidity arbitrage”).

Speculative Investing

This policy should not have been purchased if you planned to use it, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. Your policy may not be traded on any stock exchange or secondary market. By purchasing this policy you represent and warrant that you are not using this policy, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme.

Accumulation Period

(a) Crediting of purchase payments

You can allocate a portion of each purchase payment to one or more Allocation Options in whole number percentages, except in New York where the MainStay VP MacKay Common Stock—Initial Class Investment Division is not available for Non-Qualified Policies. The minimum amount that you may allocate to any one Allocation Option is $1,000 for a single premium policy and $10 for a flexible premium policy.

We credit that portion of each purchase payment you allocate to an Investment Division to the policy in the form of Accumulation Units. We determine the number of Accumulation Units credited to a policy by dividing the amount allocated to each Investment Division by the Accumulation Unit value for that Investment Division on the Business Day we receive the purchase payment. The value of an Accumulation Unit will vary depending on the investment experience of the Portfolio in which the Investment Division invests. The number of Accumulation Units credited to a policy will not, however, change as a result of any fluctuations in the value of an Accumulation Unit. (See “The Fixed Account” for a description of interest credited thereto.)

(b) Valuation of Accumulation Units

We expect the value of Accumulation Units to increase or decrease from one day to the next. The value of Accumulation Units in each Investment Division will change daily to reflect the investment experience of the corresponding Portfolio as well as the daily deduction of the Separate Account charges (and any charges or credits for taxes). The Statement of Additional Information contains a detailed description of how the Accumulation Units are valued.

Policyowner Inquiries

Your inquiries should be addressed to the Service Center that services your policy. (See Question 17) Faxed and e-mailed requests are not currently accepted, however, we reserve the right to accept them at our discretion. We will confirm all transactions in writing. If you feel that a transaction has been processed incorrectly, it is your responsibility to contact us in writing and provide us with all relevant details. You must provide us with the nature of the error, the date of the error and any other relevant details. You should review your reports and statements carefully and promptly report any errors and discrepancies to us, preferably, within fifteen (15) days of the date of the confirmation with the transaction in question.

CHARGES AND DEDUCTIONS

Surrender Charges

Since no deduction for a sales charge is made from purchase payments, we impose a surrender charge on certain partial withdrawals and surrenders of the policies. We measure the surrender charge as a percentage of the amount withdrawn or surrendered. The surrender charge may apply to certain Income Payment options.

If you surrender your policy, we deduct the surrender charge from the amount paid to you. In the case of a partial withdrawal, we deduct surrender charges from the remaining value of the Allocation Options from which the partial withdrawals are made. If the remaining value in an Allocation Option is less than the necessary surrender charge, we will not process the withdrawal.

For single premium policies, we keep track of each purchase payment and assess a charge based on the length of time such payment is in your policy before it is withdrawn. You may make up to four additional purchase payments each Policy Year on a single premium policy. The surrender charge is 7% of the amount withdrawn or surrendered during the first Policy Year that a purchase payment is in your policy. The surrender charge declines 1% for each additional Policy Year that a purchase payment is in your policy, as shown in the following chart:


Policy Year of Purchase Payment		Surrender Charge
1		7%
2		6%
3		5%
4		4%
5		3%
6		2%
7		1%
8 and later		0%

Under a single premium policy, for purposes of calculating the surrender charge, we treat withdrawals as coming from the value attributable to the oldest purchase payment first (on a first-in, first-out basis). Therefore, surrender charges may apply to any earnings on those purchase payments.

For flexible premium policies, the surrender charge is 7% of the amount withdrawn or surrendered during the first four Policy Years. The surrender charge then declines 1% for each Policy Year until the tenth Policy Year so that there is no charge after the tenth Policy Year, as shown in the following chart:


Policy Year		Surrender Charge
1-4		7%
5		6%
6		5%
7		4%
8		3%
9		2%
10		1%
11 and later		0%

Exceptions to Surrender Charges

We will not assess a surrender charge:

(a)

under a single premium policy, on amounts you withdraw in any one Policy Year that do not exceed 10% of the policy’s value at the beginning of that Policy Year (the amount that may be withdrawn under this exception may be limited by prior transfers from the Fixed Account to the Investment Division) (See “The Fixed Account”);

(b)

when you make a withdrawal or surrender of at least $2,000 and the entire amount is applied under certain Income Payment options in the policy (however, if within seven years after the Policy Date, in the case of single premium policies, or ten years after the Policy Date, in the case of flexible premium policies, any unpaid amount applied under such Income Payment option is withdrawn, a surrender charge will be applied to the amount withdrawn) (See “DISTRIBUTIONS UNDER THE POLICY—Income Payments”);

(c)

if NYLIAC cancels the policy;

(d)

when we pay proceeds upon the death of the policyowner or the Annuitant; and

(e)

if the aggregate surrender charges under a policy will exceed 9.0% of the total purchase payments.

In addition, we will not assess a surrender charge to withdrawals from the Fixed Account in situations described under “The Fixed Account.”

Other Charges

(a) Mortality and Expense Risk Charges

Prior to the date Income Payments are scheduled to begin, NYLIAC imposes risk charges to compensate it for bearing certain mortality and expense risks under the policies. This charge is equal, on an annual basis, to 1.25% of the average daily net asset value of the applicable Separate Account and is deducted daily. We guarantee that these charges will not increase. If these charges are insufficient to cover actual costs and assumed risks, the loss will fall on NYLIAC. We expect to profit from this charge. We may use these proceeds for any corporate purpose, including expenses relating to the sale of the policies, to the extent that surrender charges do not adequately cover sales expenses.

The mortality risk assumed is the risk that Annuitants as a group will live for a longer time than our actuarial tables predict. As a result, we would be paying more Income Payments than we planned. We also assume a risk that the mortality assumptions reflected in our guaranteed annuity payment tables, shown in each policy, will differ from actual mortality experience. Lastly, we assume a mortality risk that, at the time of death, the guaranteed minimum death benefit will exceed the policy’s Accumulation Value. The expense risk assumed is the risk that the cost of issuing and administering the policies will exceed the amount we charge for these services.

(b) Administrative Fee

Prior to the date Income Payments are scheduled to begin for flexible premium policies, we impose an administrative fee to cover the cost of providing policy administrative services. This charge is equal, on an annual basis, to 0.50% of the average daily net asset value of the applicable Separate Account. This charge is intended to offset the additional administrative service expenses of flexible premium policies, including: (i) processing changes in future purchase payment allocations, (ii) providing purchase payment histories and the appropriate unit valuations associated with those purchase payments and (iii) providing policyowners with the more extensive annual notices and other notices required for many flexible premium policies. Larger flexible premium policies may bear a portion of the cost of administering smaller flexible premium policies because the charge deducted for administrative expenses is a percentage of net asset value.

(c) Policy Service Charge

For flexible premium policies, we deduct an annual policy service charge each Policy Year on the Policy Anniversary if on that date the policy’s value is less than $10,000. This charge is the lesser of $30 or 1% of the policy’s value at the end of the Policy Year or on the date of surrender, whichever is applicable.

We deduct the annual policy service charge from each Allocation Option in proportion to its percentage of the policy’s value on the Policy Anniversary. This charge covers the costs for providing services under the policy such as collecting, processing and confirming purchase payments and establishing and maintaining the available methods of payment.

(d) Fund Charges

The value of the assets of the Separate Accounts will indirectly reflect the Fund’s total fees and expenses. The Fund’s total fees and expenses are not part of the policy. They may vary in amount from year to year. These fees and expenses are described in detail in the Fund’s prospectus and/or SAI.

Taxes

NYLIAC may, where premium taxes are imposed by state law, deduct such taxes from your policy either (i) when a surrender or cancellation occurs, or (ii) when Income Payments begin. Applicable premium tax rates depend upon such factors as your current state of residency, and the insurance laws and NYLIAC’s status in states where premium taxes are incurred. Current premium tax rates range from 0% to 3.5%. Applicable premium tax rates are subject to change by legislation, administrative interpretations or judicial acts.

We may in the future seek to amend the policies to deduct premium taxes when a purchase payment is received.

Under present laws, NYLIAC will also incur state and local taxes (in addition to the premium taxes described above) in several states. NYLIAC may assess charges for such taxes.

NYLIAC does not expect to incur any federal income tax liability attributable to investment income or capital gains retained as part of the Separate Account reserves under the policies. (See “FEDERAL TAX MATTERS”) Based upon these expectations, no charge is being made currently for corporate federal income taxes which may be attributable to the Separate Accounts. Such a charge may be made in future years for any federal income taxes NYLIAC incurs.

DISTRIBUTIONS UNDER THE POLICY

Surrenders and Withdrawals

You can make partial withdrawals, periodic partial withdrawals, hardship withdrawals or surrender the policy to receive part or all of the policy’s value, at any time before Income Payments begin and while the Annuitant is living. To request a surrender or withdrawal, you must send a written request in Good Order to the Service Center that services your policy at one of the addresses listed in Question 17 of this prospectus, or utilize any other method we make available. If the request is in Good Order, the amount available for withdrawal is the policy’s value on the Business Day the Service Center that services your policy receives the surrender or withdrawal request (except in the case of periodic partial withdrawals, for which the amount available for withdrawal is the policy’s value on the established periodic partial withdrawal request date), less any surrender charges, any applicable policy fee and any taxes required by law to be deducted. If you have not provided us with a written election not to withhold federal income taxes at the time you make a withdrawal or surrender request, NYLIAC must by law withhold such taxes from the taxable portion of any surrender or withdrawal. We will remit that amount to the federal government. In addition, some states have enacted legislation requiring withholding. We will pay all surrenders or withdrawals within seven days of receipt of all documents in Good Order (including documents necessary to comply with federal and state tax law), in connection with a withdrawal request or of the periodic partial withdrawal request date, subject to postponement in certain circumstances. (See “DISTRIBUTIONS UNDER THE POLICY—Delay of Payments.”)

Since you assume the investment risk with respect to amounts allocated to the Separate Accounts and because certain surrenders or withdrawals are subject to a surrender charge and premium tax deduction, the total amount paid upon surrender of the policy (taking into account any prior withdrawals), may be more or less than the total purchase payments made.

Surrenders and withdrawals may be taxable transactions, and the Code provides that a 10% penalty tax may be imposed on certain early surrenders or withdrawals. (See “FEDERAL TAX MATTERS—Taxation of Annuities in General”) In addition, taxable surrenders and withdrawals may be subject to an additional 3.8 percent tax on net investment income. (See “FEDERAL TAX MATTERS—3.8 Percent Tax on Certain Investment Income.”)

(a) Surrenders

We will deduct a surrender charge and any premium tax required by law, if applicable, from the amount paid. We will pay the proceeds to you in a lump sum unless you elect a different Income Payment method. If your address has been on file with us for less than 15 days, we may require additional verification of your identity, in Good Order, before we will process a request to send surrender proceeds electronically to that bank account or through the mail to that address. For requests to surrender amounts greater than $50,000, we may require a notarized confirmation of the owner(s) signature. (See “DISTRIBUTIONS UNDER THE POLICY—Income Payments.”) Faxed and e-mailed requests are not currently accepted, however, we reserve the right to accept them at our discretion.

(b) Partial Withdrawals

The minimum amount that can be withdrawn is $100. The amount will be withdrawn from the Allocation Options in accordance with your request. Also note that partial withdrawal requests for amounts greater than $50,000 must be received in Good Order and we may require a notarized confirmation of the Owner(s) signature. If your address has been on file with us for less than 30 days, we will either require the request in writing or require additional verification of your identity, in Good Order, before we will process a request to send partial withdrawal proceeds through the mail to that address. In addition, partial withdrawal requests that effected an ownership change within 30 days of such partial withdrawal request must be made in writing and sent to the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus. Faxed and e-mailed requests are not currently accepted, however, we reserve the right to accept them at our discretion.

If a requested partial withdrawal is equal to the value in the Allocation Option from which you make the withdrawal, we will pay the entire value of that Allocation Option, less any surrender charge that may apply. You must tell us how to allocate a partial withdrawal among the Allocation Options. Your requested partial withdrawal will be effective on the date we receive your written request. However, if the day we receive your request is not a Business Day or if your request is received after the close of the NYSE, then the requested partial withdrawal will be effective on the next Business Day. Generally, we will pay the partial withdrawal within seven days of that date.

(c) Periodic Partial Withdrawals

You may arrange for periodic partial withdrawals on a monthly, quarterly or semi-annual basis. To process Periodic Partial Withdrawals you must send a written request in Good Order to the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus. The surrender charge, 10% penalty tax and provisions applicable to partial withdrawals apply to periodic partial withdrawals. (See “Charges and Deductions”)

Our confirmation notice will indicate when a withdrawal has resulted in the near or actual exhaustion of money in one or more of the Allocation Options. In that connection, when a periodic partial withdrawal amount exceeds the amount remaining in one or more of the Allocation Options and there is no indication of an alternate Allocation Option, we will send out a check for less than the scheduled amount and will cease future payments until we receive new instructions designating new Allocation Options from which we can make the withdrawal.

(d) Hardship Withdrawals

Under certain Qualified Policies, the Plan Administrator (as defined in Code Section 414(g)) may allow, in its sole discretion, certain withdrawals it determines to be “hardship withdrawals.” The surrender charge, 10% penalty tax and provisions applicable to partial withdrawals apply to hardship withdrawals. For single premium policies, the surrender charge will only be applied to any amounts withdrawn in any Policy Year which, when added to all other withdrawals which were not subject to a surrender charge in that Policy Year, exceed 10% of the policy’s value.

Cancellations

If we do not receive any purchase payments under a flexible premium policy for a period of two Policy Years, and both (a) the total purchase payments made, less any partial withdrawals and any surrender charges, and (b) the policy’s value, are less than $2,000, we reserve the right to terminate your policy subject to any applicable state insurance law or regulation.

Similarly, NYLIAC may, in its sole discretion, subject to any applicable state insurance law or regulation, cancel single premium policies that have a policy value of less than $2,000. We may pay the policy’s value to you in one lump sum.

We will notify you in your annual report of our intention to exercise these rights on the 90th day following that Policy Anniversary, unless an additional purchase payment, provided that you are not older than the maximum age for making a

premium payment shown on the Policy Data Page, is received before the end of that 90-day period. If such a cancellation occurs, we will pay you the policy’s value in one lump sum.

Retirement Date

The Retirement Date is the day that Income Payments are scheduled to begin unless you surrender the policy or we pay an amount as proceeds to the designated Beneficiary prior to that date. You specify the Retirement Date. You may defer the Retirement Date to any Policy Anniversary before the Annuitant will be age 75 or to a later date agreed to by NYLIAC, provided that we receive notice in a form acceptable to us (or as required under state law) of the request at least one month before the last selected Retirement Date. To request to change or defer the Retirement Date to a later date, subject to the constraints noted above, you must provide notice in a form acceptable to us (or as required under state law) in Good Order to the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus. The Retirement Date and Income Payment method for Qualified Policies may also be controlled by endorsements, the plan, or applicable law.

Death Before Retirement Date

If the Annuitant (which, for Non-Qualified Policies, includes any named Contingent Annuitant who is alive at the death of the Primary Annuitant before the Retirement Date), dies prior to the Retirement Date, we will pay an amount as proceeds to the designated Beneficiary, as of the date we receive proof of death and all other required information in Good Order at the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus. Generally, we will not issue a policy to joint owners. However, if NYLIAC makes an exception and issues a jointly owned policy, ownership rights and privileges under the policy must be exercised jointly and we will pay benefits under the policy upon the death of any joint owner. (See “FEDERAL TAX MATTERS—Taxation of Annuities in General”) For policies owned by a grantor trust, all of whose grantors are individuals, benefits will be paid upon the death of any grantor. That amount will be the greater of:

(a) the sum of all purchase payments, less any partial withdrawals and surrender charges made before notification of death, and less premium amounts for any riders; or

(b) the policy’s value.

If more than one Beneficiary is named, each Beneficiary will be paid a pro rata portion from each Investment Division and the Fixed Account in which the policy is invested as of the date we receive proof of death and all requirements necessary to make the payment to that Beneficiary. We will keep the remaining balance in the policy to pay the other Beneficiaries. Due to market fluctuations, the remaining Accumulation Value may increase or decrease and we may pay subsequent Beneficiaries a different amount. Beneficiary(ies) may not make transfers between Investment Divisions of the Separate Account and the Fixed Account.

This formula guarantees that the amount paid will at least equal the sum of all purchase payments (less any partial withdrawals and surrender charges on such partial withdrawals and premium amounts for riders). The Beneficiary may receive the amount payable in a lump sum or under one of the Income Payment options. Beneficiary(ies) may not make transfers between Investment Divisions of the Separate Account, the Fixed Account or any other investment option that we may offer at any time.

If the Owner of a policy issued after January 18, 1985 dies before the Retirement Date, the policy will no longer be in force and we will pay as proceeds to the Beneficiary an amount which is the greater of “(a)” or “(b)” as they are described above. Payment will be made in a lump sum to the Beneficiary unless the Owner has elected or the Beneficiary elects otherwise in a signed written notice in Good Order.

If such an election is properly made, all or part of these proceeds will be:

(i)

applied under options 1A or 1B. (See “Income Payments”) However, we will pay any unpaid amount remaining under options 1A or 1B at the end of the five-year period following the Owner’s death in one lump sum to the Beneficiary; or

(ii)

used to purchase an immediate annuity for the Beneficiary who will be the Owner and Annuitant.

Payments under the annuity or under any other method of payment we make available must be for the life of the Beneficiary, or for a number of years that is not more than the life expectancy of the Beneficiary at the time of the Owner’s death (as determined for federal tax purposes), and must begin within one year after the Owner’s death.

We determine the value of the proceeds at the end of the Business Day during which death occurs.

For policies issued after January 18, 1985, if (a) the Owner and the Annuitant are not the same person and the Owner’s spouse is the sole primary Beneficiary, or (b) the Owner and the Annuitant are the same individual and the Owner’s spouse is the sole primary Beneficiary and the Contingent Annuitant, we will pay the proceeds to the surviving spouse if the Owner dies before the Retirement Date or the surviving spouse can continue the policy as the new Owner.

We will make any distribution or application of policy proceeds within 7 days after NYLIAC receives all documents (including documents necessary to comply with federal and state tax law) in connection with the event or election that causes the distribution to take place at the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus, subject to postponement in certain circumstances. (See “DISTRIBUTIONS UNDER THE POLICY—Delay of Payments”)

Income Payments

(a) Election of Income Payment Options

You may select Income Payments that are fixed. At any time before the Retirement Date, you may change the Income Payment Option or request any other method of payment we agree to. To change the Income Payment Option or to request another method of payment prior to the Retirement Date, you must send a written request in Good Order to the Service Center that services your policy in Question 17 of this prospectus. If an Income Payment Option is chosen which depends on the continuation of the life of the Annuitant or of a Joint Annuitant, we may require proof of birth date before Income Payments begin. For Income Payment Options involving life income, the actual age of the Annuitant or of a Joint Annuitant will affect the amount of each payment. Since payments to older annuitants are expected to be fewer in number, the amount of each annuity payment should be greater.

Effective for amounts received in taxable years beginning after December 31, 2010, a policyholder may elect to apply a portion of the Accumulation Value toward one of the Income Payment options we may offer, while the remainder of the policy continues to accumulate income on a tax-deferred basis. This is called a partial annuitization. A partial annuitization will reduce the benefits provided under this policy. The Accumulation Value will be reduced by the amount placed under one of the Income Payment options we may offer. Under a partial annuitization, the policy’s Accumulation Value, any riders under the policy and any charges assessed will be treated the same as they would under any other withdrawal from the policy’s Accumulation Value, except that surrender charges will not be assessed. (See “FEDERAL TAX MATTERS.”)

In the event that an Income Payment Option is not selected, we will make monthly Income Payments which will go on for as long as the Annuitant lives (10 years guaranteed even if the Annuitant dies sooner) in accordance with Income Payment option 3A and the “Annuity Benefit” section of the policy.

Under Income Payment Options involving life income, the payee may not receive Income Payments equal to the total purchase payments made under the policy if the Annuitant dies before the actuarially predicted date of death.

For Income Payment Options not involving life contingencies (options 1A, 1B, 2A, 2B or 2A-V below), NYLIAC bears no mortality risk notwithstanding the mortality risk charge collected by NYLIAC. (See “CHARGES AND DEDUCTIONS—Other Charges”)

(b) Fixed Income Payments

You (or the Beneficiary upon your death or the death of the Annuitant prior to the Retirement Date) may choose to have Income Payments made under any of the Fixed Income Payment options described below:

1A. Interest Accumulation. NYLIAC credits interest (at least 3.5% per year) on the money remaining under this Income Payment option. You can withdraw this amount at any time in sums of $100 or more. We pay interest to the date of withdrawal on sums withdrawn.

1B. Interest Payment. NYLIAC pays interest once each month (at an effective rate of at least 3.0% per year), every 3 months or 6 months, or once each year, as chosen, based on the money remaining under this Income Payment option.

2A. Income for Elected Period. NYLIAC makes monthly Income Payments for the number of years elected. When asked, NYLIAC will state in writing what each Income Payment would be, if made every 3 months or 6 months, or once each year.

2B. Income of Elected Amount. NYLIAC makes Income Payments of the elected amount monthly, every 3 months or 6 months, or once each year, as chosen, until all proceeds and interest have been paid. The total Income Payments made each year must be at least 5% of the proceeds placed under this Income Payment option. Each year NYLIAC credits interest of at least 3.5% on the money remaining under the Income Payment option.

3A. Life Income-Guaranteed Period. NYLIAC makes an Income Payment each month during the lifetime of the payee. Income Payments do not change, and are guaranteed for 5, 10, 15, or 20 years, as chosen, even if the payee dies sooner.

3B. Life Income-Guaranteed Total Amount. NYLIAC makes an Income Payment each month during the lifetime of the payee. Income Payments do not change, and are guaranteed until the total amount paid equals the amount placed under this Income Payment option, even if the payee dies sooner.

3C. Life Income-Joint and Survivor. NYLIAC makes an Income Payment each month while one or both of the two payees are living. Income Payments do not change, and are guaranteed for 10 years, even if both payees die sooner.

(c) Other Methods of Payment

If NYLIAC agrees, you (or the Beneficiary upon your death or the death of the Annuitant prior to the Retirement Date) may choose to have Income Payments made under some other method of payment.

A payee receiving payments under Income Payment options 1A, 1B, 2A or 2B may later elect (with NYLIAC’s permission) to have any unpaid amount placed under another method of payment.

If a payee dies on or after the Retirement Date, we will pay any unpaid policy proceeds under the method of payment being used as of the date of the payee’s death. (For certain restrictions on methods of payment, see “Federal Tax Matters”)

Taxable Income Payments may be subject to an additional 3.8 percent tax on net investment income. (See “FEDERAL TAX MATTERS—3.8 Percent Tax on Certain Investment Income.”)

(d) Proof of Survivorship

We may require satisfactory proof of survival, from time to time, before we pay any Income Payments or other benefits. We will request the proof at least 30 days prior to the next scheduled benefit payment date.

Delay of Payments

We will pay any amounts due from the Separate Account under the policy within seven days of the date NYLIAC receives all documents (including documents necessary to comply with federal and state tax law) in connection with a request at the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus.

Situations where payment may be delayed:

1. We may delay payment of any amounts due from the Separate Account under the policy and transfers among Investment Divisions during any period that:

(a) The New York Stock Exchange (“NYSE”) is closed for other than usual weekends or holidays; trading is restricted by the Securities and Exchange Commission (“SEC”); or the SEC declares that an emergency exists;

(b) The SEC, by order, permits us to delay payment in order to protect our policyowners; or

2. We may delay payment of any amounts due from the Fixed Account. When permitted by law, we may defer payment of any partial withdrawal or full surrender request for up to six months from the date of surrender from the Fixed Account. We will pay interest of at least 3.5% per year on any partial withdrawal or full surrender request deferred for 30 days or more.

3. Federal laws made to combat terrorism and prevent money laundering by criminals might, in certain circumstances, require us to reject a premium payment and/or “freeze” a policy. If these laws apply in a particular policy(ies), we would not be allowed to pay any request for transfers, partial withdrawals, surrenders or death benefits. If a policy or an account is frozen, the Accumulation Value would be moved to a special segregated interest-bearing account and held in that account until we receive instructions from the appropriate federal regulator.

Designation of Beneficiary

Before the date Income Payments are scheduled to begin and while the Annuitant is living, you may change the Beneficiary by written notice in Good Order to NYLIAC sent to the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus. You may name one or more Beneficiaries. If prior to the date Income

Payments are scheduled to begin, (a) the Annuitant dies before you and (b) no Beneficiary for the proceeds or for a stated share of the proceeds survives, the right to the proceeds or shares of the proceeds passes to you. If you are the Annuitant, the proceeds pass to your Beneficiary.

However, if the Owner who is not the Annuitant dies before Income Payments begin, and no Beneficiary for the proceeds or for a stated share of the proceeds survives, the right to the proceeds or shares of the proceeds pass to the Owner’s estate.

Every state has unclaimed property laws, which generally declare an annuity policy to be abandoned after a period of inactivity of three to five years from the policy’s maturity date or the date the death benefit is due and payable. If, after a thorough search, we are unable to locate you after your policy’s Retirement Date, or if we are unable to locate your Beneficiary if you die before the Retirement Date, or you or the Beneficiary do not come forward to claim the policy proceeds or death benefit in a timely manner, the proceeds or death benefit may be paid to the abandoned property division or unclaimed property office of the state in which the beneficiary or the annuitant last resided, as shown on our books and records, or to Delaware (our state of domicile). This escheatment is revocable, however, and the state is obligated to pay back the escheated amount if you or your beneficiary steps forward to claim it with the proper documentation. To prevent such escheatment, it is important that you update your Beneficiary designation, including addresses, if and as they change. Please contact us at one of the addresses listed in Question 17 of this Prospectus.

Restrictions Under the Texas Optional Retirement Program

Section 36.105 of the Texas Educational Code permits participants in the Texas Optional Retirement Program (“ORP”) to withdraw or surrender their interest in a variable annuity contract issued under the ORP only upon:

(1) termination of employment in the Texas public institutions of higher education,

(2) retirement, or

(3) death.

Accordingly, we will require a participant in the ORP (or the participant’s estate if the participant has died) to obtain a certificate of termination from the employer before the policy is surrendered.

Restrictions Under Code Section 403(b)(11)

With respect to 403(b) TSAs, an employee may not begin distributions attributable to salary reduction contributions, including the earnings on these contributions, made in years beginning after December 31, 1988 before the employee attains age of 59½, has a severance from employment, dies or becomes disabled. An employee also may not begin distributions attributable to earnings in such years on salary reduction accumulations held as of the end of the last year beginning before January 1, 1989 if the employee is under age 59½, has a severance from employment, dies or becomes disabled. The Code section 403(b) plan may also provide for distribution in the case of hardship. However, hardship distributions are limited to amounts contributed by salary reduction. The earnings on such amounts may not be withdrawn. Even though a distribution may be permitted under these rules (e.g. for hardship or after separation from service), it may still be subject to a 10% penalty tax as a premature distribution.

Under the final Code section 403(b) regulations, which the Department of Treasury published on July 26, 2007, employer contributions made to Code section 403(b) TSA contracts will be subject to new withdrawal restrictions. Under the new rules, amounts attributable to employer contributions to a Code section 403(b) TSA contract that is issued after December 31, 2008 may not be distributed earlier than the earliest of severance from employment or upon the occurrence of a certain event, such as after a fixed number of years, the attainment of a stated age, or disability. These new withdrawal restrictions do not apply to Code section 403(b) TSA contracts issued before January 1, 2009.

Under the terms of your Code section 403(b) plan you may have the option to invest in other funding vehicles, including Code section 403(b)(7) custodial accounts. You should consult your plan document to make this determination.

THE FIXED ACCOUNT

The Fixed Account includes all of NYLIAC’s assets except those assets allocated to the Separate Accounts. NYLIAC has sole discretion to invest the assets of the Fixed Account subject to applicable law. The Fixed Account is not registered under the federal securities laws and is generally not subject to their provisions. Therefore, generally you do not have the benefits and protections of these statutes for amounts allocated to the Fixed Account. Furthermore, the staff of the SEC has not reviewed the disclosures in this prospectus relating to the Fixed Account.

(a) Interest Crediting

NYLIAC guarantees that it will credit interest at an effective rate of at least 4% to purchase payments or portions of purchase payments allocated or transferred to the Fixed Account. NYLIAC may, AT ITS SOLE DISCRETION, credit a higher rate of interest to the Fixed Account, or to amounts allocated or transferred to the Fixed Account.

(b) Surrender Charges

We may apply surrender charges to withdrawals from the Fixed Account. (See “CHARGES AND DEDUCTIONS—Surrender Charges”) In addition to the “Exceptions to Surrender Charges,” subject to any applicable state insurance law or regulation, we will not impose a surrender charge on any amount withdrawn from the Fixed Account if: (a) on any Policy Anniversary the interest rate set for that amount falls more than three percentage points below the rate which was set for the immediately preceding Policy Year, and (b) you withdraw part or all of that amount allocated to the Fixed Account within 60 days after that Policy Anniversary. (For single premium policies, we make this determination independently for each additional purchase payment or portion of each additional purchase payment transferred to the Fixed Account on the anniversary of each such purchase payment; for flexible premium policies, we reserve the right to set a separate yearly interest rate and period for which this rate is guaranteed for amounts transferred to the Fixed Account.)

(c) Transfers to Investment Divisions

Depending on state filing and review processes, we may transfer amounts from the Fixed Account to the Investment Divisions up to 30 days prior to the date Income Payments are scheduled to begin, subject to the following conditions.

1. You may transfer an amount from the Fixed Account to the Investment Divisions if, on any Policy Anniversary, the interest rate set for that amount falls more than three percentage points below the rate which was set for the immediately preceding Policy Year, and you make a transfer request within 60 days after that Policy Anniversary. There is no minimum transfer requirements under this condition.

2. For single premium policies, during the first seven Policy Years following the purchase payment to which an amount to be transferred is attributed, you may transfer up to 10% of the policy’s value at the beginning of the Policy Year Divisions. However, the amount you transfer will reduce, by an equivalent amount, the total amount that you may withdraw during that Policy Year from the policy’s value under the first exception to the imposition of surrender charges described under “Exceptions to Surrender Charges”. In addition, any amount you withdraw during a Policy Year under that first exception to the imposition of a surrender charge will limit subsequent amounts that you may transfer from the Fixed Account under this condition.

3 For flexible premium policies, except as stated in (c)1 above, we do not permit transfers from the Fixed Account during the first ten Policy Years.

4. For single premium policies, we permit transfers of at least the minimum amount after the first seven Policy Years following the purchase payment to which an amount to be transferred is attributed. For flexible premium policies, we permit transfers of at least the minimum amount after the first ten Policy Years. The minimum amount that you may transfer from the Fixed Account to the Investment Divisions is the lesser of:

(i) $1,000 for single premium policies or $500 for flexible premium policies or

(ii) the value of the Fixed Account attributed to that purchase payment for single premium policies or the total value of the Fixed Account for flexible premium policies. Additionally, for flexible premium policies, the remaining value in the Fixed Account must be at least $100. If, after a transfer, the remaining value in the Fixed Account would be less than $100, we may include that amount in the transfer.

For both single and flexible premium policies, we reserve the right to limit the total number of transfers to no more than four in any one Policy Year. We also reserve the right to limit the dollar amount of any transfers. (See “Transfers”)

You must make transfer requests in writing in Good Order and sent to the Service Center that services your policy at one of the addresses listed in Question 17 of this Prospectus. Faxed and e-mailed requests are not currently accepted, however, we reserve the right to accept them at our discretion.

(d) General Matters

We may delay payments of any amount due from the Fixed Account. See the policy itself for details and a description of the Fixed Account.

FEDERAL TAX MATTERS

Introduction

The following discussion is general and is not intended as tax advice. We issue both Qualified and Non-Qualified Policies. Both types of policies offer tax-deferred accumulation. A Non-Qualified Policy can provide for retirement income other than through a tax-qualified plan. Qualified Policies are designed for use by individuals in retirement plans which are intended to qualify as plans qualified for special income tax treatment under Sections 219, 403(b), 408 or 408A of the Code. The ultimate effect of federal income taxes on the Accumulation Value, on Income Payments and on the economic benefit to you, the Annuitant or the Beneficiary depends on the type of retirement plan for which the Qualified Policy is purchased, on the tax and employment status of the individual concerned and on NYLIAC’s tax status. The following discussion assumes that Qualified Policies are used in retirement plans that qualify for the special federal income tax treatment described above. This discussion is not intended to address the tax consequences resulting from all of the situations in which a person may be entitled to or may receive a distribution under a policy. Any person concerned about these tax implications should consult a tax adviser before making a premium payment. This discussion is based upon NYLIAC’s understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service. We cannot predict the likelihood of continuation of the present federal income tax laws or of the current interpretations by the Internal Revenue Service, which may change from time to time without notice. Any such change could have retroactive effects regardless of the date of enactment. Moreover, this discussion does not take into consideration any applicable state or other tax laws except with respect to the imposition of any state premium taxes. We suggest you consult with your tax adviser.

Taxation of Annuities in General

The following discussion assumes that the policies will qualify as annuity contracts for federal income tax purposes. The Statement of Additional Information discusses such qualifications.

Section 72 of the Code governs taxation of annuities in general. NYLIAC believes that an annuity policyowner generally is not taxed on increases in the value of a policy until distribution occurs either in the form of a lump sum received by withdrawing all or part of the Accumulation Value (i.e., surrenders or partial withdrawals) or as Income Payments under the Income Payment option elected. The exception to this rule is that generally, a policyowner of any deferred annuity policy who is not a natural person must include in income any increase in the excess of the policyowner’s Accumulation Value over the policyowner’s investment in the contract during the taxable year. However, there are some exceptions to this exception. You may wish to discuss these with your tax counsel. The taxable portion of a distribution (in the form of an annuity or lump sum payment) is generally taxed as ordinary income. For this purpose, the assignment, pledge, or agreement to assign or pledge any portion of the Accumulation Value generally will be treated as a distribution.

In the case of a withdrawal or surrender distributed to a participant or Beneficiary under a Qualified Policy, a ratable portion of the amount received is taxable, generally based on the ratio of the investment in the contract to the total policy value. The “investment in the contract” generally equals the portion, if any, of any premium payments paid by or on behalf of an individual under a policy which is not excluded from the individual’s gross income. For policies issued in connection with qualified plans, the “investment in the contract” can be zero. The law requires the use of special simplified methods to determine the taxable amount of payments that are based in whole or in part on the Annuitant’s life and that are paid from TSAs.

Generally, in the case of a withdrawal under a Non-Qualified Policy before the Annuity Commencement Date, amounts received are first treated as taxable income to the extent that the Accumulation Value immediately before the withdrawal exceeds the “investment in the contract” at that time. Any additional amount withdrawn is not taxable. On the other hand, upon a full surrender of a Non-Qualified Policy, if the “investment in the contract” exceeds the Accumulation Value (less any surrender charges), the loss is treated as an ordinary loss for federal income tax purposes. However, limitations may apply to the amount of the loss that may be deductible.

Although the tax consequences may vary depending on the Income Payment option elected under the policy, in general, only the portion of the Income Payment that represents the amount by which the Accumulation Value exceeds the “investment in the contract” will be taxed. After the investment in the Policy is recovered, the full amount of any additional Income Payments is taxable. For fixed Income Payments, in general, there is no tax on the portion of each payment which represents the same ratio that the “investment in the contract” bears to the total expected value of the Income Payments for the term of the payments. However, the remainder of each Income Payment is taxable until the recovery of the investment in the contract, and thereafter the full amount of each annuity payment is taxable. If death occurs before full recovery of the investment in the contract, the unrecovered amount may be deducted on the Annuitant’s final tax return.

Effective for amounts received in taxable years beginning after December 31, 2010, a policyowner may elect to apply a portion of the Accumulation Value towards one of the Income Payment options we may offer, while the remainder of the policy continues to accumulate income on a tax-deferred basis. This is called a partial annuitization. If a policyowner

chooses to partially annuitize a policy, the resulting payments will be taxed as fixed Income Payments described above, only if such payments are received for one of the following periods: (1) the annuitant’s life (or the lives of the joint annuitants, if applicable), or (2) a period of 10 years or more. Provided such requirements are met, the “investment in the contract” will be allocated pro rata between each portion of the policy from which amounts are received as an annuity and the portion of the policy from which amounts are not received as an annuity.

In the case of a distribution, a penalty tax equal to 10% of the amount treated as taxable income may be imposed. The penalty tax is not imposed in certain circumstances, including, generally, distributions: (1) made on or after the date on which the policyowner attains age 59¹⁄₂, (2) made as a result of the policyowner’s (or, where the policyowner is not an individual, the Annuitant’s) death, (3) made as a result of the policyowner’s disability, (4) which are part of a series of substantially equal periodic payments (at least annually) made for the life (or life expectancy) of the policyowner or the joint lives (or joint life expectancies) of the policyowner and his or her designated beneficiary, or (5) received from an Inherited IRA. Other tax penalties may apply to certain distributions pursuant to a Qualified Policy.

All non-qualified, deferred annuity contracts issued by NYLIAC (or its affiliates) to the same policyowner during any calendar year are to be treated as one annuity contract for purposes of determining the amount includible in an individual’s gross income. In addition, there may be other situations in which the Treasury Department may conclude (under its authority to issue regulations) that it would be appropriate to aggregate two or more annuity contracts purchased by the same policyowner. Accordingly, a policyowner should consult a tax adviser before purchasing more than one policy or other annuity contract.

A transfer of ownership of a policy, or designation of an Annuitant or other Beneficiary who is not also the policyowner, may result in certain income or gift tax consequences to the policyowner. A policyowner contemplating any transfer or assignment of a policy should consult a tax adviser with respect to the potential tax effects of such a transaction.

3.8 Percent Tax on Certain Investment Income

In general, a tax of 3.8 percent will apply to net investment income (“NII”) received by an individual taxpayer to the extent his or her modified adjusted gross income (“MAGI”) exceeds certain thresholds (e.g., $250,000 in the case of taxpayers filing jointly, $125,000 in the case of a married taxpayer filing separately and $200,000 in the case of other individual taxpayers). For this purpose, NII includes (i) gross income from various investments, including gross income received with respect to annuities that are not held through a tax-qualified plan (e.g., a traditional IRA or Section 403(b) plan) and (ii) net gain attributable to the disposition of property. Such NII (as well as gross income from tax qualified plans) will also increase a taxpayer’s MAGI for purposes of the taxable thresholds described above. This tax also applies to trusts and estates under a special set of rules. In 2012 the IRS and the Treasury Department issued guidance regarding this new tax in the form of proposed regulations, which were finalized in 2013. You should consult your tax advisor to determine the applicability of this tax in your individual circumstances and with respect to any amount received in connection with the surrender of the policy, distributions or withdrawals from the policy or the exercise of other rights and features under this annuity contract.

Partial Section 1035 Exchanges

Section 1035 of the Code provides that an annuity contract may be exchanged in a tax-free transaction for another annuity contract or a long-term care insurance policy. The IRS has issued guidance which provides that the direct transfer of a portion of an annuity contract into another annuity contract can qualify as a tax-free exchange, provided that no amounts (other than annuity payments made for life or for a term of at least 10 years) are distributed from either contract involved in the exchange for 180 days following the date of the transfer. If a taxpayer takes a distribution during this 180-day waiting period, the IRS guidance provides that the IRS will apply general tax principles to determine the tax treatment of the transfer and/or the distribution (e.g., in appropriate circumstances, as taxable “boot” or as a taxable distribution, effectively negating the tax-free exchange).

This IRS guidance, however, does not address the tax treatment of a partial exchange of an annuity contract for a long-term care insurance policy. Although we believe that taking a distribution or withdrawal from the Contract described in this prospectus within 180 days of a partial exchange of such Contract for a long-term care insurance policy should not cause such prior partial exchange to be treated as taxable, there can be no assurance that the IRS will not expand the 180-day rule described above to partial exchanges of an annuity contract for a long-term care insurance policy, or that the IRS will not provide other guidance with respect to such partial exchanges. If you contemplate such an exchange, you should consult a tax advisor to discuss the potential tax effects of such a transaction.

Qualified Policies

Qualified Policies are designed for use with retirement plans that qualify for special federal income tax treatment under Sections 219, 403(b), 408, and 408A of the Code. The tax rules applicable to participants and beneficiaries in these plans vary according to the type of plan and the terms and conditions of the plan itself. Special favorable tax treatment may be available for certain types of contributions and distributions (including special rules for certain lump sum distributions to individuals who attained the age of 50 by January 1, 1986). Adverse tax consequences may result from contributions in excess of specified limits, distributions prior to age 59¹⁄₂ (subject to certain exceptions), distributions that do not conform to specified minimum distribution rules and in certain other circumstances. Therefore, this discussion only provides general information about the use of Qualified Policies with the plans described below. Policyowners and participants under these plans, as well as Annuitants and Beneficiaries are cautioned that the rights of any person to any benefits under the plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the policy issued in connection with the plan. Purchasers of Qualified Policies should seek legal and tax advice regarding the suitability of the policy.

(a) 403(b) Plans. Under Section 403(b) of the Code, payments made by public school systems and certain tax exempt organizations to purchase annuity policies for their employees are excludible from the gross income of the employee, subject to certain limitations. However, such payments may be subject to FICA (Social Security) taxes.

Important Information Regarding Final Code Section 403(b) Regulations

On July 26, 2007, the Department of the Treasury published final Code section 403(b) regulations that were largely effective on January 1, 2009. These comprehensive regulations include several new rules and requirements, such as a requirement that employers maintain their Code section 403(b) plans pursuant to a written plan. The final regulations, subsequent IRS guidance, and the terms of the written plan and/or the written information sharing agreement between the employer and NYLIAC may impose new restrictions on both new and existing Code section 403(b) TSA contracts, including restrictions on the availability of loans, distributions, transfers and exchanges, regardless of when a contract was purchased.

Prior to the effective date of the final regulations, IRS guidance applicable to tax-free transfers and exchanges of Code section 403(b) TSA contracts or custodial accounts became effective September 25, 2007, replacing existing rules under IRS Revenue Ruling 90-24 previously applicable to such transfers and exchanges (a “90-24 transfer”). Under this guidance, transfers and exchanges (both referred to below as “transfers”) are available only to the extent permitted under the employer’s written Code section 403(b) plan.

Transfers occurring after September 24, 2007 that do not comply with this guidance can result in the applicable contract becoming taxable on January 1, 2009, or the date of the transfer, whichever is later. If you make a transfer to a contract or custodial account that is not part of the employer’s Code section 403(b) plan (other than a transfer to a different plan), and the contract provider and employer fail to enter into an information sharing agreement by January 1, 2009, the transfer would be considered a “failed” transfer, resulting in the applicable contract becoming subject to tax. Additional guidance issued by the IRS generally permits a failed transfer to be corrected no later than June 30, 2009, by re-transferring to a contract or custodial account that is part of the employer’s Code section 403(b) plan and/or that is subject to an information-sharing agreement with the employer.

In general, certain contracts originally established by a 90-24 transfer prior to September 25, 2007, are exempt (or grandfathered) from some of the requirements of the final regulations; provided that no salary reduction or other contributions have ever been made to such contracts, and that no additional transfers are made to such contracts on or after September 25, 2007. Further, contracts that are not grandfathered are generally required to be part of, and subject to the requirements of, an employer’s written Code section 403(b) plan no later than by January 1, 2009.

The new rules in the final regulations generally do not affect a participant’s ability to transfer some or all of a Code section 403(b) TSA contract to a state-defined benefit plan to purchase service credits, where such a transfer is otherwise consistent with applicable rules and requirements and with the terms of the employer’s plan.

You should discuss with your tax advisor the final Code section 403(b) regulations and other applicable IRS guidance in order to determine the impact they may have on any existing Code section 403(b) TSA contracts that you may own and/or on any Code section 403(b) TSA contract that you may consider purchasing.

(b) Individual Retirement Annuities. Sections 219 and 408 of the Code permit individuals or their employers to contribute to an individual retirement program known as an “Individual Retirement Annuity” or “IRA”, including an employer-sponsored Simplified Employee Pension or “SEP”. Individual Retirement Annuities are subject to limitations on the amount which may be contributed and deducted and the time when distributions may commence. In addition, distributions from certain other types of qualified plans may be placed into IRAs on a tax-deferred basis.

(c) Roth Individual Retirement Annuities. Section 408A of the Code permits individuals with incomes below a certain level to contribute to an individual retirement program known as a “Roth Individual Retirement Annuity” or “Roth IRA.” Roth IRAs are subject to limitations on the amount that may be contributed. Contributions to Roth IRAs are not deductible, but distributions from Roth IRAs that meet certain requirements are not included in gross income. Individuals generally may convert their existing non-Roth IRAs into Roth IRAs. Beginning in 2008, a direct rollover may also be made from an eligible retirement plan other than a non-Roth IRA (such as a qualified retirement plan, section 403(b) tax sheltered annuity, or eligible governmental section 457 plan) to a Roth IRA provided applicable requirements are met. Such conversions and rollovers will be subject to income tax at the time of conversion or rollover.

(d) Deferred Compensation Plans. Section 457 of the Code, while not actually providing for a qualified plan as that term is normally used, provides for certain deferred compensation plans with respect to service for state governments, local governments, political subdivisions, agencies, instrumentalities and certain affiliates of such entities and tax exempt organizations which enjoy special treatment. The policies can be used with such plans. Under such plans, a participant may specify the form of investment in which his or her participation will be made. Such investments are generally owned by, and are subject to the claims of the general creditors of, the sponsoring employer, except that Section 457 plans of state and local government must be held and used for the exclusive benefit of participants and beneficiaries in a trust or annuity contract.

The Qualified Policies are subject to the RMD rules under Code section 401(a)(9) and the regulations issued thereunder. Under these rules, generally, distributions under your Qualified Policy must begin no later than the beginning date required by the Internal Revenue Service (“IRS”). The beginning date is determined by the type of Qualified Policy that you own. For each calendar year that an RMD is not timely made, a 50% excise tax is imposed on the amount that should have been distributed, but was not.

Unless the distributions are made in the form of an annuity that complies with Code section 401(a)(9) and the regulations issued thereunder, the minimum amount required to be distributed for each calendar year is generally determined by dividing the value of the Qualified Policy as of the end of the prior calendar year by the applicable distribution period (determined under IRS tables).

Beginning in 2006, regulations under Code section 401(a)(9) provide a new method for calculating the amount of RMDs from Qualified Policies. Under these regulations, during the accumulation phase of the Qualified Policy, the actuarial present value of certain additional benefits provided under the policy (such as guaranteed death benefits) must be taken into account in calculating the value of the Qualified Policy for purposes of determining the annual RMD for the Qualified Policy. As a result, under these regulations, it is possible that, after taking account of the value of such benefits, there may not be sufficient Accumulation Value to satisfy the applicable RMD requirement. This generally will depend on the investment performance of your policy. You may need to satisfy such RMD from other tax-qualified plans that you own. You should consult with your tax advisor regarding these requirements and the implications of purchasing any riders or other benefits in connection with your Qualified Policy.

Taxation of Death Benefits

The tax treatment of amounts distributed from your contract upon the death of the policyowner or annuitant depends on whether the policyowner or annuitant dies before or after the Annuity Commencement Date. If death occurs prior to the Annuity Commencement Date, and the Beneficiary receives payments under an annuity payout option, the benefits are generally taxed in the manner described above for annuity payouts. If the benefits are received in a lump sum, they are taxed to the extent they exceed the remaining investment in the contract. If death occurs after the Annuity Commencement Date, amounts received by the Beneficiary are not taxed until they exceed the remaining investment in the contract.

DISTRIBUTION AND COMPENSATION ARRANGEMENTS

NYLIFE Distributors LLC (“NYLIFE Distributors”), the underwriter and distributor of the policies, is registered with the SEC and the Financial Industry Regulatory Authority, Inc. (FINRA) as a broker-dealer. The firm is an indirect wholly-owned subsidiary of New York Life, and an affiliate of NYLIAC. Its principal business address is 30 Hudson Street, Jersey City, New Jersey 07302.

The policies were sold by Registered Representatives of NYLIFE Securities, LLC (“NYLIFE Securities”), a broker-dealer that is an affiliate of NYLIFE Distributors. Your Registered Representative is also a licensed insurance agent with New York Life. He or she may be qualified to offer other forms of life insurance, annuities, and other investment products. In certain circumstances, NYLIFE Securities Registered Representatives can sell both products manufactured and issued by New York Life or its affiliates and products provided by other companies.

NYLIFE Securities and in turn your registered representative, receive compensation for selling you this policy or any other investment product. Compensation may consist of commissions, asset-based compensation, allowances for expenses, and other compensation programs. The amount of compensation will vary depending on the policy, the age of the Owner and whether the source of funds is from an internal exchange. Differing compensation arrangements have the potential to influence the recommendation made by your registered representative or broker-dealer.

The maximum commission and expense allowance paid to NYLIFE Securities registered representatives is 3.5% of all premiums received. The total commissions paid for Facilitator^® multi-funded retirement annuity policies during the fiscal years ended December 31, 2018, 2017 and 2016 were $74,010, $118,214 and $69,181, respectively. NYLIFE Distributors did not retain any of these commissions. Premium payments are accepted on a continuous basis.

New York Life also has other compensation programs where managers and employees involved in the sales process receive additional compensation related to the sale of products manufactured and issued by New York Life or its affiliates.

NYLIFE Securities Registered Representatives can qualify to attend New York Life-sponsored educational, training, and development conferences based on the sales they make of life insurance, annuities, and investment products during a particular twelve-month period. In addition, qualification for recognition programs sponsored by New York Life depends on the sale of products manufactured and issued by New York Life or its affiliates.

VOTING RIGHTS

The Fund is not required and typically does not hold routine annual stockholder meetings. Special stockholder meetings will be called when necessary. Not holding routine annual meetings will result in policyowners having a lesser role in governing the business of the Fund.

To the extent required by law, the Eligible Portfolio shares held in the Separate Accounts will be voted by NYLIAC at special shareholder meetings of the Fund in accordance with instructions we receive from persons having voting interests in the corresponding Investment Division. If, however, the federal securities laws is amended, or if its present interpretation should change, and as a result, NYLIAC determines that it is allowed to vote the Eligible Portfolio shares in its own right, we may elect to do so.

The number of votes which are available to you will be calculated separately for each Investment Division. That number will be determined by applying your percentage interest, if any, in a particular Investment Division to the total number of votes attributable to the Investment Division.

Prior to the date Income Payments are scheduled to begin, you hold a voting interest in each Investment Division to which you have money allocated. The number of votes which are available to you will be determined by dividing the policy’s value attributable to an Investment Division by the net asset value per share of the applicable Eligible Portfolios.

After the date Income Payments are scheduled to begin, the person receiving Variable Income Payments has the voting interest. The number of votes will be determined by dividing the reserve for such policy allocated to a MainStay VP MacKay Common Stock—Initial Class Investment Division by the net asset value per share of the MainStay VP MacKay Common Stock—Initial Class Portfolio. The votes attributable to a policy decrease as the reserves allocated to a MainStay VP Common Stock—Initial Class Investment Division decrease. In determining the number of votes, fractional shares will be recognized.

The number of votes of the Eligible Portfolio which are available will be determined as of the date established by the Fund. Voting instructions will be solicited by written or electronic communication prior to such meeting in accordance with procedures established by the Fund.

If we do not receive timely instructions, we will vote those shares in proportion to the voting instructions which are received with respect to all policies participating in that Investment Division. As a result, a small number of policyholders may control the outcome of the vote. Voting instructions to abstain on any item to be voted upon will be applied on a pro rata basis to reduce the votes eligible to be cast. Each person having a voting interest in an Investment Division will receive proxy material, reports and other materials relating to the appropriate Eligible Portfolio.

STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information (“SAI”) is available which contains more details concerning the subjects discussed in this prospectus. The following is the Table of Contents for the SAI:

TABLE OF CONTENTS


	Page
THE POLICIES		2
Total Disability Benefit Rider		2
Valuation of Accumulation Units		2
Contingent Annuitant		3
INVESTMENT PERFORMANCE CALCULATIONS		3
MainStay VP U.S. Government Money Market—Initial Class Investment Division		3
MainStay VP Bond—Initial Class Investment Division Yields		4
MainStay VP Bond—Initial Class & MainStay VP MacKay Common Stock—Initial Class Standard Total Return Calculations		4
Other Performance Data		5
MAINSTAY VP FUNDS TRUST		6
ANNUITY PAYMENTS		6
GENERAL MATTERS		6
FEDERAL TAX MATTERS		7
Taxation of New York Life Insurance and Annuity Corporation		7
Tax Status of the Policies		7
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS		8
STATE REGULATION		8
RECORDS AND REPORTS		8
LEGAL PROCEEDINGS		8
FINANCIAL STATEMENTS		9
OTHER INFORMATION		9
NYLIAC AND SEPARATE ACCOUNT FINANCIAL STATEMENTS		F-1

How to obtain a Facilitator SAI dated May 1, 2019:

The Facilitator Statement of Additional Information is posted on our website, www.newyorklife.com. For a paper copy of the Statement of Additional Information, please call or send this request form to the Service Center that services your policy.

Name

Address


City		State		Zip

The Facilitator^®:

A retirement annuity

for dynamic financial times

Your Statement of

Additional Information

LOGO

NYLIAC MFA Separate Account I

NYLIAC MFA Separate Account II

Statement of Additional Information

for the

Facilitator^®*

MULTI-FUNDED RETIREMENT ANNUITY POLICIES

Offered by

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION (A Delaware Corporation)

May 1, 2019

This Statement of Additional Information (“SAI”) is not a prospectus. This SAI contains information that expands upon subjects discussed in the current Facilitator prospectus. You should read the SAI in conjunction with the current Facilitator prospectus, dated May 1, 2019. You may obtain a copy of the prospectus by calling or writing NYLIAC at the Service Center that services your policy. Terms used but not defined in the SAI have the same meaning as in the current Facilitator prospectus.

TABLE OF CONTENTS


	Page
THE POLICIES		2
Total Disability Benefit Rider		2
Valuation of Accumulation Units		2
Contingent Annuitant		3
INVESTMENT PERFORMANCE CALCULATIONS		3
MainStay VP U.S. Government Money Market—Initial Class Investment Division		3
MainStay VP Bond—Initial Class Investment Division Yields		4
MainStay VP Bond—Initial Class and MainStay VP MacKay Common Stock—Initial Class Standard Total Return Calculations		4
Other Performance Data		5
MAINSTAY VP FUNDS TRUST		6
ANNUITY PAYMENTS		6
GENERAL MATTERS		6
FEDERAL TAX MATTERS		7
Taxation of New York Life Insurance and Annuity Corporation		7
Tax Status of the Policies		7
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS		8
STATE REGULATION		8
RECORDS AND REPORTS		8
LEGAL PROCEEDINGS		8
FINANCIAL STATEMENTS		9
OTHER INFORMATION		9
NYLIAC AND SEPARATE ACCOUNT FINANCIAL STATEMENTS		F-1

*	Facilitator^® is NYLIAC’s registered service mark for the policies and is not meant to connote performance.

THE POLICIES

The following provides additional information about the policies, to supplement the description in the prospectus.

Total Disability Benefit Rider

As described in the prospectus, the Total Disability Benefit Rider credits benefit amounts as purchase payments if the Annuitant is totally disabled for at least six consecutive months. No benefit amounts will be credited to the policy after Income Payments begin or, if earlier, the Policy Anniversary on which the Annuitant is age 65. The Annuitant is considered to be totally disabled if he or she is unable to perform his or her own occupation. The total disability must be caused by an injury or sickness that first occurs after the rider was issued. However, after total disability has lasted for two years, the Annuitant will be deemed to be totally disabled only if he or she is unable to perform any occupation for which he or she is reasonably suited based on education, training and work experience. NYLIAC will not credit any benefit amounts in connection with the following disabilities: (i) those that start prior to the Annuitant’s fifth birthday; (ii) those that are caused by an intentionally self-inflicted injury; or (iii) those that are caused by act of war.

The benefit amount for each month during a period of total disability will be determined as follows:

(a) if total disability began 60 or more months after the rider is issued, the amount is one-sixtieth of the basic plan premiums (purchase payments less premium amounts paid for riders), paid or credited within the 60 months before the disability began;

(b) if total disability starts more than 12 but within 60 months after the rider is issued, the amount is the total of the basis plan premiums paid or credited while the rider was in effect divided by the number of full and partial months that the rider was in effect;

(c) if total disability began within 12 months after the rider was issued, the amount will be the smaller of the total scheduled basic plan premiums for the first Policy Year divided by 12 or the total basic plan premiums paid while the rider was in effect divided by the number of full and partial months that the rider was in effect.

However, for a flexible premium Non-Qualified Policy, the benefit amount will never be more than $1,250 in any policy month. For a flexible premium Qualified Policy, the benefit amount will never be more than the greater of $2,500 in any policy month or the pro rata monthly amount permitted by law for the applicable tax qualified plan. (See “Federal Tax Matters—Qualified Plans”).

For Non-Qualified Policies, only total disabilities of the Annuitant are covered. Previously, if the Contingent Annuitant became the Annuitant, the policyowner could apply to NYLIAC to have a new rider included in the policy to cover the Contingent Annuitant. New sales of the Total Disability Benefit Rider have been discontinued.

Valuation of Accumulation Units

Accumulation Units are valued separately for each Investment Division of each Separate Account. The method used for valuing Accumulation Units in each Investment Division is the same. The value of each Accumulation Unit was arbitrarily set as of the date operations began for the Investment Division. Thereafter, the value of an Accumulation Unit of an Investment Division for any Business Day equals the value of an Accumulation Unit in that Investment Division as of the immediately preceding Business Day multiplied by the “Net Investment Factor” for that Investment Division for the current Business Day.

We determine the Net Investment Factor for each Investment Division for any period from the close of the preceding Business Day to the close of the current Business Day (“Valuation Period”), is determined by the following formula:

(a/b) - c

Where:

(a) = the result of:

(1)

the net asset value per share of the Eligible Portfolio shares held in the Investment Division determined at the end of the current Valuation Period, plus

(2)

the per share amount of any dividend or capital gain distribution made by the Eligible Portfolio for shares held in the Investment Division if the “ex-dividend” date occurs during the current Valuation Period, plus or minus (only in the case of NYLIAC MFA Separate Account II Investment Divisions),

(3)

a charge or credit, if any, for taxes;

(b) = the net result of:

(1)

the net asset value per share of the Eligible Portfolio shares held in the Investment Division determined as of the end of the immediately preceding Valuation Period, plus or minus (only in the case of NYLIAC MFA Separate Account II Investment Divisions),

(2)

a charge or credit, if any, for taxes; and

(c)

= a factor representing the charges deducted from the applicable Investment Division on a daily basis. For flexible premium policies, the factor is equal, on an annual basis, to 1.75% of the daily net asset value of the Separate Accounts. For single premium policies, the factor is equal, on an annual basis, to 1.25% of the daily net asset value of the Separate Accounts.

The Net Investment Factor may be greater or less than one. Therefore, the value of an Accumulation Unit in an Investment Division may increase or decrease from Valuation Period to Valuation Period.

Contingent Annuitant

The Contingent Annuitant, who generally must be the spouse of the Annuitant, is the person who becomes the Annuitant at the death of the “Primary Annuitant” before Income Payments begin if the policyowner is still living. The Primary Annuitant is the person named as the Annuitant in the application for a Non-Qualified Policy.

If prior to the date Income Payments begin, while the policyowner is still living, the Contingent Annuitant is alive at the death of the Primary Annuitant, the proceeds of a Non-Qualified Policy will not be paid to the Beneficiary at the death of the Primary Annuitant. Instead, the policy will continue in force and the proceeds will be paid upon the death of the Contingent Annuitant or upon the death of the policyowner if earlier. All policyowner rights and the benefits provided under the policy will continue during the lifetime of the Contingent Annuitant, as provided in the policy, as if the Contingent Annuitant were the Annuitant, except for the Total Disability Benefit Rider. (See “Total Disability Benefit Rider”). After the policy is issued, the Contingent Annuitant may be deleted but not changed.

The named Contingent Annuitant will be considered deleted if a policy would not be treated as an annuity for federal income tax purposes should the Contingent Annuitant become the Annuitant. Currently, the policies do not provide for the naming of Contingent Annuitants. (See “Federal Tax Matters”)

INVESTMENT PERFORMANCE CALCULATIONS

MainStay VP U.S. Government Money Market—Initial Class Investment Division

NYLIAC calculates the MainStay VP U.S. Government Money Market—Initial Class Investment Division’s current annualized yield for a seven-day period in a manner which does not take into consideration any realized or unrealized gains or losses on shares of the U.S. Government Money Market—Initial Class Portfolio of the Fund or on its portfolio securities. We compute this current annualized yield by determining the net change (exclusive of realized gains or losses on the sale of securities and unrealized appreciation and depreciation) in the value of a hypothetical account having a balance of one unit of the MainStay VP U.S. Government Money Market—Initial Class Investment Division at the beginning of such seven-day period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return and annualizing this quotient on a 365-day basis. The net change in account value reflects the deductions for administrative services (for flexible premium policies) and the mortality and expense risk charge and income and expenses accrued during the period. Because of these deductions, the yield for the MainStay VP U.S. Government Money Market—Initial Class Investment Division will be lower than the yield for the MainStay VP U.S. Government Money Market—Initial Class Portfolio of the Fund.

NYLIAC also calculates the effective yield of the MainStay VP U.S. Government Money Market—Initial Class Investment Division for the same seven-day period on a compounded basis. We calculate the effective yield by compounding the unannualized base period return by adding one to the base period return, raising the sum to a power equal to 365 divided by 7, and subtracting one from the result.

The yield on amounts held in a MainStay VP U.S. Government Money Market—Initial Class Investment Division normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The MainStay VP U.S. Government Money Market—Initial Class Investment Division’s actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the MainStay VP U.S. Government Money Market—Initial Class Portfolio, the types and quality of portfolio securities held by the MainStay VP U.S. Government Money Market—Initial Class Portfolio, and its operating expenses.

For the seven-day period ending December 31, 2018, the annualized yields for the single premium policies for the MainStay VP U.S. Government Money Market—Initial Class Investment Division were 0.66% for NYLIAC MFA Separate Account I and 0.66% for NYLIAC MFA Separate Account II. For the same period, the annualized yields for the flexible premium policies for the MainStay VP U.S. Government Money Market—Initial Class Investment Division were 0.16% for NYLIAC MFA Separate Account I and 0.16% for NYLIAC MFA Separate Account II.

For the seven-day period ending December 31, 2018, the effective yield for the single premium policies for the MainStay VP U.S. Government Money Market—Initial Class Investment Division was 0.68% for NYLIAC MFA Separate Accounts I and II. For the same period, the effective yields for the flexible premium policies for the MainStay VP U.S. Government Money Market—Initial Class Investment Division were 0.18% for NYLIAC MFA Separate Account I and 0.18% for NYLIAC MFA Separate Account II.

MainStay VP Bond—Initial Class Investment Division Yields

NYLIAC may from time to time disclose the current annualized yield of the MainStay VP Bond—Initial Class Investment Division for 30-day periods. The annualized yield of a MainStay VP Bond—Initial Class Investment Division refers to the income generated by the Investment Division over a specified 30-day period. Because the yield is annualized, the yield generated by an Investment Division during the 30-day period is assumed to be generated each 30-day period. We compute the yield by dividing the net investment income per Accumulation Unit earned during the period by the price per unit on the last day of the period, according to the following formula:


YIELD	= 2	((a–b+1)⁶ –1)
YIELD	= 2	cd

Where:

a = net investment income earned during the period by the Portfolio attributable to shares owned by the

MainStay VP Bond—Initial Class Investment Division.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of accumulation units outstanding during the period.

d = the maximum offering price per accumulation unit on the last day of the period.

Net investment income will be determined in accordance with rules established by the Securities and Exchange Commission. Accrued expenses will include all recurring fees that are charged to all policyowner accounts. The yield calculations do not reflect the effect of any surrender charges that may be applicable to a particular policy. Surrender charges range from 7% to 0% of the amount withdrawn depending on the elapsed time since the policy was issued.

Because of these charges and deductions the yield for the Investment Divisions will be lower than the yield for the corresponding Portfolio of the Fund. The yield on amounts held in the Investment Divisions normally will fluctuate over time. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The MainStay VP Bond—Initial Class Investment Division’s actual yield will be affected by the types and quality of portfolio securities held by the MainStay VP Bond—Initial Class Portfolio of the Fund, and its operating expenses.

For the 30-day period ended December 31, 2018, the annualized yields for the MainStay VP Bond—Initial Class

Investment Divisions were 1.92% and 1.41% respectively, for single premium policies and flexible premium policies.

MainStay VP Bond—Initial Class and MainStay VP MacKay Common Stock—Initial Class Standard Total Return Calculations

NYLIAC may from time to time also calculate average annual total returns for one or more of the MainStay VP Bond—Initial Class or MainStay VP MacKay Common Stock—Initial Class Investment Divisions for various periods of time. We compute the average annual total return by finding the average annual compounded rates of return over one, three, five and ten year periods that would equate the initial amount invested to the ending redeemable value, according to the following formula:

P(1+T)n = ERV

Where:

P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV

= ending redeemable value of a hypothetical $1,000 payment made at the beginning of the one, three, five, or ten-year period, at the end of the one, three, five, or ten-year period (or fractional portion thereof).

All recurring fees that are charged to all policyowner accounts are recognized in the ending redeemable value. The average annual total return calculations will reflect the effect of surrender charges that may be applicable to a particular period.

For the one, three, five and ten year periods ending December 31, 2018, and the period from January 23, 1984 to December 31, 2018, respectively, the average annual total returns for the single premium policies for the MainStay VP Bond—Initial Class Investment Division were -9.08%, -0.88%, 0.57% and 2.47%, respectively, for NYLIAC MFA Separate Account I, and -9.08%, -0.88%, 0.57% and 2.47%, respectively, for NYLIAC MFA Separate Account II. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP Bond—Initial Class Investment Division were -9.54%, -2.07%, -0.56% and 1.85%, respectively, for NYLIAC MFA Separate Account I, and -9.54%, -2.07%, -0.56% and 1.85%, respectively, for NYLIAC MFA Separate Account II.

For the one, three, five and ten year periods ending December 31, 2017, and the period from January 23, 1984 to December 31, 2018, respectively, the average annual total returns for the single premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -13.53%, 4.91%, 5.84% and 11.05%, respectively, for NYLIAC MFA Separate Account I. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -13.96%, 3.65%, 4.66% and 10.38%, respectively, for NYLIAC MFA Separate Account I.

For the one, three, five and ten year periods ending December 31, 2018, and the period from January 23, 1984 to December 31, 2018 respectively, the average annual total returns for the single premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -13.53%, 4.91%, 5.84% and 11.05%, respectively, for NYLIAC MFA Separate Account II. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -13.96%, 3.65%, 4.66% and 10.38%, respectively, for NYLIAC MFA Separate Account II.

Other Performance Data

NYLIAC may from time to time also calculate average annual total returns in a non-standard format in conjunction with the standard format described above. The non-standard format will be identical to the standard format except that the surrender charge will not be reflected.

Using the non-standard format, for the one, three, five and ten year periods ending December 31, 2017, and the period from January 23, 1984 to December 31, 2018, respectively, the average annual total returns for the single premium policies for the MainStay VP Bond—Initial Class Investment Division were -2.24%, 0.83%, 1.18% and 2.47%, respectively, for NYLIAC MFA Separate Account I, and -2.24%, 0.83%, 1.18% and 2.47%, respectively, for NYLIAC MFA Separate Account II. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP Bond—Initial Class Investment Division were -2.73%, 0.33%, 0.68% and 1.96%, respectively, for NYLIAC MFA Separate Account I, and -2.73%, 0.33%, 0.68% and 1.96%, respectively, for NYLIAC MFA Separate Account II.

For the one, three, five and ten year periods ending December 31, 2018, and the period from January 23, 1984 to December 31, 2018, respectively, the average annual total returns for the single premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -7.02%, 6.72%, 6.49% and 11.05%, respectively, for NYLIAC MFA Separate Account I. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -7.49%, 6.19%, 5.96% and 10.49%, respectively, for NYLIAC MFA Separate Account I.

For the one, three, five and ten year periods ending December 31, 2018, and the period from January 23, 1984 to December 31, 2018, respectively, the average annual total returns for the single premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -7.02%, 6.72%, 6.49% and 11.05%, respectively, for NYLIAC MFA Separate Account II. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP MacKay Common Stock—Initial Class Investment Division were -7.49%, 6.19%, 5.96% and 10.49%, respectively, for NYLIAC MFA Separate Account II.

NYLIAC may from time to time also calculate cumulative total returns in conjunction with the standard format described above. The cumulative returns will be calculated using the following formula assuming that the surrender charge percentage will not be reflected.

CTR = ERV/P–1

Where:

CTR = the cumulative total return net of an Investment Division recurring charges for the period

ERV

= ending redeemable value of a hypothetical $1,000 payment made at the beginning of the one, five, or ten- year period, at the end of the one, three, five or ten-year period (or fractional portion thereof)

P = a hypothetical initial payment of $1,000.

All non-standard performance data will only be advertised if the standard performance data for the same period, as well as for the required periods, is also disclosed.

MAINSTAY VP FUNDS TRUST

The MainStay VP Funds Trust is registered with the Securities and Exchange Commission as a diversified open-end management investment company, but such registration does not signify that the Commission supervises the management, or the investment practices or policies, of the Fund.

The Fund currently issues its shares only to separate accounts of NYLIAC. Shares are sold and redeemed at the net asset value of the respective Portfolio of the Fund.

ANNUITY PAYMENTS

We will make equal annuity payments each month under the Life Income Payment Option during the lifetime of the Annuitant. Once payments begin, they do not change and are guaranteed for 10 years even if the Annuitant dies sooner. If the Annuitant dies before all guaranteed payments have been made, the rest will be made to the Beneficiary. We may require that the payee submit proof of the Annuitant’s survivorship as a condition for future payments beyond the 10-year guaranteed payment period.

On the Annuity Commencement Date, We will determine the Accumulation Value of your policy and use that value to calculate the amount of each annuity payment. We determine each annuity payment by applying the Accumulation Value, less any premium taxes, to the annuity factors specified in the annuity table set forth in the policy. Those factors are based on a set amount per $1,000 of proceeds applied. The appropriate rate must be determined by the gender (except where, as in the case of certain Qualified Policies and other employer-sponsored retirement plans, such classification is not permitted), date of application and age of the Annuitant. The dollars applied are then divided by 1,000 and the result multiplied by the appropriate annuity factor from the table to compute the amount of each monthly annuity payment.

GENERAL MATTERS

Non-Participating. The policies are non-participating. Dividends are not paid.

Misstatement of Age or Gender. If the Annuitant’s stated age and/or gender in the policy are incorrect, NYLIAC will change the benefits payable to those which the premium payments would have purchased for the correct age and gender. Gender is not a factor when annuity benefits are based on unisex annuity payment rate tables. (See “Income Payments—Election of Income Payment Options” in the Prospectus.) If We made payments based on incorrect age or gender, We will increase or reduce a later payment or payments to adjust for the error. Any adjustment will include interest, at 3.5% per year, from the date of the wrong payment to the date the adjustment is made.

Assignments. If permitted by the plan or by law for the plan indicated in the application for the policy, you may assign your interest in a Non-Qualified Policy or any interest in it prior to the Annuity Commencement Date and during the Owner’s lifetime. In order to effect an assignment of all or any part of your interest in a Non-Qualified Policy prior to the Annuity Commencement Date and during the Owner’s lifetime, you must send a duly executed instrument of assignment to VPSC at one of the addresses listed in Question Question 17 of the Prospectus. NYLIAC will not be deemed to know of an assignment unless it receives a copy of a duly executed instrument evidencing such assignment. Further, NYLIAC assumes no responsibility for the validity of any assignment. (See “Federal Tax Matters—Taxation of Annuities in General” of the Prospectus.)

Modification. NYLIAC may not modify the policy without your consent except to make the policy meet the requirements of the Investment Company Act of 1940, or to make the policy comply with any changes in the Code or as required by the Code in order to continue treatment of the policy as an annuity, or by any other applicable law.

Incontestability. We rely on statements made in the application or a Policy Request. They are representations, not warranties. We will not contest the policy after it has been in force during the lifetime of the Annuitant for two years from the Policy Date.

FEDERAL TAX MATTERS

Taxation of New York Life Insurance and Annuity Corporation

NYLIAC is taxed as a life insurance company. Because the Separate Account is not an entity separate from NYLIAC, and its operations form a part of NYLIAC, it will not be taxed separately as a “regulated investment company” under Subchapter M of the Code. As a result, NYLIAC takes into account applicable tax attributes of the assets of the Separate Account on its corporate income tax return, including corporate dividends received deductions and foreign tax credits that may be produced by assets of the Separate Account. Investment income and realized net capital gains on the assets of the Separate Account are reinvested and are taken into account in determining the Accumulation Value. As a result, such investment income and realized net capital gains are automatically retained as part of the reserves under the policy. Under existing federal income tax law, NYLIAC believes that Separate Account investment income and realized net capital gains should not be taxed to the extent that such income and gains are retained as part of the tax-deductible reserves under the policy.

Tax Status of the Policies

Section 817(h) of the Code requires that the investments of the Separate Account must be “adequately diversified” in accordance with Treasury regulations in order for the policies to qualify as annuity contracts under Section 72 of the Code. The Separate Account intends to comply with the diversification requirements prescribed by the Treasury under Treasury Regulation Section 1.817-5.

To comply with regulations under Section 817(h) of the Code, the Separate Account is required to diversify its investments, so that on the last day of each quarter of a calendar year, no more than 55% of the value of its assets is represented by any one investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. For this purpose, securities of a single issuer are treated as one investment and each U.S. Government agency or instrumentality is treated as a separate issuer. Any security issued, guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. Government or an agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

Although the Treasury Department has issued regulations on the diversification requirements, such regulations do not provide guidance concerning the extent to which policyowners may direct their investments to particular subaccounts of a separate account, or the permitted number of such subaccounts. It is unclear whether additional guidance in this regard will be issued in the future. It is possible that if such guidance is issued, the policy may need to be modified to comply with such additional guidance. For these reasons, NYLIAC reserves the right to modify the policy as necessary to attempt to prevent the policyowner from being considered the owner of the assets of the Separate Account or otherwise to qualify the policy for favorable tax treatment.

The Code also requires that non-qualified annuity contracts contain specific provisions for distribution of the policy proceeds upon the death of any policyowner. In order to be treated as an annuity contract for federal income tax purposes, the Code requires that such policies provide that (a) if any policyowner dies on or after the Annuity Commencement Date and before the entire interest in the policy has been distributed, the remaining portion must be distributed at least as rapidly as under the method in effect on the policyowner’s death; and (b) if any policyowner dies before the Annuity Commencement Date, the entire interest in the policy must generally be distributed within 5 years after the policyowner’s date of death. For policies owned by a grantor trust, all of whose grantors are individuals, these distribution requirements apply at the death of any grantor. These requirements will be considered satisfied if the entire interest of the policy is used to purchase an immediate annuity under which payments will begin within one year of the policyowner’s death and will be made for the life of the Beneficiary or for a period not extending beyond the life expectancy of the Beneficiary. If the Beneficiary is the policyowner’s surviving spouse (as defined under Federal law), the Policy may be continued with the surviving spouse as the new policyowner. If the policyowner is not a natural person, these “death of Owner” rules apply when the primary Annuitant dies or is changed. Non-Qualified Policies contain provisions intended to comply with these requirements of the Code. No regulations interpreting these requirements of the Code have yet been issued and thus no assurance can be given that the provisions contained in these policies satisfy all such Code requirements. The provisions contained in these policies will be reviewed and modified if necessary to assure that they comply with the Code requirements when clarified by regulation or otherwise.

Withholding of federal income taxes on the taxable portion of all distributions may be required unless the recipient elects not to have any such amounts withheld and properly notifies NYLIAC of that election. Different rules may apply to United States citizens or expatriates living abroad. In addition, some states have enacted legislation requiring withholding.

Even if a recipient elects no withholding, special rules may require NYLIAC to disregard the recipient’s election if the recipient fails to supply NYLIAC with a “TIN” or taxpayer identification number (social security number for individuals) or if the Internal Revenue Service notifies NYLIAC that the TIN provided by the recipient is incorrect.

Under the Foreign Account Tax Compliance Act (“FATCA”), as reflected in Sections 1471 through 1474 of the IRC, U.S. withholding agents (such as NYLIAC) may be required to obtain certain information to establish the U.S. or non-U.S. status of its account or contract holders (e.g., a Form W-9 or W-8BEN may be required) and perform certain due diligence to ensure that information is accurate. In certain cases, if this information is not obtained, withholding agents, such as NYLIAC may be required to withhold at a 30 percent rate on certain payments beginning July 1, 2014.

SAFEKEEPING OF SEPARATE ACCOUNT ASSETS

NYLIAC holds title to assets of the Separate Accounts. The assets are kept physically segregated and held separate and apart from NYLIAC’s general corporate assets. Records are maintained of all purchases and redemptions of Eligible Portfolio shares held by each of the Investment Divisions.

STATE REGULATION

NYLIAC is a stock life insurance company organized under the laws of Delaware, and is subject to regulation by the Delaware State Insurance Department. We file an annual statement with the Delaware Commissioner of Insurance on or before March 1 of each year covering the operations and reporting on the financial condition of NYLIAC as of December 31 of the preceding calendar year. Periodically, the Delaware Commissioner of Insurance examines the financial condition of NYLIAC, including the liabilities and reserves of the Separate Account.

In addition, NYLIAC is subject to the insurance laws and regulations of all the states where it is licensed to operate. The availability of certain policy rights and provisions depends on state approval and/or filing and review processes. Where required by state law or regulation, the policies will be modified accordingly.

RECORDS AND REPORTS

NYLIAC maintains all records and accounts relating to the Separate Account. As presently required by the federal securities laws, NYLIAC will mail to you at your last known address of record, at least semi-annually after the first Policy Year, reports containing information required under the federal securities laws or by any other applicable law or regulation. If you feel a transaction has been processed incorrectly, it is your responsibility to contact us in writing and provide us with all relevant details. You must provide us with the nature of the error, the date of the error and any other relevant details. It is important that you review your confirmation and quarterly statements carefully and promptly report any errors and discrepancies to us, preferably, within fifteen (15) days of the date of the statement in question.

It is important that you inform NYLIAC of an address change so that you can receive these policy statements (See “How do I contact NYLIAC by Telephone or by the Internet?” in the Prospectus). In the event your statement is returned from the US Postal Service as undeliverable, we reserve the right to suspend mailing future correspondence and also suspend current transaction processing until an accurate address is obtained. Additionally, no new service requests can be processed until a valid current address is provided.

LEGAL PROCEEDINGS

NYLIAC is a defendant in lawsuits arising from its agency sales force, insurance (including variable contracts registered under the federal securities laws) and/or other operations. Some of these actions seek substantial or unspecified compensatory and punitive damages. NYLIAC is from time to time involved in various governmental, administrative, and investigative proceedings and inquiries.

Notwithstanding the uncertain nature of litigation and regulatory inquiries, the outcome of which cannot be predicted, NYLIAC believes that, after provisions made in the financial statements, the ultimate liability that could result from litigation and proceedings would not have a material adverse effect on NYLIAC’s financial position; however, it is possible that settlements or adverse determinations in one or more actions or other proceedings in the future could have a material adverse effect on NYLIAC’s operating results for a given year.

FINANCIAL STATEMENTS

The statutory financial statements of NYLIAC as of December 31, 2018 and 2017, and for each of the three years in the period ended December 31, 2018 included in this SAI have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The financial statements of the Separate Account as of December 31, 2018 and for each of the periods indicated in the Financial Statements included in this SAI have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

OTHER INFORMATION

NYLIAC filed a Registration Statement with the Securities and Exchange Commission, under the Securities Act of 1933 as amended, with respect to the policies discussed in this Prospectus and SAI. We have not included all of the information set forth in the registration statement, amendments and exhibits to the registration statement in the Prospectus and this SAI. We intend the statements contained in the Prospectus and this SAI concerning the content of the policies and other legal instruments to be summaries. For a complete statement of the terms of these documents, you should refer to the instruments filed with the Securities and Exchange Commission. The omitted information may be obtained at the principal offices of the Securities and Exchange Commission in Washington, D.C., upon payment of prescribed fees, or through the Commission’s website at www.sec.gov.

F-1

NYLIAC MFA Separate Account-I

NYLIAC MFA Separate Account-II

Financial Statements

F-1

NYLIAC MFA Separate Account-I Tax-Qualified Policies

Statement of Assets and Liabilities

As of December 31, 2018



	Common Stock						Bond					Money Market
	Investment						Investment					Investment
	Divisions						Divisions					Divisions

	Single Premium Policies			Flexible Premium Policies			Single Premium Policies		Flexible Premium Policies			Single Premium Policies		Flexible Premium Policies
ASSETS:
Investments in the Mainstay VP
Funds Trust at net asset value	$	17,083,161		$	50,524,055		$	3,144,410	$	10,287,674		$	176,419	$	484,149
Dividends due and accrued	—			—			—		—			10		27
Net receivable from (payable to) New York Life
Insurance and Annuity Corporation	(38,997		)	(5,613		)	—		(2,853		)	—		(2		)
Net receivable from (payable to) the Fund for
shares sold or purchased	40,741			12,817			322		4,330			8		45

LIABILITIES:
Liability to New York Life Insurance and Annuity Corporation for:
Mortality and expense risk charges	1,744			5,146			322		1,055			18		50
Administrative charges	—			2,058			—		422			—		20

Total net assets	$	17,083,161		$	50,524,055		$	3,144,410	$	10,287,674		$	176,419	$	484,149

Total shares outstanding	677,094			2,002,528			229,250		750,047			176,395		484,084
Net asset value per share (NAV)	$	25.23		$	25.23		$	13.72	$	13.72		$	1.00	$	1.00
Total units outstanding	115,886			408,467			50,269		195,929			7,806		25,512
Variable accumulation unit value	$	147.37		$	123.71		$	62.56	$	52.51		$	22.63	$	18.99
Identified cost of investment	$	13,325,907		$	37,252,839		$	3,290,436	$	10,669,226		$	176,395	$	484,100

The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.

F-2

NYLIAC MFA Separate Account-I Tax-Qualified Policies

Statement of Operations

For the year ended December 31, 2018



	Common Stock						Bond						Money Market
	Investment						Investment						Investment
	Divisions						Divisions						Divisions

	Single Premium Policies			Flexible Premium Policies			Single Premium Policies			Flexible Premium Policies			Single Premium Policies			Flexible Premium Policies
INVESTMENT INCOME (LOSS):
Dividend income	$	311,337		$	910,618		$	90,763		$	300,499		$	2,528		$	6,982
Mortality and expense risk charges	(253,032		)	(738,607		)	(41,519		)	(135,776		)	(2,321		)	(6,412		)
Administrative charges	—			(316,661		)	—			(61,868		)	—			(3,614		)

Net investment income (loss)	58,305			(144,650		)	49,244			102,855			207			(3,044		)

REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments	2,424,934			6,845,708			401,582			1,318,042			18,373			61,330
Cost of investments sold	(1,022,560		)	(4,860,376		)	(391,618		)	(1,258,626		)	(18,372		)	(61,328		)

Net realized gain (loss) on investments	1,402,374			1,985,332			9,964			59,416			1			2
Realized gain distribution received	1,754,554			5,131,827			9,037			29,918			—			—
Change in unrealized appreciation (depreciation)
on investments	(4,456,452		)	(10,988,300		)	(149,543		)	(517,653		)	—			(1		)

Net gain (loss) on investments	(1,299,524		)	(3,871,141		)	(130,542		)	(428,319		)	1			1

Net increase (decrease) in net assets
resulting from operations	$	(1,241,219	)	$	(4,015,791	)	$	(81,298	)	$	(325,464	)	$	208		$	(3,043	)

The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.

F-3

NYLIAC MFA Separate Account-I Tax-Qualified Policies

Statement of Changes in Net Assets

For years ended December 31, 2018

and December 31, 2017



	Common Stock												Bond												Money Market
	Investment Divisions												Investment Divisions												Investment Divisions
	Single Premium Policies						Flexible Premium Policies						Single Premium Policies						Flexible Premium Policies						Single Premium Policies						Flexible Premium Policies
	2018			2017			2018			2017			2018			2017			2018			2017			2018			2017			2018			2017
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)	$	58,305		$	19,006		$	(144,650	)	$	(255,575	)	$	49,244		$	42,442		$	102,855		$	71,516		$	207		$	(1,741	)	$	(3,044	)	$	(9,022	)
Net realized gain (loss) on investments	1,402,374			857,993			1,985,332			871,618			9,964			77,685			59,416			146,482			1			2			2			6
Realized gain distribution received	1,754,554			801,956			5,131,827			2,311,707			9,037			32,876			29,918			106,594			—			—			—			—
Change in unrealized appreciation (depreciation) on
investments	(4,456,452		)	2,154,935			(10,988,300		)	7,797,074			(149,543		)	(53,471		)	(517,653		)	(79,093		)	—			(23		)	(1		)	(60		)
Net increase (decrease) in net assets resulting from
operations	(1,241,219		)	3,833,890			(4,015,791		)	10,724,824			(81,298		)	99,532			(325,464		)	245,499			208			(1,762		)	(3,043		)	(9,076		)

Contributions and (Withdrawals):
Payments received from policyowners	2,977			3,199			105,647			116,203			—			3,199			27,603			29,204			—			—			1,342			3,278
Policyowners' surrenders	(1,846,628		)	(2,768,069		)	(4,511,264		)	(4,963,846		)	(305,632		)	(826,641		)	(877,872		)	(1,084,365		)	(16,046		)	(35,098		)	(45,474		)	(71,270		)
Policyowners' annuity and death benefits	(211,005		)	(270,016		)	(380,876		)	(613,373		)	(24,463		)	(100,141		)	(73,789		)	(103,377		)	—			(2,140		)	(2,990		)	(11,314		)
Net transfers from (to) Fixed Account	(74,941		)	(77,853		)	(739,874		)	(784,380		)	(28,969		)	(108,853		)	(96,696		)	(311,642		)	—			—			(2,348		)	(9,246		)
Transfers between Investment Divisions	—			21,236			3,029			11,562			(1		)	(4,516		)	(3,029		)	(1,868		)	(1		)	(16,721		)	—			(9,694		)

Net contributions and (withdrawals)	(2,129,597		)	(3,091,503		)	(5,523,338		)	(6,233,834		)	(359,065		)	(1,036,952		)	(1,023,783		)	(1,472,048		)	(16,047		)	(53,959		)	(49,470		)	(98,246		)

Increase (decrease) in net assets	(3,370,816		)	742,387			(9,539,129		)	4,490,990			(440,363		)	(937,420		)	(1,349,247		)	(1,226,549		)	(15,839		)	(55,721		)	(52,513		)	(107,322		)

NET ASSETS:
Beginning of period	20,453,977			19,711,590			60,063,184			55,572,194			3,584,773			4,522,193			11,636,921			12,863,470			192,258			247,979			536,662			643,984
End of period	$	17,083,161		$	20,453,977		$	50,524,055		$	60,063,184		$	3,144,410		$	3,584,773		$	10,287,674		$	11,636,921		$	176,419		$	192,258		$	484,149		$	536,662

The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.

F-4

NYLIAC MFA Separate Account-II Non-Qualified Policies

Statement of Assets and Liabilities

As of December 31, 2018



	Common Stock					Bond					Money Market
	Investment					Investment					Investment
	Divisions					Divisions					Divisions

	Single Premium Policies		Flexible Premium Policies			Single Premium Policies		Flexible Premium Policies			Single Premium Policies		Flexible Premium Policies
ASSETS:
Investments in the Mainstay VP
Funds Trust at net asset value	$	23,972,167	$	6,361,009		$	5,252,121	$	1,339,911		$	181,588	$	64,763
Dividends due and accrued	—		—			—		—			10		4
Net receivable from (payable to) New York Life
Insurance and Annuity Corporation	—		(52		)	—		(28		)	—		—
Net receivable from (payable to) the Fund for
shares sold or purchased	2,441		959			538		220			9		6

LIABILITIES:
Liability to New York Life Insurance and Annuity Corporation for:
Mortality and expense risk charges	2,442		648			538		137			25		7
Administrative charges	—		259			—		55			—		3

Total net assets	$	23,972,166	$	6,361,009		$	5,252,121	$	1,339,911		$	181,582	$	64,763

Total shares outstanding	950,140		252,120			382,918		97,689			181,564		64,755
Net asset value per share (NAV)	$	25.23	$	25.23		$	13.72	$	13.72		$	1.00	$	1.00
Total units outstanding	162,687		51,423			83,655		25,477			8,038		3,415
Variable accumulation unit value	$	147.37	$	123.71		$	62.79	$	52.60		$	22.63	$	18.99
Identified cost of investment	$	18,501,803	$	4,856,868		$	5,520,528	$	1,391,585		$	181,566	$	64,757

The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.

F-5

NYLIAC MFA Separate Account-II Non-Qualified Policies

Statement of Operations

For the year ended December 31, 2018



	Common Stock						Bond						Money Market
	Investment						Investment						Investment
	Divisions						Divisions						Divisions

	Single Premium Policies			Flexible Premium Policies			Single Premium Policies			Flexible Premium Policies			Single Premium Policies			Flexible Premium Policies
INVESTMENT INCOME (LOSS):
Dividend income	$	424,809		$	112,576		$	150,143		$	38,444		$	2,487		$	991
Mortality and expense risk charges	(343,133		)	(92,085		)	(69,673		)	(17,368		)	(2,273		)	(927		)
Administrative charges	—			(40,809		)	—			(8,982		)	—			(568		)

Net investment income (loss)	81,676			(20,318		)	80,470			12,094			214			(504		)

REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments	2,468,871			865,137			883,702			117,909			25,389			23,654
Cost of investments sold	(1,019,032		)	(566,697		)	(851,958		)	(115,585		)	(25,386		)	(23,652		)

Net realized gain (loss) on investments	1,449,839			298,440			31,744			2,324			3			2
Realized gain distribution received	2,394,029			634,425			14,949			3,828			—			—
Change in unrealized appreciation (depreciation)
on investments	(5,683,872		)	(1,409,361		)	(266,514		)	(60,515		)	(3		)	(2		)

Net gain (loss) on investments	(1,840,004		)	(476,496		)	(219,821		)	(54,363		)	—			—

Net increase (decrease) in net assets
resulting from operations	$	(1,758,328	)	$	(496,814	)	$	(139,351	)	$	(42,269	)	$	214		$	(504	)

The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.

F-6

NYLIAC MFA Separate Account-II Non-Qualified Policies

Statement of Changes in Net Assets

For years ended December 31, 2018

and December 31, 2017



	Common Stock												Bond												Money Market
	Investment Divisions												Investment Divisions												Investment Divisions
	Single Premium Policies						Flexible Premium Policies						Single Premium Policies						Flexible Premium Policies						Single Premium Policies						Flexible Premium Policies
	2018			2017			2018			2017			2018			2017			2018			2017			2018			2017			2018			2017
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)	$	81,676		$	29,103		$	(20,318	)	$	(35,421	)	$	80,470		$	76,237		$	12,094		$	7,100		$	214		$	(1,995	)	$	(504	)	$	(1,346	)
Net realized gain (loss) on investments	1,449,839			1,851,937			298,440			164,486			31,744			70,502			2,324			30,950			3			9			2			1
Realized gain distribution received	2,394,029			1,154,831			634,425			293,217			14,949			57,279			3,828			13,547			—			—			—			—
Change in unrealized appreciation (depreciation) on
investments	(5,683,872		)	2,424,934			(1,409,361		)	950,124			(266,514		)	(34,662		)	(60,515		)	(19,469		)	(3		)	(31		)	(2		)	(9		)
Net increase (decrease) in net assets resulting from
operations	(1,758,328		)	5,460,805			(496,814		)	1,372,406			(139,351		)	169,356			(42,269		)	32,128			214			(2,017		)	(504		)	(1,354		)

Contributions and (Withdrawals):
Payments received from policyowners	—			—			17,394			20,060			—			1,999			5,572			7,462			—			1			3,749			3,750
Policyowners' surrenders	(1,057,694		)	(3,690,972		)	(357,508		)	(893,473		)	(526,086		)	(642,640		)	(57,882		)	(272,202		)	(11,791		)	(65,280		)	(16,550		)	(3,354		)
Policyowners' annuity and death benefits	(564,120		)	(1,339,430		)	(218,880		)	(245,165		)	(157,059		)	(349,725		)	(19,254		)	(65,417		)	(529		)	—			—			(4,921		)
Net transfers from (to) Fixed Account	(432,734		)	(435,798		)	(82,692		)	(41,625		)	(74,898		)	(62,312		)	(6,640		)	(1,139		)	—			(3,230		)	(5,608		)	—
Transfers between Investment Divisions	40,073			—			—			—			(40,072		)	—			—			—			—			—			—			—

Net contributions and (withdrawals)	(2,014,475		)	(5,466,200		)	(641,686		)	(1,160,203		)	(798,115		)	(1,052,678		)	(78,204		)	(331,296		)	(12,320		)	(68,509		)	(18,409		)	(4,525		)

Increase (decrease) in net assets	(3,772,803		)	(5,395		)	(1,138,500		)	212,203			(937,466		)	(883,322		)	(120,473		)	(299,168		)	(12,106		)	(70,526		)	(18,913		)	(5,879		)

NET ASSETS:
Beginning of period	27,744,969			27,750,364			7,499,509			7,287,306			6,189,587			7,072,909			1,460,384			1,759,552			193,688			264,214			83,676			89,555
End of period	$	23,972,166		$	27,744,969		$	6,361,009		$	7,499,509		$	5,252,121		$	6,189,587		$	1,339,911		$	1,460,384		$	181,582		$	193,688		$	64,763		$	83,676

The notes to the financial statements are an integral part of, and should be read in conjunction with, the financial statements.

F-7

NYLIAC MFA Separate Accounts-I and -II

Tax-Qualified and Non-Qualified Policies

Notes to Financial Statements

NOTE 1—Organization and Significant Accounting Policies:

NYLIAC MFA Separate Account-I (“Separate Account-I”) and NYLIAC MFA Separate Account-II (“Separate Account-II”) were established on May 27, 1983, under Delaware law by New York Life Insurance and Annuity Corporation (“NYLIAC”), a wholly-owned subsidiary of New York Life Insurance Company (“NYLIC”). These accounts were established to receive and invest net premium payments under Tax Qualified Multi-Funded Retirement Annuity Policies (“Separate Account-I”) and Non-Qualified Multi-Funded Retirement Annuity Policies (“Separate Account-II”) issued by NYLIAC. Effective December 19, 1994, sales of all such policies were discontinued.

Separate Account-I and Separate Account-II are registered under the Investment Company Act of 1940, as amended, as unit investment trusts that follows the accounting and reporting guidance under ASC 946. The assets of Separate Account-I and Separate Account-II are invested exclusively in shares of eligible portfolios of the MainStay VP Funds Trust, a diversified open-end management investment company, and are clearly identified and distinguished from the other assets and liabilities of NYLIAC. These assets are the property of NYLIAC; however, the portion of the assets attributable to the policies will not be charged with liabilities arising out of any other business NYLIAC may conduct. The Fixed Account represents a portion of the general account assets of NYLIAC and is not included in this report. NYLIAC’s Fixed Account may be charged with liabilities arising out of other business NYLIAC may conduct.

There are six Investment Divisions within both Separate Account-I and Separate Account-II, three of which invest Single Premium Policy net premium payments and three of which invest Flexible Premium Policy net premium payments. The Common Stock Investment Divisions invest in the MainStay VP MacKay Common Stock—Initial Class (formerly known as Mainstay VP Common Stock—Initial Class), the Bond Investment Divisions invest in the MainStay VP Bond—Initial Class, and the Money Market Investment Divisions invest in the MainStay VP U.S. Government Money Market—Initial Class. Net premium payments received are allocated to the Investment Divisions of Separate Account-I or Separate Account-II according to policyowner instructions. In addition, the policyowner has the option to transfer amounts between the Investment Divisions of Separate Account-I or Separate Account-II and the Fixed Account of NYLIAC.

No Federal income tax is payable on investment income or capital gains of Separate Account-I or Separate Account-II under current Federal income tax law.

Security Valuation-The investment in the MainStay VP Funds Trust is valued at the net asset value (“NAV”) of shares of the respective fund portfolios.

Security Transactions-Realized gains and losses from security transactions are reported on the identified cost basis. Security transactions are accounted for as of the date the securities are purchased or sold (trade date).

Distributions Received-Dividend income and capital gain distributions are recorded on the ex-dividend date and reinvested in the corresponding portfolio.

The authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance also establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

The levels of the fair value hierarchy are based on the inputs to the valuation as follows:

Level 1-Fair Value is based on unadjusted quoted prices for identical assets or liabilities in an active market. Active markets are defined as a market in which many transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2-Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data for substantially the full term of the asset.

Level 3-Instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions in pricing the asset or liability.

Investments in the mutual funds represent open-end mutual funds in which the valuation is based on the aggregate NAV of the shares held at the valuation date, which represents fair value, and are classified as level 1.

The amounts shown as net receivable from (payable to) NYLIAC on the Statement of Assets and Liabilities reflect transactions that occurred on the last business day of the reporting period. These amounts will be deposited to or withdrawn from the separate account in accordance with the policyowners’ instructions on the first business day subsequent to the close of the period presented. The amounts shown as net receivable from (payable to) the Funds for shares sold or purchased represent unsettled trades.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

F-8

NYLIAC MFA Separate Accounts-I and -II

Tax-Qualified and Non-Qualified Policies

Notes to Financial Statements (Continued)

NOTE 2—Purchases and Sales (in 000’s):

The cost of purchases and proceeds from the sales of investments for the year ended December 31, 2018 were as follows:



	Purchases		Sales
Separate Account-I (Tax-Qualified Policies)
Common Stock Investment Divisions
Single Premium Policies	$	2,102	$	2,425
Flexible Premium Policies	6,300		6,846

Bond Investment Divisions
Single Premium Policies	101		402
Flexible Premium Policies	422		1,318

Money Market Investment Divisions
Single Premium Policies	3		18
Flexible Premium Policies	9		61

Total	$	8,937	$	11,070

Separate Account-II (Non-Qualified Policies)
Common Stock Investment Divisions
Single Premium Policies	$	2,929	$	2,469
Flexible Premium Policies	837		865

Bond Investment Divisions
Single Premium Policies	181		884
Flexible Premium Policies	56		118

Money Market Investment Divisions
Single Premium Policies	13		25
Flexible Premium Policies	5		24

Total	$	4,021	$	4,385



NOTE 3—Expenses and Related Party Transactions:

New York Life Investment Management LLC (“New York Life Investments”) provides investment advisory services to the MainStay VP Funds Trust for a fee. New York Life Investments retains several sub-advisors, including, MacKay Shields LLC ("MacKay") and New York Life Investors (“NYL Investors”) to provide investment advisory services to certain portfolios of the MainStay VP Funds Trust. New York Life Investments, MacKay and NYL Investors are indirect, wholly-owned subsidiaries of NYLIC.

Effective January 1, 2018, the portfolio managers from Cornerstone Capital Management Holdings LLC ("CCM") who manage all or a portion of the day-to-day investment operations of the Portfolios transitioned from CCM to MacKay, which is also a wholly-owned, fully autonomous subsidiary of NYLIC.

NYLIAC deducts an annual policy service charge for Flexible Premium policies on each policy anniversary date and upon surrender, if on the policy anniversary and/or date of surrender the policy’s accumulation value is less than $10,000. This charge is the lesser of $30 or 1% of the policy’s accumulation value. This charge covers the cost for providing services such as collecting, processing and confirming purchase payments. This charge is shown as a reduction to payments received from policyowners in the accompanying Statements of Changes in Net Assets.

NYLIAC deducts a surrender charge on certain partial withdrawals or surrenders from Single Premium and Flexible Premium policies. For Single Premium policies, NYLIAC assesses a charge based on the length of time each payment is in the policy before it is withdrawn. Single Premium policyholders can make up to four additional purchase payments each policy year, with a maximum cumulative total of $8,000 per policy year. Additional premiums will not be accepted into a policy once the annuitant has reached the later of age 65 or 10 years from the date the policy was issued. The surrender charge for Single Premium policyholders is 7% of the amount withdrawn or surrendered during the first policy year that a purchase payment is made. This charge declines 1% for each additional policy year that a purchase payment is in the policy until the seventh policy year, after which no charge is made. For Flexible Premium policies, the maximum allowable dollar amount for additional premium payments per policy year is the greater of $7,500 or

F-9

NYLIAC MFA Separate Accounts-I and -II

Tax-Qualified and Non-Qualified Policies

Notes to Financial Statements (Continued)



NOTE 3—Expenses and Related Party Transactions (Continued):

twice the policy’s annualized initial premium. Additional premiums will not be accepted into a policy once the annuitant has reached the later of age 65 or 10 years from the date the policy was issued. The surrender charge for Flexible Premium policies is 7% of the amount withdrawn or surrendered during the first four policy years. This charge then declines 1% each policy year until the tenth policy year, after which no charge is made. These charges are recorded with surrenders in the accompanying Statements of Changes in Net Assets. Surrender charges are paid to NYLIAC.

Single and Flexible Premium policies of Separate Account-I and Separate Account-II are charged for the mortality and expense risks assumed by NYLIAC. Additionally, Flexible Premium policies are charged for administrative services provided by NYLIAC. These charges are made daily at an annual rate of 1.25% for mortality and expense risks and an additional .50% for administrative charges on Flexible Premium policies, of the daily average variable accumulation value of each Investment Division, and is the same rate for each of the five periods presented in the Financial Highlights section. These charges are disclosed in the accompanying Statement of Operations.

NYLIAC MFA Separate Account-I and Separate Account-II policyowners may pay certain portfolio company (“Funds”) operating expenses during the time they own their policy, which are reflected in the daily computation of NAVs for the Funds. NYLIAC may receive payment or compensation from the Funds resulting from certain of these operating expenses in connection with the administration, distribution and other services it provides to the Funds, some of whom may be affiliates of either NYLIAC or MFA Separate Account-I and Separate Account-II. Management Fees (which may include administration and/or advisory fees) range from 0.40% to 0.54% and other expenses are 0.03%. These ranges are shown as a percentage of average net assets as of December 31, 2017, and approximate the ranges as of December 31, 2018.

NOTE 4—Distribution of Net Income:

Separate Account-I and Separate Account-II do not expect to declare dividends to policyowners from accumulated net investment income and realized gains. The income and gains are distributed to policyowners as part of withdrawals of amounts (in the form of surrenders, death benefits, transfers, or annuity payments) in excess of the net premium payments.

NOTE 5—Changes in Units Outstanding (in 000’s):

The changes in units outstanding for the years ended December 31, 2018 and 2017 were as follows:



	2018					2017
	Units Issued	Units Redeemed		Net Increase (Decrease)		Units Issued	Units Redeemed		Net Increase (Decrease)
Separate Account-I (Tax-Qualified Policies)
Common Stock Investment Divisions
Single Premium Policies	—	(13	)	(13	)	1	(23	)	(22	)
Flexible Premium Policies	2	(43	)	(41	)	3	(56	)	(53	)

Bond Investment Divisions
Single Premium Policies	—	(6	)	(6	)	1	(17	)	(16	)
Flexible Premium Policies	2	(22	)	(20	)	2	(29	)	(27	)

Money Market Investment Divisions
Single Premium Policies	—	(1	)	(1	)	—	(2	)	(2	)
Flexible Premium Policies	1	(3	)	(2	)	—	(5	)	(5	)

Separate Account-II (Non-Qualified Policies)
Common Stock Investment Divisions
Single Premium Policies	1	(13	)	(12	)	6	(43	)	(37	)
Flexible Premium Policies	—	(5	)	(5	)	1	(11	)	(10	)

Bond Investment Divisions
Single Premium Policies	1	(13	)	(12	)	2	(19	)	(17	)
Flexible Premium Policies	—	(2	)	(2	)	—	(6	)	(6	)

Money Market Investment Divisions
Single Premium Policies	—	(1	)	(1	)	—	(3	)	(3	)
Flexible Premium Policies	—	(1	)	(1	)	—	(1	)	(1	)

F-10

NYLIAC MFA Separate Accounts-I and -II

Tax-Qualified and Non-Qualified Policies

Notes to Financial Statements (Continued)

NOTE 6—Financial Highlights:

The following table presents financial highlights for each Investment Division as of December 2018, 2017, 2016, 2015 and 2014:



		Net Assets (in 000’s)		Units Outstanding (in 000’s)		Variable Accumulation Unit Value			Total Return¹	Investment Income Ratio ²

Separate Account-I (Tax-Qualified Policies)
Common Stock Investment Divisions	2018	$	17,083		116		$	147.37	(7.0)%	1.5%
Single Premium Policies	2017	20,454			129		158.50		21.3%	1.3%
	2016	19,712			151		130.65		7.8%	1.5%
	2015	19,963			165		121.24		(0.4)%	1.3%
	2014	22,663			186		121.72		13.1%	1.3%
Common Stock Investment Divisions	2018	$	50,524		408		$	123.71	(7.5)%	1.6%
Flexible Premium Policies	2017	60,063			449		133.72		20.7%	1.3%
	2016	55,572			502		110.78		7.2%	1.5%
	2015	59,031			571		103.31		(0.9)%	1.3%
	2014	66,088			634		104.24		12.5%	1.3%
Bond Investment Divisions	2018	$	3,144		50		$	62.56	(2.2)%	2.6%
Single Premium Policies	2017	3,585			56		63.99		2.6%	2.2%
	2016	4,522			72		62.39		2.2%	2.5%
	2015	4,763			78		61.02		(1.0)%	2.3%
	2014	5,571			90		61.65		4.5%	1.9%
Bond Investment Divisions	2018	$	10,288		196		$	52.51	(2.7)%	2.8%
Flexible Premium Policies	2017	11,637			216		53.99		2.1%	2.5%
	2016	12,863			243		52.90		1.7%	2.6%
	2015	14,213			273		52.00		(1.5)%	2.4%
	2014	16,076			305		52.80		4.0%	2.0%
Money Market Investment Divisions	2018	$	176		8		$	22.63	0.1%	1.4%
Single Premium Policies	2017	192			9		22.60		(0.8)%	0.4%
	2016	248			11		22.79		(1.2)%	0.0%
	2015	453			20		23.07		(1.2)%	0.0%
	2014	571			24		23.36		(1.2)%	0.0%
Money Market Investment Divisions	2018	$	484		26		$	18.99	(0.4)%	1.9%
Flexible Premium Policies	2017	537			28		19.07		(1.3)%	0.6%
	2016	644			33		19.32		(1.7)%	0.0%
	2015	738			38		19.65		(1.7)%	0.0%
	2014	869			43		20.00		(1.7)%	0.0%

F-11

NYLIAC MFA Separate Accounts-I and -II

Tax-Qualified and Non-Qualified Policies

Notes to Financial Statements (Continued)

NOTE 6—Financial Highlights (Continued):



		Net Assets (in 000’s)		Units Outstanding (in 000’s)		Variable Accumulation Unit Value			Total Return¹	Investment Income Ratio ²
Separate Account-II (Non-Qualified Policies)
Common Stock Investment Divisions	2018	$	23,972		163		$	147.37	(7.0)%	1.6%
Single Premium Policies	2017	27,745			175		158.50		21.3%	1.4%
	2016	27,750			212		130.66		7.8%	1.5%
	2015	27,827			230		121.24		(0.4)%	1.3%
	2014	30,609			251		121.72		13.1%	1.3%
Common Stock Investment Divisions	2018	$	6,361		51		$	123.71	(7.5)%	1.5%
Flexible Premium Policies	2017	7,500			56		133.72		20.7%	1.3%
	2016	7,287			66		110.78		7.2%	1.5%
	2015	7,374			71		103.31		(0.9)%	1.3%
	2014	8,221			79		104.24		12.5%	1.2%
Bond Investment Divisions	2018	$	5,252		84		$	62.79	(2.2)%	2.7%
Single Premium Policies	2017	6,190			96		64.23		2.6%	2.4%
	2016	7,073			113		62.63		2.2%	2.6%
	2015	7,783			127		61.25		(1.0)%	2.4%
	2014	8,739			141		61.89		4.5%	2.0%
Bond Investment Divisions	2018	$	1,340		25		$	52.60	(2.7)%	2.8%
Flexible Premium Policies	2017	1,460			27		54.07		2.1%	2.3%
	2016	1,760			33		52.98		1.7%	2.6%
	2015	1,881			36		52.08		(1.5)%	2.4%
	2014	2,060			39		52.88		4.0%	2.0%
Money Market Investment Divisions	2018	$	182		8		$	22.63	0.1%	1.4%
Single Premium Policies	2017	194			9		22.60		(0.8)%	0.4%
	2016	264			12		22.79		(1.2)%	0.0%
	2015	345			15		23.07		(1.2)%	0.0%
	2014	475			20		23.36		(1.2)%	0.0%
Money Market Investment Divisions	2018	$	65		3		$	18.99	(0.4)%	1.4%
Flexible Premium Policies	2017	84			4		19.07		(1.3)%	0.4%
	2016	90			5		19.32		(1.7)%	0.0%
	2015	99			5		19.65		(1.7)%	0.0%
	2014	129			6		20.00		(1.7)%	0.0%

Charges and fees levied by NYLIAC are disclosed in Note 3.

Expenses as a percent of average net assets were 1.25%-1.75% excluding expenses of the underlying funds, surrender charges, and policy service charges.

Total returns are not annualized for periods less than a year. These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total returns are calculated for each period indicated or from the effective date through the end of the reporting period.

These amounts represent the dividends excluding distributions of capital gains, received by a subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average investment at net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units.

F-12

Report of Independent Registered Public Accounting Firm

To the Board of Directors of New York Life Insurance and Annuity Corporation and the Policyowners of NYLIAC MFA Separate Account-I and NYLIAC MFA Separate Account-II

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities of the Common Stock Investment Division - Single Premium Policies, the Common Stock Investment Division - Flexible Premium Policies, the Bond Investment Division - Single Premium Policies, the Bond Investment Division - Flexible Premium Policies, the Money Market Investment Division - Single Premium Policies, and the Money Market Investment Division - Flexible Premium Policies of NYLIAC MFA Separate Account-I and NYLIAC MFA Separate Account-II as of December 31, 2018, and the related statements of operations for the year then ended, and the statements of changes in net assets for each of the two years in the period ended December 31, 2018, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Common Stock Investment Division - Single Premium Policies, the Common Stock Investment Division - Flexible Premium Policies, the Bond Investment Division - Single Premium Policies, the Bond Investment Division - Flexible Premium Policies, the Money Market Investment Division - Single Premium Policies, and the Money Market Investment Division - Flexible Premium Policies of NYLIAC MFA Separate Account-I and NYLIAC MFA Separate Account-II as of December 31, 2018 and the results of each of their operations for the year then ended, and the changes in each of their net assets for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the New York Life Insurance and Annuity Corporation management. Our responsibility is to express an opinion on the financial statements of each of the investment divisions in the NYLIAC MFA Separate Account-I and NYLIAC MFA Separate Account-II based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to each of the investment divisions in the NYLIAC MFA Separate Account-I and NYLIAC MFA Separate Account-II in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of investments owned as of December 31, 2018 by correspondence with the transfer agents of the investee mutual funds. We believe that our audits provide a reasonable basis for our opinions.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 21, 2019

We have served as the auditor of one or more of the investment divisions in NYLIAC MFA Separate Account-I and NYLIAC MFA Separate Account-II since at least 1994. We have not been able to determine the specific year we began serving as auditor.

F-13

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A wholly-owned subsidiary of

New York Life Insurance Company)

FINANCIAL STATEMENTS

(STATUTORY BASIS)

December 31, 2018, 2017 and 2016

LOGO

Report of Independent Auditors

To the Board of Directors of New York Life Insurance and Annuity Corporation:

We have audited the accompanying statutory financial statements of New York Life Insurance and Annuity Corporation (the “Company”), which comprise the statutory statements of financial position as of December 31, 2018 and 2017, and the related statutory statements of operations, of changes in capital and surplus, and of cash flows for each of the three years in the period ended December 31, 2018.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Delaware State Insurance Department. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note 2 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Delaware State Insurance Department, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

PricewaterhouseCoopers LLP, PricewaterhouseCoopers Center, 300 Madison Avenue, New York, NY 10017

T: (646) 471 3000, F: (813) 286 6000, www.pwc.com/us

LOGO

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles” paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2018 and 2017, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2018.

Opinion on Statutory Basis of Accounting

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in accordance with the accounting practices prescribed or permitted by the Delaware State Insurance Department described in Note 2.

Emphasis of Matter

As disclosed in Note 11 to the financial statements, the Company has entered into significant related party transactions with New York Life Insurance Company and its affiliates. Our opinion is not modified with respect to this matter.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the statutory-basis financial statements taken as a whole. The supplemental schedules of the Company as of December 31, 2018 and for the year then ended are presented to comply with the National Association of Insurance Commissioners’ Annual Statement Instructions and Accounting Practices and Procedures Manual and for purposes of additional analysis and are not a required part of the statutory-basis financial statements. The supplemental schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the statutory-basis financial statements. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the statutory-basis financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the statutory-basis financial statements or to the statutory-basis financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental schedules are fairly stated, in all material respects, in relation to the statutory-basis financial statements taken as a whole.

LOGO

New York, New York

March 13, 2019

Table of Contents



	Page Number
Independent Auditor's Report	1
Statutory Statements of Financial Position	3
Statutory Statements of Operations	4
Statutory Statements of Changes in Capital and Surplus	5
Statutory Statements of Cash Flows	6
Notes to Statutory Financial Statements
Note 1 - Nature of Operations	8
Note 2 - Basis of Presentation	8
Note 3 - Significant Accounting Policies	8
Note 4 - Business Risks and Uncertainties	15
Note 5 - Recent Accounting Pronouncements	15
Note 6 - Investments	16
Note 7 - Derivative Instruments and Risk Management	26
Note 8 - Separate Accounts	31
Note 9 - Fair Value Measurements	34
Note 10 - Investment Income and Capital Gains and Losses	43
Note 11 - Related Party Transactions	46
Note 12 - Insurance Liabilities	49
Note 13 - Reinsurance	51
Note 14 - Benefit Plans	53
Note 15 - Commitments and Contingencies	53
Note 16 - Income Taxes	56
Note 17 - Capital and Surplus	60
Note 18 - Dividends to Stockholders	60
Note 19 - Loan-Backed and Structured Security Impairments	61
Note 20 - Subsequent Events	65
Glossary of Terms	66

Supplemental Schedules and Interrogatories
Schedule 1 - Supplemental Schedule of Selected Financial Data	68
Schedule 2 - Summary Investment Schedule	72
Schedule 3 - Investment Risk Interrogatories	74

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A wholly owned subsidiary of New York Life Insurance Company)

STATUTORY STATEMENTS OF FINANCIAL POSITION



	December 31,
	2018			2017
	(in millions)
Assets
Bonds	$	84,920		$	82,299
Common and preferred stocks	1,327			1,406
Mortgage loans	14,210			13,657
Policy loans	894			867
Limited partnerships and other invested assets	1,320			1,271
Cash, cash equivalents and short-term investments	1,891			2,211
Other investments	479			326
Total cash and invested assets	105,041			102,037
Investment income due and accrued	712			692
Interest in annuity contracts	8,673			8,229
Other assets	566			607
Separate accounts assets	38,466			41,286
Total assets	$	153,458		$	152,851
Liabilities, capital and surplus
Liabilities:
Policy reserves	94,131			86,310
Deposit funds	1,308			1,176
Policy claims	244			198
Separate accounts transfers due and accrued	(916		)	(993		)
Obligations under structured settlement agreements	8,673			8,229
Amounts payable under security lending agreements	676			675
Other liabilities	973			1,426
Funds held under coinsurance - affiliated	—			4,015
Interest maintenance reserve	106			154
Asset valuation reserve	1,213			1,189
Separate accounts liabilities	38,464			41,285
Total liabilities	144,872			143,664
Capital and Surplus:
Capital stock - par value $10,000
(20,000 shares authorized,
2,500 issued and outstanding)	25			25
Gross paid in and contributed surplus	3,928			3,928
Unassigned surplus	4,633			5,234
Total capital and surplus	8,586			9,187

Total liabilities, capital and surplus	$	153,458		$	152,851

See accompanying notes to financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A wholly owned subsidiary of New York Life Insurance Company)

STATUTORY STATEMENTS OF OPERATIONS



	Years Ended December 31,
	2018			2017		2016
	(in millions)
Income
Premiums	$	12,301		$	13,392	$	12,770
Net investment income	4,075			3,934		3,795
Other income	920			900		862
Total income	17,296			18,226		17,427
Benefits and expenses
Benefit payments:
Death benefits	676			463		394
Annuity benefits	3,003			2,799		2,555
Surrender benefits	8,044			6,266		5,805
Other benefit payments	80			60		44
Total benefit payments	11,803			9,588		8,798
Additions to policy reserves	7,626			5,855		5,564
Net transfers to (from) separate accounts	(210		)	240		297
Adjustment in funds withheld	(3,886		)	189		179
Operating expenses	1,474			1,487		1,420
Total benefits and expenses	16,807			17,359		16,258
Gain from operations before federal and foreign income taxes	489			867		1,169
Federal and foreign income taxes	214			249		279
Net gain from operations	275			618		890
Net realized capital gains (losses), after taxes and transfers to interest maintenance reserve	(8		)	34		(112		)
Net income	$	267		$	652	$	778

See accompanying notes to financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A wholly owned subsidiary of New York Life Insurance Company)

STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS



	Years Ended December 31,
	2018			2017			2016
	(in millions)
Capital and surplus, beginning of year	$	9,187		$	8,725		$	8,146
Net income	267			652			778
Change in net unrealized capital gains on investments	(73		)	100			32
Change in nonadmitted assets	(160		)	408			(91		)
Change in reserve valuation basis	—			—			(72		)
Change in asset valuation reserve	(24		)	(137		)	(121		)
Change in net deferred income tax	153			(282		)	54
Dividends to stockholder	(600		)	(275		)	—
Prior period correction	(169		)	—			—
Other adjustments, net	5			(4		)	(1		)
Capital and surplus, end of year	$	8,586		$	9,187		$	8,725

See accompanying notes to financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A wholly owned subsidiary of New York Life Insurance Company)

STATUTORY STATEMENTS OF CASH FLOWS



	Years Ended December 31,
	2018			2017			2016
	(in millions)
Cash flows from operating activities:
Premiums received	$	12,279		$	13,378		$	12,765
Net investment income received	3,783			3,585			3,518
Other	910			899			851
Total received	16,972			17,862			17,134
Benefits and other payments	11,644			9,478			8,783
Net transfers to separate accounts	(293		)	302			336
Operating expenses	1,396			1,590			1,379
Federal income taxes	269			288			254
Total paid	13,016			11,658			10,752
Net cash from operating activities	3,956			6,204			6,382
Cash flows from investing activities:
Proceeds from investments sold	2,888			5,287			4,257
Proceeds from investments matured or repaid	10,107			10,985			10,048
Cost of investments acquired	(16,388		)	(21,925		)	(20,896		)
Net change in policy loans	(29		)	—			5
Net cash from investing activities	(3,422		)	(5,653		)	(6,586		)
Cash flows from financing and miscellaneous activities:
Dividends to stockholder	(600		)	(275		)	—
Other miscellaneous uses	(254		)	12			(164		)
Net cash from financing and miscellaneous activities	(854		)	(263		)	(164		)
Net increase (decrease) in cash, cash equivalents and short-term investments	(320		)	288			(368		)
Cash, cash equivalents and short-term investments, beginning of year	2,211			1,923			2,291
Cash, cash equivalents and short-term investments, end of year	$	1,891		$	2,211		$	1,923

See accompanying notes to financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A wholly owned subsidiary of New York Life Insurance Company)

STATUTORY STATEMENTS OF CASH FLOWS (supplemental)



	Years Ended December 31,
	2018		2017		2016
	(in millions)
Supplemental disclosures of cash flow information:
Non-cash activities during the year not included in the Statutory Statements of Cash Flows:
Exchange/conversion of bonds to bonds	$	563	$	336	$	418
Capitalized interest on bonds	$	136	$	136	$	143
Depreciation/amortization on fixed assets	$	73	$	73	$	71
Merger/exchange/spinoff of equity investment to equity investment	$	19	$	26	$	13
Transfer of bond investment to other invested assets	$	17	$	26	$	—
Capitalized interest on mortgage loans	$	2	$	24	$	5
Exchange of bonds to stocks	$	2	$	12	$	88
Transfer of mortgage loans to other invested assets	$	—	$	23	$	—
Transfer of other invested assets to stocks	$	—	$	—	$	51
Bond to be announced commitments - purchased/sold	$	—	$	94	$	903
Other	$	14	$	28	$	27

See accompanying notes to financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

(A wholly-owned subsidiary of New York Life Insurance Company)

NOTES TO STATUTORY FINANCIAL STATEMENTS

December 31, 2018, 2017 and 2016

NOTE 1 - NATURE OF OPERATIONS

New York Life Insurance and Annuity Corporation (“the Company”), domiciled in the State of Delaware, is a direct, wholly-owned subsidiary of New York Life Insurance Company (“New York Life”). The Company’s primary business operations are its life and annuity business and its investment management activities. The Company offers a wide variety of interest sensitive and variable life insurance and annuity products to a large cross section of the insurance market. The Company markets its products in all 50 states of the United States of America and the District of Columbia, primarily through New York Life’s career agency force, with certain products also marketed through independent brokers, brokerage general agents and banks.

NOTE 2 - BASIS OF PRESENTATION

The accompanying financial statements have been prepared using accounting practices prescribed or permitted by the Delaware State Insurance Department (“DSID” or “statutory accounting practices”), which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The DSID recognizes only statutory accounting practices prescribed or permitted by the State of Delaware for determining and reporting the financial position and results of operations of an insurance company and for determining its solvency under the Delaware State Insurance Law. The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of Delaware. Prescribed statutory accounting practices include state laws and regulations. Permitted statutory accounting practices encompass accounting practices that are not prescribed; such practices differ from state to state, may differ from company to company within a state, and may change in the future. The Company has no permitted practices.

Prior Period Correction

The Company determined that it understated reserves dating back to 2014 for a fixed deferred annuity product with guaranteed income benefits. Management evaluated the adjustment and concluded that while the Company's reserves in prior periods were understated, this item was not material to any previously reported annual financial statements. As a result, the Company recorded a prior period correction to reduce surplus by $169 million in 2018, reflecting the cumulative impact for the years 2017 and prior.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Management is also required to disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from those estimates.

Bonds

Bonds other than loan-backed and structured securities are stated at amortized cost using the interest method. Bonds in or near default (rated NAIC 6) are stated at the lower of amortized cost or fair value. Refer to Note 9 - Fair Value Measurements, for a discussion of the valuation approach and methods for bonds.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

SVO-Identified bond Exchange Traded Funds ("ETFs") are stated at fair value and reported as bonds. Refer to Note 9 - Fair Value Measurements, for discussion on the valuation approach and methods for bonds.

Loan-backed and structured securities, which are included in bonds, are valued at amortized cost using the interest method including current assumptions of projected cash flows. Loan-backed and structured securities in or near default (rated NAIC 6) are stated at the lower of amortized cost or fair value. Amortization of premium or accretion of discount from the purchase of these securities considers the estimated timing and amount of cash flows of the underlying loans, including prepayment assumptions based on data obtained from external sources or internal estimates. Projected future cash flows are updated monthly, and the amortized cost and effective yield of the securities are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. For high credit quality loan-backed and structured securities (those rated AA or above at the date of acquisition), the adjustments to amortized cost are recorded as a charge or credit to net investment income in accordance with the retrospective method. For loan-backed and structured securities that are not of high credit quality (those rated below AA at date of acquisition), certain floating rate securities and securities with the potential for a loss of a portion of the original investment due to contractual prepayments (e.g., interest only securities), the effective yield is adjusted prospectively for any changes in estimated cash flows.

All acquisitions of securities are recorded in the financial statements on a trade date basis except for the acquisitions of private placement bonds, which are recorded on the funding date.

Preferred Stocks

Preferred stocks in “good standing” (NAIC designation of 1 to 3) are valued at amortized cost. Preferred stocks “not in good standing” (NAIC designation of 4 to 6) are valued at the lower of amortized cost or fair value. Refer to Note 9 - Fair Value Measurements, for a discussion of the valuation approach and methods for preferred stocks.

Common Stocks

Common stocks include the Company’s investments in unaffiliated stocks which are carried at fair value. Unrealized gains and losses are reflected in surplus, net of deferred taxes. Refer to Note 9 - Fair Value Measurements, for a discussion of the valuation approach and methods for common stocks.

Other than Temporary Impairments

The cost basis of bonds and equity securities is adjusted for impairments in value that are deemed to be other than temporary. An other-than-temporary loss is recognized in net income when it is anticipated that the amortized cost will not be recovered. Factors considered in evaluating whether a decline in value is other than temporary include: (1) whether the decline is substantial; (2) the duration that the fair value has been less than cost; (3) the financial condition and near-term prospects of the issuer; and (4) the Company’s ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value.

When a bond (other than loan-backed and structured securities), preferred stock or common stock is deemed other-than-temporarily impaired, the difference between the investments’ amortized cost and its fair value is recognized as a realized loss and reported in net income if the loss is credit related, or deferred in the interest maintenance reserve ("IMR") if interest related for bonds.

For loan-backed and structured securities, the entire difference between the security’s amortized cost and its fair value is recognized in net income only when the Company (1) has the intent to sell the security or (2) it does not have the intent and ability to hold the security to recovery. If neither of these two conditions exists, a realized loss is recognized in net income for the difference between the amortized cost basis of the security and the net present value of projected future cash flows expected to be collected. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the loan-backed or structured security prior to impairment.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

The determination of cash flow estimates in the net present value calculation is subjective and methodologies will vary, depending on the type of security. The Company considers all information relevant to the collectability of the security, including past events, current conditions, and reasonably supportable assumptions and forecasts in developing the estimate of cash flows expected to be collected. This information generally includes, but may not be limited to, the remaining payment terms of the security, estimated prepayment speeds, defaults, recoveries upon liquidation of the underlying collateral securing the notes, the financial condition of the issuer(s), credit enhancements and other third-party guarantees. In addition, other information, such as industry analyst reports and forecasts, sector credit ratings, the financial condition of the bond insurer for insured fixed income securities and other market data relevant to the collectability may also be considered, as well as the expected timing of the receipt of insured payments, if any. The estimated fair value of the collateral may be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of the collateral for recovery.

The new cost basis of an impaired security is not adjusted for subsequent increases in estimated fair value. In periods subsequent to the recognition of an other-than-temporary impairment ("OTTI"), the impaired bond security is accounted for as if it had been purchased on the measurement date of the impairment. Accordingly, the discount (or reduced premium) based on the new cost basis may be accreted (or amortized) into net investment income in future periods based on prospective changes in cash flow estimates, to reflect adjustments to the effective yield.

Mortgage Loans

Mortgage loans on real estate are carried at unpaid principal balances, net of discounts, premiums, deferred origination fees, and specific valuation allowances, and are collateralized. Specific valuation allowances are established for the excess carrying value of the mortgage loan over the estimated fair value of the collateral as an unrealized loss in surplus, when it is probable that based on current information and events, the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. Fair value of the collateral is estimated by performing an internal or external current appraisal. If impairment is deemed to be other-than-temporary, which can include a loan modification that qualifies as a troubled debt restructuring (“TDR”), a direct write-down is recognized as a realized loss reported in net income, and a new cost basis for the individual mortgage loan, which is equal to the fair value of the collateral, less costs to obtain and sell, is established. Refer to Note 9 - Fair Value Measurements, for a discussion of the valuation approach and methods for mortgage loans.

The Company accrues interest income on mortgage loans to the extent it is deemed collectible. The Company places loans on non-accrual status, and ceases to recognize interest income when management determines that the collection of interest and repayment of principal is not probable. Any accrued but uncollected interest is reversed out of interest income once a loan is put on non-accrual status. Interest payments received on mortgage loans where interest payments have been deemed uncollectible are recognized on a cash basis and recorded as interest income. If a determination is made that the principal will not be collected, the interest payment received is used to reduce the principal balance. If a mortgage loan has any investment income due and accrued that is 90 days past due and collectible, the investment income will continue to accrue but all accrued interest related to the mortgage loan is reported as a nonadmitted asset, until such time that it has been paid or is deemed uncollectible.

Real Estate

Real estate includes properties that are directly-owned real estate properties and real estate property investments that are directly and wholly-owned through a limited liability company and meet certain criteria. Real estate held for the production of income are stated at cost less accumulated depreciation and encumbrances. Real estate held for sale is stated at the lower of cost less accumulated depreciation or fair value, less encumbrances and estimated costs to sell, which may result in an OTTI recognized as a realized loss in net income. Depreciation of real estate held for the production of income is calculated using the straight-line method over the estimated lives of the assets, generally 40 years. Costs of permanent improvements are depreciated over their estimated useful life.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Policy Loans

Policy loans are stated at the aggregate balance due. The excess of the unpaid balance of a policy loan that exceeds the cash surrender value is nonadmitted.

Limited Partnerships and Limited Liability Companies

Limited partnerships and limited liability companies which have admissible audits are carried at the underlying audited equity of the investee. The financial statements of equity method investees are usually not received sufficiently timely for the Company to apply the equity method at each reporting period. Therefore, the equity pick-up on these investments has been recorded on a one to three-month lag.

The new cost basis of an impaired limited partnership is not adjusted for subsequent increases in the underlying audited equity of the investee. The Company nonadmits the entire investment when an admissible audit is not performed. Dividends and distributions from limited partnerships and limited liability companies, other than those deemed a return of capital, are recorded in net investment income. Undistributed earnings are included in unrealized gains and losses and are reflected in surplus, net of deferred taxes.

Low-Income Housing Tax Credit (“LIHTC”) investments, which are included in limited partnerships and other invested assets, are recorded at proportional amortized cost and include remaining unfunded commitments. The carrying value of the investment is amortized into income in proportion to the actual and projected future amounts of tax credits and deductible losses. The amortization is recorded through net investment income.

Derivative Instruments

Derivative instruments that qualify and are designated for hedge accounting IMR are transferred to the IMR, net of taxes.

Derivative instruments that qualify and are designated for hedge accounting are valued in a manner consistent with the items being hedged. Periodic payments and receipts on these derivatives are recorded on an accrual basis within net investment income for hedges of fixed income securities, other income for hedges of liabilities, and net realized capital gains and losses for hedges of net investments in foreign operations. Net realized gains and losses are recognized upon termination or maturity of these contracts in a manner consistent with the hedged item and when subject to the IMR, are transferred to the IMR, net of taxes.

Derivative instruments that do not qualify or are not designated for hedge accounting are carried at fair value and changes in fair value are recorded in surplus as unrealized gains and losses, net of deferred taxes. Periodic payments and receipts on these derivatives are recorded on an accrual basis within net investment income for hedges of fixed income securities and other income for hedges of liabilities and net realized capital gains and losses for hedges of foreign net investments and credit default swaps. Upon termination or maturity the gains or losses on these contracts are recognized in net realized capital gains and losses, net of taxes. Realized gains or losses on terminated or matured derivatives, which are subject to the IMR, are transferred to the IMR, net of taxes.

Cash, Cash Equivalents and Short-term Investments

Cash and cash equivalents includes cash on hand, amounts due from banks and highly liquid debt instruments that have original maturities of three months or less at date of purchase and are carried at amortized cost. Cash and cash equivalents also include money market mutual funds which are stated at fair value. Short-term investments consist of securities with remaining maturities of one year or less, but greater than three months at the time of acquisition and are carried at amortized cost, which approximates fair value.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Asset Valuation Reserve

The asset valuation reserve ("AVR") is used to stabilize surplus from fluctuations in the market value of bonds, stocks, mortgage loans, real estate, limited partnerships and other investments. Changes in the AVR are accounted for as direct increases or decreases in surplus. The IMR captures interest related realized gains and losses on sales (net of taxes) of bonds, preferred stocks mortgage loans, interest related other-than-temporary impairments (net of taxes) and realized gains or losses (net of taxes) on terminated interest rate related derivatives which are amortized into net income over the expected years to maturity of the investments sold or the item being hedged using the grouped method. An interest related other-than-temporary impairment occurs when the Company has the intent to sell an investment, at the reporting date, before recovery of the cost of the investment. For loan-backed and structured securities, the non-interest related other-than-temporary impairment is booked to the AVR, and the interest related portion to the IMR.

Loaned Securities and Repurchase Agreements

The Company enters into securities lending agreements whereby certain investment securities are loaned to third-parties. Securities loaned are treated as financing arrangements. With respect to securities loaned, in order to reduce the Company’s risk under these transactions, the Company requires initial cash collateral equal to 102% of the fair value of domestic securities loaned. The Company records an offsetting liability in amounts payable under security lending agreements. The Company monitors the fair value of securities loaned with additional collateral obtained as necessary. The borrower of the loaned securities is permitted to sell or repledge those securities.

The Company enters into dollar roll repurchase agreements to sell and repurchase securities. Assets to be repurchased are the same, or substantially the same, as the assets sold. The Company agrees to sell securities at a specified price and repurchase the securities at a lower price. The Company receives cash in the amount of the sales proceeds and establishes a liability equal to the repurchase amount. The difference between the sale and repurchase amounts represents deferred income which is earned over the life of the agreement. The liability for repurchasing the assets is included in other liabilities.

The Company enters into tri-party reverse repurchase agreements to purchase and resell short-term securities. The Company receives securities as collateral, having a fair value at least equal to 102% of the purchase price paid by the Company for the securities and the Company’s designated custodian takes possession of this collateral. The Company is not permitted to sell or repledge these securities. The collateral is not recorded on the Company’s financial statements. However, if the counterparty defaults, the Company would then exercise its rights with respect to the collateral, including a sale of the collateral. The fair value of the securities held as collateral is monitored daily and additional collateral is obtained, where appropriate, to protect against credit exposure. The Company records the amount paid for securities purchased under agreements to resell in cash, cash equivalents and short-term investments.

Premiums and Related Expenses

Life premiums are recognized as revenue when due. Annuity considerations are recognized as revenue when received. Commissions and other costs associated with acquiring new business are charged to operations as incurred. Amounts received or paid under deposit type contracts without mortality or morbidity risk are not reported as income or benefits but are recorded directly as an adjustment to the liability for deposit funds.

Net Investment Income

Income from investments, including amortization of premium, accrual of discount and similar items, is recorded within net investment income, unless otherwise stated herein.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Policy Reserves

Policy reserves are based on mortality tables and valuation interest rates, which are consistent with statutory requirements and are designed to be sufficient to provide for contractual benefits. The Company holds reserves greater than those developed under the minimum statutory reserving rules when the valuation actuary determines that the minimum statutory reserves are inadequate. Actual results could differ from these estimates and may result in the establishment of additional reserves. The valuation actuary monitors actual experience and, where circumstances warrant, revises assumptions and the related estimates for policy reserves. Refer to Note 12 - Insurance Liabilities, for discussion of reserves in excess of minimum NAIC requirements.

Federal Income Taxes

Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year and any adjustments to such estimates from prior years. Deferred federal income tax assets (“DTAs”) and deferred federal income tax liabilities (“DTLs”) are recognized for expected future tax consequences of temporary differences between statutory and taxable income. Temporary differences are identified and measured using a balance sheet approach whereby statutory and tax balance sheets are compared. Changes in DTAs and DTLs are recognized as a separate component of surplus (except for the net deferred tax asset related to unrealized gains, which is included in unrealized gains and losses). Net DTAs are admitted to the extent permissible under NAIC SAP. Gross DTAs are reduced by a statutory valuation allowance, if it is more likely than not that some portion or all of the gross DTA will not be realized. The Company is required to establish a tax loss contingency if it is more likely than not that a tax position will not be sustained. The amount of the contingency reserve is management’s best estimate of the amount of the original tax benefit that could be reversed upon audit, unless the best estimate is greater than 50% of the original tax benefit, in which case the reserve is equal to the entire tax benefit.

The Company is a member of an affiliated group, which files a consolidated federal income tax return with New York Life. The consolidated income tax provision or benefit is allocated among the members of the group in accordance with a tax allocation agreement. This tax allocation agreement provides that the Company computes its share of the consolidated tax provision or benefit, in general, on a separate company basis, and may, where applicable, include the tax benefits of operating or capital losses utilizable in the New York Life's consolidated returns. Intercompany tax balances are settled quarterly on an estimated basis with a final settlement occurring within 30 days of the filing of the consolidated tax return. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year and any adjustments to such estimates from prior years.

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into law, making significant changes to the U.S. Internal Revenue Code ("IRC").

On February 8, 2018, the NAIC issued Interpretation 18-01 ("INT 18-01") to address the reporting and updating of estimates that companies are required to reflect as various accounting adjustments in their financial statements as a result of the TCJA. This guidance provides that, although some accounting computations may be considered complete, other accounting computations or assessments may be considered incomplete when the financial statements are filed. As such, for those items which are incomplete but for which a reasonable estimate can be made, those amounts should be recorded as provisional in the financial statements not to extend beyond one year of the TCJA enactment date of December 22, 2017. See Note 16 - Income Taxes for additional information on the TCJA and the INT 18-01 provisional amounts.

Separate Accounts

The Company has established both non-guaranteed and guaranteed separate accounts with varying investment objectives which are segregated from the Company’s general account and are maintained for the benefit of separate accounts policyholders. Assets held in non-guaranteed separate accounts are stated at market value. Assets held in guaranteed separate accounts are carried at the same basis as the general account up to the value of policyholder reserves and at fair value thereafter.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

The liability for separate accounts represents policyholders’ interests in the separate accounts assets, excluding liabilities representing due and accrued transfers to the general account. The liability for non-guaranteed separate accounts represents policyholders’ interests in the separate accounts assets, including accumulated net investment income and realized and unrealized gains and losses on those assets. For the guaranteed separate accounts, the liability represents amounts due to policyholders pursuant to the terms of the contract.

Other Assets and Liabilities

Other assets primarily consist of net DTAs and other receivables.

Other liabilities primarily consist of payable to parent, derivative liabilities, amounts payable for undelivered securities and reinsurance payables.

Nonadmitted Assets

Under statutory accounting practices, certain assets are designated as nonadmitted assets and are not included in the accompanying Statutory Statements of Financial Position since these assets are not permitted by the DSID to be taken into account in determining the Company’s financial condition.

Nonadmitted assets typically include agents’ debit balances, DTAs not realizable within three years, and receivables over ninety days past due. Changes to nonadmitted assets are reported as a direct adjustment to surplus in the accompanying Statutory Statements of Changes in Surplus.

Fair Value of Financial Instruments and Insurance Liabilities

Fair value of various assets and liabilities are included throughout the notes to the financial statements. Specifically, fair value disclosure of investments held is reported in Note 6 - Investments. Fair values for derivative instruments are included in Note 7 - Derivative Instruments and Risk Management. Fair values for insurance liabilities are reported in Note 12 - Insurance Liabilities. The aggregate fair value of all financial instruments summarized by type is included in Note 9 - Fair Value Measurements.

Contingencies

Amounts related to contingencies are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable.

At the inception of a guarantee, the Company recognizes an initial liability at fair value for the obligations it has undertaken, regardless of the probability of performance under the guarantee.

Foreign Currency Transactions

For foreign currency items, income and expenses are translated at the average exchange rate for the period, while assets and liabilities are translated using the spot rate in effect at the date of the statements. Changes in the asset and liability values due to fluctuations in foreign currency exchange rates are recorded as unrealized capital gains and losses in surplus until the asset is sold or exchanged or the liability is settled. Upon settlement, previously recorded unrealized capital gains and losses are reversed, and the foreign exchange gain or loss for the entire holding period is recorded as a realized capital gain or loss in net income.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 4 - BUSINESS RISKS AND UNCERTAINTIES

The Company is exposed to an array of risks, including, but not limited to, regulatory actions, financial risk, risks associated with its investments and operational risk, including cyber security.

The Company is regulated by the insurance departments of the states and territories where it is licensed to do business. Although the federal government does not directly regulate the business of insurance, federal legislation and administrative policies can significantly and adversely affect the insurance industry and the Company. The Company is unable to predict whether any administrative or legislative proposals, at either the federal or state level, will be adopted in the future, or the effect, if any, such proposals would have on the Company.

The Company's insurance liabilities and assets under management are exposed to market risk, policyholder behavior risk and mortality/longevity risk. Market volatility and other equity market conditions may affect the Company’s exposure to risks related to guaranteed death benefits and guaranteed living benefits on variable products. Furthermore, the level of sales of the Company’s insurance and investment products is influenced by many factors, including general market rates of interest, the strength, weakness and volatility of equity markets, and terms and conditions of competing products.

The Company is exposed to the risks normally associated with an investment portfolio, which include interest rate, liquidity, credit and counterparty risks. The Company controls its exposure to these risks by, among other things, closely monitoring and managing the duration and cash flows of its assets and liabilities, maintaining a large percentage of its portfolio in highly liquid securities, engaging in a disciplined process of underwriting, reviewing and monitoring credit risk, and by devoting significant resources to develop and periodically update its risk management policies and procedures.

The Company relies on technology systems and solutions to conduct business and to retain, store and manage confidential information. The failure of the Company’s technology systems and solutions, or those of a vendor, for any reason has the potential to disrupt its operations, result in the loss of customer business, damage the Company’s reputation, and expose the Company to litigation and regulatory action, all of which could adversely impact its profitability.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

Changes in Accounting Principles

Accounting changes adopted to conform to the provisions of NAIC SAP or other state prescribed accounting practices are reported as changes in accounting principles. The cumulative effect of changes in accounting principles is generally reported as an adjustment to unassigned surplus in the period of the change in accounting principle. Generally, the cumulative effect is the difference between the amount of capital and surplus at the beginning of the year and the amount of capital and surplus that would have been reported at that date if the new accounting principles had been applied retroactively for all prior periods. There were no significant accounting changes in 2018 or 2017.

In 2017, the NAIC adopted revisions to Statement of Statutory Accounting Practice ("SSAP") 37 “Mortgage Loans.” The revisions clarify the types of mortgage loan transactions that qualify for accounting and reporting under SSAP 37 in instances where the reporting entity is not the only lender in a mortgage loan transaction. The revisions also incorporate additional disclosures. The adoption of these revisions did not have an impact on the Company’s statement of financial positions or results of operations. New disclosures related to the adoption of this guidance are included in Note 6 - Investments.

In 2016, the NAIC adopted revisions to SSAP 103 “Transfers and Servicing of Financial Assets.” The revisions incorporate new required disclosures for repurchase and reverse repurchase transactions with an effective date of December 31, 2017. New disclosures related to the adoption of this guidance are included in Note 6 - Investments.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS (continued)

Future Adoption of New Accounting Pronouncement

In 2016, the NAIC announced that enough states had passed the new standard valuation law to make the Principle Based Reserving ("PBR") valuation manual operative for individual life products. Under PBR, companies will hold reserves at the higher of the three basis; a) the formulaic reserve using prescribed factors or b) the reserve computed under a single economic scenario using justified company experience assumptions which consists of mortality, expenses and policyholder behavior among other assumptions or c) the reserve based on a wide range of future economic conditions using justified company experience assumptions which consists of mortality, expenses and policyholder behavior among other assumptions. Products passing certain specified exclusion tests may be exempt from the calculation of reserves under b) and/or c) above. Insurers are allowed to voluntarily adopt the new standard on a prospective basis to insurance policies issued on or after January 1, 2017. The new standard is mandatory for policies issued on or after January 1, 2020. The Company is assessing the impact of this guidance on its financial statements.

NOTE 6 - INVESTMENTS

Bonds

The carrying value and estimated fair value of bonds at December 31, 2018 and 2017, by maturity, were as follows (in millions):



	2018				2017
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Due in one year or less	$	4,523	$	4,540	$	3,759	$	3,804
Due after one year through five years	24,938		24,904		23,810		24,349
Due after five years through ten years⁽¹⁾	31,247		30,718		30,750		31,508
Due after ten years	24,212		24,376		23,980		25,610
Total	$	84,920	$	84,538	$	82,299	$	85,271

⁽¹⁾ Includes an affiliated bond issued by Madison Capital Funding LLC (“MCF”). Refer to Note 11 - Related Party Transactions for a more detailed discussion of related party investments.

Corporate bonds are shown based on contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage and asset-backed securities ("ABS") are not due at a single maturity date and therefore are shown based on the expected cash flows of the underlying loans, which includes estimates of anticipated future prepayments.

In addition to the information disclosed above, short-term investments with a carrying value of $8 million and $15 million at December 31, 2018 and 2017, respectively, and cash equivalents with a carrying value of $2,056 million and $2,280 million at December 31, 2018 and 2017, respectively are due in one year or less. Carrying value approximates fair value for these investments.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

At December 31, 2018 and 2017, the distribution of gross unrealized gains and losses on bonds were as follows (in millions):



	2018
	Carrying Value		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. governments	$	5,731	$	194	$	135	$	5,790
All other governments	314		22		2		334
U.S. special revenue and special assessment	15,451		585		280		15,756
Industrial and miscellaneous unaffiliated	61,515		787		1,554		60,748
Parent, subsidiaries, and affiliates	1,909		1		—		1,910
Total	$	84,920	$	1,589	$	1,971	$	84,538



	2017
	Carrying Value		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. governments	$	6,161	$	280	$	84	$	6,357
All other governments	298		29		1		326
U.S. special revenue and special assessment	14,664		843		128		15,379
Industrial and miscellaneous unaffiliated	59,301		2,194		276		61,219
Parent, subsidiaries, and affiliates	1,875		115		—		1,990
Total	$	82,299	$	3,461	$	489	$	85,271

Common and Preferred Stocks

The carrying value of and change in unrealized gains (losses) generated by common and preferred stocks at December 31, 2018, 2017 and 2016 were as follows (in millions):



	2018					2017				2016
	Carrying Value		Change in Unrealized Gains (Losses)			Carrying Value		Change in Unrealized Gains (Losses)		Carrying Value		Change in Unrealized Gains (Losses)
Common stocks	$	1,315	$	(142	)	$	1,393	$	117	$	1,079	$	46
Preferred stocks	12		—			13		—		11		—
Total	$	1,327	$	(142	)	$	1,406	$	117	$	1,090	$	46

Mortgage Loans

The Company’s mortgage loans are diversified by property type, location and borrower, and are collateralized. The maximum and minimum lending rates for new commercial mortgage loans funded during 2018 were 8.4% and 3.4% and funded during 2017 were 10.6% and 2.6%, respectively. The maximum percentage of any one commercial loan to the value of the collateral at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages was 92.4% (average percentage was 52.7% and 52.4% at December 31, 2018 and 2017, respectively). The maximum percentage of any residential loan to the value of the collateral at the time of the loan was 80% (average percentage was 49.3% and 43.4% at December 31, 2018 and 2017, respectively). The Company has no significant credit risk exposure to any one individual borrower.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

The majority of the Company's commercial mortgage loans were held in a form of participations with the carrying value of $14,088 million and $13,520 million at December 31, 2018 and 2017, respectively. These loans were originated or acquired by New York Life. For residential mortgages, the carrying value of participations with New York Life are $2 million and $5 million at December 31, 2018 and 2017 respectively. Refer to Note 11- Related Party Transactions for more details.

At December 31, 2018 and 2017, the distribution of the mortgage loan portfolio by property type and geographic location were as follows ($ in millions):



	2018				2017
	Carrying Value		% of Total		Carrying Value		% of Total
Property Type:
Apartment buildings	$	4,597	32.4	%	$	4,049	29.6	%
Office buildings	4,150		29.2		3,995		29.3
Retail facilities	3,364		23.7		3,615		26.5
Industrial	1,866		13.1		1,718		12.6
Hotels	202		1.4		216		1.6
Residential	24		0.2		35		0.3
Other	6		—		30		0.2
Total	$	14,210	100.0	%	$	13,657	100.0	%



	2018				2017
	Carrying Value		% of Total		Carrying Value		% of Total
Geographic Location:
South Atlantic	$	3,562	25.1	%	$	3,396	24.9	%
Central	3,520		24.8		3,338		24.4
Middle Atlantic	3,030		21.3		2,852		20.9
Pacific	2,916		20.5		2,830		20.7
New England	1,183		8.3		1,155		8.5
Other	—		—		86		0.6
Total	$	14,210	100.0	%	$	13,657	100.0	%

At December 31, 2018 and 2017, $3 million and $4 million, respectively, of mortgage loans were past due 90 days and over.

The Company maintains a watchlist of commercial loans that may potentially be impaired. The general guidelines analyzed to include commercial loans within the watchlist are loan-to-value ratio (“LTV”), asset performance such as debt service coverage ratio, lease rollovers, income/expense hurdles, major tenant or borrower issues, the economic climate, and catastrophic events, among others. Loans placed on the watchlist generally take priority in being revalued in the Company’s inspection/evaluation commercial loan program that revalues properties securing commercial loans. The guideline for analyzing residential loans occurs once a loan is 60 or more days delinquent. At that point, an appraisal or broker’s price opinion of the underlying asset is obtained.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

Fair value of the collateral for commercial mortgages (excluding credit loans) over $5 million is updated triennially, unless a more current appraisal is warranted. Commercial mortgages less than $5 million have an on-site inspection performed by an external inspection service every 3 years. If the loan is determined to be troubled, the loan is more frequently monitored as to its status. LTV, which is based on collateral values, is deemed as one of the key mortgage loan indicators to assess credit quality and to assist in identifying problem loans. At December 31, 2018 and 2017, LTVs on the Company’s mortgage loans were as follows (in millions):



	2018
Loan to Value % (By Class)	Apartment Buildings		Office Buildings		Retail Facilities		Industrial		Hotels		Residential		Other		Total
Above 95%	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
91% to 95%	—		—		—		—		—		—		—		—
81% to 90%	—		43		—		—		—		—		—		43
71% to 80%	491		—		126		—		—		3		—		620
below 70%	4,106		4,108		3,238		1,866		202		21		6		13,547
Total	$	4,597	$	4,151	$	3,364	$	1,866	$	202	$	24	$	6	$	14,210



	2017
Loan to Value % (By Class)	Apartment Buildings		Office Buildings		Retail Facilities		Industrial		Hotels		Residential		Other		Total
Above 95%	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
91% to 95%	—		—		—		—		—		—		—		—
81% to 90%	—		43		—		—		—				—		43
71% to 80%	253		32		161		4		—		5		—		455
below 70%	3,796		3,920		3,454		1,714		216		29		30		13,159
Total	$	4,049	$	3,995	$	3,615	$	1,718	$	216	$	34	$	30	$	13,657

At December 31, 2018 and 2017, impaired mortgage loans were as follows (in millions):



	2018
Type	Impaired Loans with Allowance for Credit Losses		Related Allowance		Impaired Loans Without Allowance for Credit Losses		Average Recorded Investment		Interest Income Recognized		Interest Income on a Cash Basis During the Period
Residential	$	—	$	—	$	3	$	3	$	—	$	—
Commercial	—		—		—		—		—		—
Total	$	—	$	—	$	3	$	3	$	—	$	—



	2017
Type	Impaired Loans with Allowance for Credit Losses		Related Allowance		Impaired Loans Without Allowance for Credit Losses		Average Recorded Investment		Interest Income Recognized		Interest Income on a Cash Basis During the Period
Residential	$	—	$	—	$	4	$	5	$	—	$	—
Commercial	—		—		—		5		—		—
Total	$	—	$	—	$	4	$	10	$	—	$	—

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

Real Estate

At December 31, 2018 and 2017, the carrying value of the Company’s real estate portfolio which is included in Other investments in the accompanying Statutory Statements of Financial Position, consisted of the following (in millions):



	2018		2017
Investment property	$	56	$	56
Acquired through foreclosure	1		1
Total real estate	$	57	$	57

At December 31, 2018 and 2017, the Company had $1 million and $1 million, respectively, of real estate that was held for sale, which consisted of residential properties acquired through foreclosure.

Limited Partnerships and Other Invested Assets

The carrying value of limited partnerships and other invested assets at December 31, 2018 and 2017 consisted of the following (in millions):



	2018		2017
Affiliated non-insurance subsidiaries	$	630	$	600
Limited partnerships and limited liability companies⁽¹⁾	503		475
Other invested assets	121		109
LIHTC investments	66		87
Total limited partnerships and other invested assets	$	1,320	$	1,271

⁽¹⁾At December 31, 2018 and 2017, the Company had $3 million and $12 million, respectively, of investments in limited partnerships and limited liability companies that were nonadmitted, and therefore, excluded from the amounts.

Net investment income (loss) and change in unrealized gains for limited partnerships and other invested assets for the years ended December 31, 2018, 2017 and 2016 consisted of the following (in millions):



	2018					2017					2016
	Net Investment Income (Loss)			Unrealized Gains		Net Investment Income (Loss)			Unrealized Gains		Net Investment Income (Loss)			Unrealized Gains
Limited partnerships and limited liability companies	$	4		$	—	$	39		$	9	$	22		$	12
Affiliated non-insurance subsidiaries	77			29		63			28		56			33
Other invested assets	6			—		5			1		6			—
LIHTC investments	(16		)	—		(36		)	—		(32		)	—
Total limited partnerships and other invested assets	$	71		$	29	$	71		$	38	$	52		$	45

Limited partnerships and limited liability companies primarily consist of limited partnership interests in mezzanine funds, wind energy investments, and other equity investments. Distributions, other than those deemed a return of capital, are recorded as Net investment income in the accompanying Statutory Statements of Operations. Undistributed earnings are included in unrealized gains and losses in surplus.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

Affiliated non-insurance subsidiaries consist of the Company's equity investment in MCF. Refer to Note 11 - Related Party Transactions for more details. Dividends are recorded in Net investment income in the accompanying Statutory Statements of Operations when declared and changes in the equity of subsidiaries are recorded in unrealized gains and losses in surplus.

Other invested assets consist primarily of other investments with characteristics of debt. Interest earned on these investments is included in Net investment income in the accompanying Statutory Statements of Operations.

The Company receives tax credits related to its investments in LIHTC partnerships. The Company’s unexpired tax credits on its investments in LIHTC expire within a range of 1 year to 11 years. During 2018 and 2017, the Company recorded amortization on these investments under the proportional amortized cost method of $16 million and $36 million, respectively. The Company recorded tax credits and other tax benefits on these investments of $26 million, $34 million, and $42 million for 2018, 2017 and 2016, respectively. The minimum holding period required for the Company’s LIHTC investments extends from 1 years to 13 years. The LIHTC investments are periodically subject to regulatory reviews by housing authorities where the properties are located. The Company is not aware of any adverse issues related to such regulatory reviews The Company's investment in LIHTC partnerships includes $11 million and $17 million of unfunded commitments at December 31, 2018 and 2017, respectively.

Assets on Deposit or Pledged as Collateral

At December 31, 2018 and 2017, the Company’s restricted assets (including pledged collateral) were as follows ($ in millions):



	2018
	Gross (Admitted and Nonadmitted) Restricted									Percentage
Restricted Asset Category	Total General Account (G/A)		Total From Prior Year		Increase (Decrease)			Total Admitted Restricted		Gross (Admitted and Non-admitted) Restricted to Total Assets		Admitted Restricted to Total Admitted Assets
Collateral held under security lending agreements	$	675	$	675	$	—		$	675	0.44	%	0.44	%
Subject to reverse repurchase agreements	220		223		(3		)	220		0.14	%	0.14	%
Letter stock or securities restricted as to sale - excluding Federal Home Loan Bank (“FHLB”) capital stock	19		7		12			19		0.01	%	0.01	%
FHLB capital stock	28		26		2			28		0.02	%	0.02	%
On deposit with states	3		4		(1		)	3		0.00	%	0.00	%
Total restricted assets	$	945	$	935	$	10		$	945	0.61	%	0.62	%

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)



	2017
	Gross (Admitted and Nonadmitted) Restricted									Percentage
Restricted Asset Category	Total General Account (G/A)		Total From Prior Year		Increase (Decrease)			Total Admitted Restricted		Gross (Admitted and Non-admitted) Restricted to Total Assets		Admitted Restricted to Total Admitted Assets
Collateral held under security lending agreements	$	675	$	675	$	—		$	675	0.44	%	0.44	%
Subject to reverse repurchase agreements	223		298		(75		)	223		0.15	%	0.15	%
Letter stock or securities restricted as to sale - excluding FHLB capital stock	7		15		(8		)	7		0.00	%	0.00	%
FHLB capital stock	26		24		2			26		0.02	%	0.02	%
On deposit with states	4		4		—			4		0.00	%	0.00	%
Total restricted assets	$	935	$	1,016	$	(81	)	$	935	0.61	%	0.61	%

Loaned Securities and Repurchase Agreements

The Company participates in securities lending programs whereby securities, which are included in investments, are loaned to third parties for the purpose of enhancing income on securities held through reinvestment of cash collateral received upon lending. For securities lending transactions, the Company requires initial collateral, usually in the form of cash, equal to 102% of the fair value of domestic securities loaned. The borrower of the loaned securities is permitted to sell or repledge those securities. At December 31, 2018 and 2017, the Company recorded cash collateral received under these agreements of $675 million, and established a corresponding liability for the same amount, which is included in Amounts payable under security lending agreements in the accompanying Statutory Statements of Financial Position. For securities lending transactions, the carrying value of securities classified as bonds and on loan at December 31, 2018 was $685 million, with a fair value of $659 million. At December 31, 2017, the carrying value was $638 million, with a fair value of $660 million. The reinvested collateral is reported in bonds, cash equivalent and short-term investments in the accompanying Statutory Statements of Financial Position. The total fair value of all reinvested collateral positions was $687 million and $684 million at December 31, 2018 and 2017, respectively.

The Company participates in dollar repurchase agreements to sell and repurchase securities. The purchaser of the securities is permitted to sell or repledge those securities. The liability for repurchasing the assets is included in Borrowed money in the accompanying Statutory Statements of Financial Position. At December 31, 2018 and 2017, the Company was not a party to any dollar repurchase agreements in the general and separate accounts.

At December 31, 2018, the carrying value and fair value of securities held under agreements to purchase and resell was $220 million, which were classified as tri-party reverse repurchase agreements and included with Cash, cash equivalents and short-term investments in the accompanying Statutory Statements of Financial Position. The securities had a weighted average maturity of two days and a weighted average yield of 2.9%. At December 31, 2017, the carrying value and fair value of securities held under agreements to purchase and resell was $223 million, which were classified as tri-party reverse repurchase agreements and included with Cash, cash equivalents and short-term investments in the accompanying Statutory Statements of Financial Position. The securities had a weighted average maturity of four days and a weighted average yield of 1.4%.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

Collateral Received

At December 31, 2018 and 2017, assets received as collateral are reflected within the accompanying Statutory Statements of Financial Position, along with a liability to return such collateral were as follows ($ in millions):



	2018
Cash Collateral Assets	Book/Adjusted Carrying Value		Fair Value		% Total Assets (Admitted and Nonadmitted)		% Total Admitted Assets
Securities lending	$	675	$	675	0.6	%	0.6	%
Derivatives	307		307		0.3		0.3
Total	$	982	$	982	0.9	%	0.9	%



	2017
Cash Collateral Assets	Book/Adjusted Carrying Value		Fair Value		% Total Assets (Admitted and Nonadmitted)		% Total Admitted Assets
Securities lending	$	675	$	675	0.6	%	0.6	%
Derivatives	203		203		0.2		0.2
Total	$	878	$	878	0.8	%	0.8	%

Cash received on securities lending transactions and repurchase agreements is then reinvested in short-term investments and bonds with various maturities.



	2018				2017
Recognized Liability to Return Collateral	Amount		% Total Liabilities		Amount		% Total Liabilities
Amounts payable under securities lending agreements	$	675	0.6	%	$	675	0.7	%
Other liabilities (derivatives)	302		0.3		174		0.2
Separate accounts liabilities (derivatives)	5		—		29		—
Total	$	982	0.9	%	$	878	0.9	%

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

Composition of Collateral Received

The following table presents the term and amounts of cash collateral received under general account securities lending agreements at December 31, 2018 and 2017 (in millions):



	2018
	Remaining Contractual Maturity of the Agreements
	Open		30 days or less		31 to 60 days		61 to 90 days		Greater than 90 days		Total
US. Treasury	$	58	$	—	$	—	$	—	$	—	$	58
U.S. government corporation and agencies	38		—		—		—		—		38
Foreign governments	5		—		—		—		—		5
U.S. corporate	471		—		—		—		—		471
Foreign corporate	103		—		—		—		—		103
Non-agency ABS	—		—		—		—		—		—
Total general account securities lending transactions	$	675	$	—	$	—	$	—	$	—	$	675



	2017
	Remaining Contractual Maturity of the Agreements
	Open		30 days or less		31 to 60 days		61 to 90 days		Greater than 90 days		Total
US. Treasury	$	394	$	—	$	—	$	—	$	—	$	394
U.S. government corporation and agencies	12		—		—		—		—		12
Foreign governments	5		—		—		—		—		5
U.S. corporate	226		—		—		—		—		226
Foreign corporate	38		—		—		—		—		38
Non-agency ABS	—		—		—		—		—		—
Total general account securities lending transactions	$	675	$	—	$	—	$	—	$	—	$	675

At December 31, 2018 and 2017, there were no separate account securities cash collateral received under securities lending agreements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

Reinvestment of Collateral Received

The following tables present the term and aggregate fair value of all securities acquired from the reinvestment of all collateral received at December 31, 2018 and 2017 (in millions):



	2018				2017
	General Account Securities Lending				General Account Securities Lending
Period to Maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Open	$	—	$	—	$	—	$	—
30 days or less	448		448		409		409
31 to 60 days	25		25		31		31
61 to 90 days	5		5		5		5
91 to 120 days	—		—		—		—
121 to 180 days	11		11		14		14
181 to 365 days	40		40		19		19
1 to 2 years	85		85		77		77
2 to 3 years	62		62		93		94
Greater than 3 years	11		11		35		35
Total collateral reinvested	$	687	$	687	$	683	$	684

To help manage the mismatch of maturity dates between the security lending transactions and the related reinvestment of the collateral received, the Company invests in highly liquid assets.

Insurer Self-Certified Securities

The following represents securities for which the Company does not have all the information required for the NAIC to provide an NAIC designation, but for which the Company is receiving timely payments of principal and interest. These securities are referred to as "5GI Securities" ($ in millions):



General Account	2018					2017
Investments	Number of 5GI Securities	Carrying Value		Estimated Fair Value		Number of 5GI Securities	Carrying Value		Estimated Fair Value
Bonds	2	$	3	$	1	—	$	—	$	—
Loan-backed and structured securities	3	5		5		2	54		54
Total	5	$	8	$	6	2	$	54	$	54

The Company did not have any 5GI securities in its separate accounts at December 31, 2018 and 2017.

Wash Sales

In the course of the Company’s investment management activities, securities may be sold and purchased within 30 days of the sale date to meet individual portfolio objectives and to achieve the ongoing rebalancing of exposure.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 6 - INVESTMENTS (continued)

The details by NAIC designation of 3 or below, or unrated, of securities sold during the years ended December 31, 2018 and 2017 (there were none during 2016), and reacquired within 30 days of the sale date are as follows ($ in millions):



2018
Description	NAIC Designation	Number of Transactions	Book Value of Securities Sold		Cost of Securities Repurchased		Realized Gains (Losses)
Bonds	NAIC 3	—	$	—	$	—	$	—
Bonds	NAIC 4	4	1		1		—
Bonds	NAIC 5	1	—		—		—
Bonds	NAIC 6	—	—		—		—
Preferred stock	NAIC 3	1	—		—		—
Preferred stock	NAIC 4	—	—		—		—
Preferred stock	NAIC 5	—	—		—		—
Preferred stock	NAIC 6	—	—		—		—
Common stock		497	70		72		3
		503	$	71	$	73	$	3



2017
Description	NAIC Designation	Number of Transactions	Book Value of Securities Sold		Cost of Securities Repurchased		Realized Gains (Losses)
Bonds	NAIC 3	2	$	3	$	3	$	—
Bonds	NAIC 4	1	1		1		—
Bonds	NAIC 5	4	2		1		—
Bonds	NAIC 6	—	—		—		—
Preferred stock	NAIC 3	1	1		1		—
Preferred stock	NAIC 4	—	—		—		—
Preferred stock	NAIC 5	—	—		—		—
Preferred stock	NAIC 6	—	—		—		—
Common stock		455	53		52		4
		463	$	60	$	58	$	4

NOTE 7 - DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

The Company uses derivative instruments to manage interest rate, equity, and currency risk. These derivative instruments include foreign currency forwards, interest rate and equity options, interest rate futures, interest rate, inflation, and foreign currency swaps. The Company does not engage in derivative instrument transactions for speculative purposes.

The Company may enter into exchange-traded futures and over-the-counter (“OTC”) derivative instruments. Exchange traded derivatives are executed through regulated exchanges and require daily posting of initial and variation margin. The Company is exposed to credit risk resulting from default of the exchange.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 7 - DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

OTC derivatives may either be cleared through a clearinghouse (“OTC-cleared”) or transacted between the Company and a counterparty under bilateral agreements (“OTC-bilateral”). Similar to exchange traded futures, OTC-cleared derivatives require initial and daily variation margin collateral postings. When transacting OTC-cleared derivatives, the Company is exposed to credit risk resulting from default of the clearinghouse and/or default of the Futures Commission Merchant (e.g. clearinghouse agent).

When transacting OTC-bilateral derivatives, the Company is exposed to the potential default of its OTC-bilateral counterparty. The Company deals with a large number of highly rated OTC-bilateral counterparties, thus limiting its exposure to any single counterparty. The Company has controls in place to monitor credit exposures of OTC-bilateral counterparties by limiting transactions within specified dollar limits and continuously assessing the creditworthiness of its counterparties. The Company uses master netting agreements and adjusts transaction levels, when appropriate, to minimize risk. The Company’s policy is to not offset amounts for derivatives executed with the same counterparty under the same master netting agreement with the associated collateral.

Credit risk is managed by entering into transactions with creditworthy counterparties and obtaining collateral where appropriate. All of the net credit exposure for the Company from derivative contracts is with investment-grade counterparties. For OTC-cleared and exchange traded derivatives, the Company obtains collateral through variation margin which is adjusted daily based on the parties’ net derivative position.

For OTC-bilateral derivatives, the Company obtains collateral in accordance with the terms of credit support annexes ("CSAs") negotiated as part of the master agreements entered into with most OTC-bilateral counterparties. The CSA defines the terms under which collateral is transferred between the parties in order to mitigate credit risk arising from “in the money” derivative positions. The CSA requires that an OTC-bilateral counterparty post collateral to secure its anticipated derivative obligation, taking into account netting arrangements. In addition, certain of the Company’s contracts require that if the Company’s (or its counterparty’s) credit rating were to fall below a specified rating assigned by a credit rating agency, the other party could request immediate payout on all transactions under the contracts or full collateralization of the positions thereunder. Cash collateral is invested in short-term investments The aggregate fair value of all OTC-bilateral derivative instruments with credit-risk-related contingent features that are in a net liability position at December 31, 2018 was $2 million, for which the Company has posted collateral with a fair value of $2 million. If the credit contingent features had been triggered at December 31, 2018, the Company estimates that it would not have had to post additional collateral for either a one notch downgrade in the Company’s credit rating or for a downgrade that would trigger full collateralization.

The Company may be exposed to credit-related losses in the event that an OTC-bilateral counterparty fails to perform its obligations under its contractual terms. In contractual arrangements with OTC-bilateral counterparties that do not include netting provisions, in the event of default, credit exposure is limited to the positive fair value of derivatives at the reporting date. In contractual arrangements with OTC-bilateral counterparties that include netting provisions, in the event of default, credit exposure is limited to the net fair value, if positive, of all derivatives at the reporting date. At December 31, 2018, the Company held collateral for derivatives of $325 million, including $23 million of securities. Fair value of derivatives in a net asset position, net of collateral, was $1 million at December 31, 2018.

Interest Rate Risk Management

The Company enters into various types of interest rate derivatives primarily to minimize exposure to fluctuations in interest rates on assets and liabilities held by the Company.

Interest rate swaps are used by the Company to hedge interest rate risk for individual and portfolios of assets. Interest rate swaps are agreements with other parties to exchange, at specified intervals, the difference between interest amounts calculated by reference to an agreed upon notional value. Generally, no cash is exchanged at the onset of the contract and no principal payments are made by either party. The Company does not act as an intermediary or broker in interest rate swaps.

Interest rate (Treasury) futures are used by the Company to manage duration of the Company's fixed income portfolio. Interest rate futures are exchange traded contracts to buy or sell a bond at a specific price at a future date.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 7 - DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

Interest rate options are used by the Company to hedge the risk of increasing interest rates on policyholder liabilities. Under these contracts, the Company will receive payments from counterparties should an agreed upon interest rate level be reached and payments will continue to increase under the option contract until an agreed upon interest rate ceiling, if applicable.

Currency Risk Management

The primary purpose of the Company’s foreign currency hedging activities is to protect the value of foreign currency denominated assets from the risk of changes in foreign exchange rates.

Foreign currency swaps are agreements with other parties to exchange, at specified intervals, principal and interest in one currency for the same in another, at a fixed exchange rate, which is generally set at inception and calculated by reference to an agreed upon notional value. Generally, only principal payments are exchanged at the onset and the end of the contract.

Foreign currency forwards involve the exchange of foreign currencies at a specified future date and at a specified price. No cash is exchanged at the time the agreement is entered into.

Equity Risk Management

The Company purchases equity put options to minimize exposure to the equity risk associated with guarantees on certain underlying policyholder liabilities. There are upfront fees paid related to option contracts at the time the agreements are entered into.

Hedge Effectiveness

To qualify for hedge accounting, the hedge relationship is designated and formally documented at inception detailing the particular risk management objective and strategy for the hedge, including the item and risk that is being hedged, the derivative that is being used, and how effectiveness is assessed.

A derivative must be highly effective in accomplishing the objective of offsetting either changes in fair value or cash flows for the risk being hedged. The Company formally assesses effectiveness of its hedging relationships both at hedge inception and on an ongoing basis in accordance with its risk management policy. The hedging relationship is considered highly effective if the changes in fair value or discounted cash flows of the hedging instrument are within 80-125% of the inverse changes in the fair value or discounted cash flows of the hedged item.

The Company discontinues hedge accounting prospectively if: (1) it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item, (2) the derivative expires or is sold, terminated, or exercised, (3) it is probable that the forecasted transaction for which the hedge was entered into will not occur, or (4) management determines that designation of the derivative as a hedge instrument is no longer appropriate.

The Company did not have any cash flow hedges of forecasted transactions except for cash flow hedges related to payments of variable interest on existing financial instruments, for the years ended December 31, 2018 and 2017.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 7 - DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

The following tables present the notional amount, gross fair value and carrying value of derivative instruments that are qualifying and designated for hedge accounting, by type of hedge designation, and those that are not designated for hedge accounting at December 31, 2018 and 2017 (in millions):



	2018
	Primary Risk Exposure	Notional Amount⁽¹⁾		Fair Value⁽²⁾				Carrying Value⁽³⁾
Derivative Type	Primary Risk Exposure	Notional Amount⁽¹⁾		Asset		Liability		Asset		Liability
Derivatives qualifying and designated:
Cash flow hedges:
Foreign currency swaps	Currency	$	68	$	13	$	—	$	14	$	—
Interest rate swaps	Interest	12		3		—		—		—
Total derivatives qualifying and designated		80		16		—		14		—
Derivatives not designated:
Foreign currency forwards	Currency	195		3		—		3		—
Foreign currency swaps	Currency	3,227		309		42		309		42
Futures	Interest	18		—		—		—		—
Equity options	Equity	652		33		—		33		—
Interest rate options	Interest	44,773		32		—		32		—
Interest rate swaps	Interest	2,754		27		62		27		62
Total derivatives not designated		51,619		404		104		404		104
Total derivatives		$	51,699	$	420	$	104	$	418	$	104

⁽¹⁾ Notional amount of derivative instruments provides a measure of involvement in these types of transactions and generally does not represent the amount exchanged between the parties engaged in the transaction.

⁽²⁾ For a discussion of valuation methods for derivative instruments refer to Note 9 - Fair Value Measurements.

⁽³⁾ The carrying value of derivatives in an asset position is reported within other investments and the carrying value of derivatives in a liability position is reported within other liabilities in the accompanying Statutory Statements of Financial Position.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 7 - DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)



	2017
	Primary Risk Exposure	Notional Amount⁽¹⁾		Fair Value⁽²⁾				Carrying Value⁽³⁾
Derivative Type	Primary Risk Exposure	Notional Amount⁽¹⁾		Asset		Liability		Asset		Liability
Derivatives qualifying and designated:
Cash Flow Hedges:
Foreign currency swaps	Currency	$	68	$	9	$	—	$	9	$	—
Interest rate swaps	Interest	12		3		—		—		—
Total derivatives qualifying and designated		80		12		—		9		—
Derivatives not designated:
Foreign currency forwards	Currency	117		1		1		1		1
Foreign currency swaps	Currency	2,594		162		83		162		83
Futures	Interest	14		—		—		—		—
Equity options	Equity	652		32		—		32		—
Interest rate options	Interest	11,048		4		—		4		—
Interest rate swaps	Interest	3,208		28		24		28		24
Total derivatives not designated		17,633		227		108		227		108
Total derivatives		$	17,713	$	239	$	108	$	236	$	108

⁽¹⁾Notional amount of derivative instruments provides a measure of involvement in these types of transactions and generally does not represent the amount exchanged between the parties engaged in the transaction.

⁽²⁾ For a discussion of valuation methods for derivative instruments refer to Note 9 - Fair Value Measurements.

Cash Flow Hedges

The Company’s cash flow hedges primarily include hedges of floating rate securities and foreign currency denominated assets. Derivative instruments used in cash flow hedges that meet criteria indicating that they are highly effective are valued and reported in a manner that is consistent with the hedged asset.

The Company designates and accounts for the following as qualified cash flow hedges: (1) interest rate swaps used to convert floating rate investments to fixed rate investments; (2) foreign currency swaps used to hedge the foreign currency cash flow exposure of foreign currency denominated investments.

The following table presents the effects of derivatives in cash flow hedging relationships for the years ended December 31, 2018, 2017 and 2016 (in millions):



	Surplus⁽¹⁾								Net Realized Capital Gains (Losses)							Net Investment Income
Derivative Type	2018		2017			2016			2018		2017			2016		2018		2017		2016
Foreign currency swaps	$	5	$	(1	)	$	(16	)	$	—	$	(4	)	$	10	$	1	$	1	1
Interest rate swaps	—		—			—			—		—			—		—		—		1
Total	$	5	$	(1	)	$	(16	)	$	—	$	(4	)	$	10	$	1	$	1	$	2

⁽¹⁾ The amount of gain (loss) recognized in surplus is reported as a change in net unrealized losses on investments in the accompanying Statutory Statements of Changes in Surplus.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 7 - DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

Derivatives Not Designated

The following table summarizes the surplus and net income impact on derivative instruments not designated for hedge accounting for the years ended December 31, 2018, 2017 and 2016 (in millions):



	Surplus⁽¹⁾									Net Realized Capital Gains (Losses)									Net Investment Income
Derivative Type	2018			2017			2016			2018			2017			2016			2018			2017			2016
Equity options	$	9		$	(15	)	$	3		$	—		$	—		$	(6	)	$	(7	)	$	(7	)	(10		)
Foreign currency forwards	3			(5		)	3			9			(5		)	1			—			—			—
Foreign currency swaps	187			(239		)	127			3			10			(9		)	35			30			26
Futures	—			—			—			(1		)	—			—			—			—			—
Interest rate options	(2		)	(3		)	13			—			—			—			(13		)	(8		)	(15		)
Interest rate swaps	(39		)	5			(7		)	(27		)	—			—			10			19			21
Total	$	158		$	(257	)	$	139		$	(16	)	$	5		$	(14	)	$	25		$	34		$	22

⁽¹⁾ The amount of gain (loss) recognized in surplus is reported as a change in net unrealized gains (losses) on investments in the accompanying Statutory Statements of Changes in Surplus.

NOTE 8 - SEPARATE ACCOUNTS

Separate Accounts Activity

The Company utilizes separate accounts to record and account for assets and liabilities for particular lines of business and/or transactions. The Company reported separate accounts assets and liabilities from the following product lines/transactions into separate accounts:


•	Variable universal life (“VUL”) insurance products guaranteed


•	VUL insurance products non-guaranteed


•	Variable annuity (“VA”) products non-guaranteed


•	Universal life (“UL”) insurance products guaranteed

In accordance with the domiciliary state procedures for approving items within the separate accounts, the separate accounts classification of the following items are supported by a specific state statute:

The separate accounts are subject to Section 2932 of the Delaware Insurance Code and the regulations there under. Assets of guaranteed separate accounts are invested in accordance with the provisions of Chapter 13 of the Delaware Insurance Code.

All items that were permitted for separate accounts reporting were supported by state statute.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 8 - SEPARATE ACCOUNTS (continued)

The assets legally and not legally insulated from the general account at December 31, 2018 and 2017 are attributed to the following products/transactions (in millions):



	2018				2017
Product/Transaction	Legally Insulated Assets		Separate Accounts Assets (Not Legally Insulated)⁽¹⁾		Legally Insulated Assets		Separate Accounts Assets (Not Legally Insulated)⁽²⁾
VUL insurance products guaranteed	$	195	$	6	$	240	$	9
VUL insurance products non-guaranteed	6,913		3		7,424		1
VA products non-guaranteed	25,348		33		27,637		30
UL insurance products guaranteed	5,960		8		5,904		41
Total	$	38,416	$	50	$	41,205	$	81

⁽¹⁾ Separate accounts assets classified as not legally insulated support $33 million of remittances and items not allocated and other transfers to the general account due or accrued (net), $1 million of payable for securities, $10 million of derivatives, $5 million of other liabilities and $1 million of surplus.

⁽²⁾ Separate accounts assets classified as not legally insulated support $30 million of remittances and items not allocated and other transfers to the general account due or accrued (net), $11 million of payable for securities, $36 million of derivatives, $3 million of other liabilities and $1 million of surplus.

Guaranteed Separate Accounts

The Company maintains four guaranteed separate accounts for universal life insurance policies and one guaranteed separate accounts for a private placement variable universal life policy, with assets of $6,169 million and $6,195 million at December 31, 2018 and 2017, respectively. These accounts provide a guarantee of principal and interest with a market value adjustment imposed upon certain surrenders. A transfer adjustment charge is imposed upon certain transfers. Interest rates on these contracts may be adjusted periodically. The assets of these separate accounts are stated at amortized cost up to the value of policyholder reserves and at fair value thereafter. Certain derivatives not qualifying for hedge accounting are stated at fair value.

Non-Guaranteed Separate Accounts

The Company maintains non-guaranteed separate accounts for its VA and VUL products, some of which are registered with the Securities and Exchange Commission. Assets in non-guaranteed separate accounts were $32,297 million and $35,092 million at December 31, 2018 and 2017, respectively. The assets of these separate accounts represent investments in shares of New York Life sponsored MainStay VP Funds Trust and other non-proprietary insurance-dedicated funds.

Certain of these variable contracts have guaranteed minimum death benefit (“GMDB”) and guaranteed minimum accumulation benefit (“GMAB”) features that are guaranteed by the assets of the general account.

To compensate the general account for the risk taken, the separate accounts have paid risk charges as follows for the past five years (in millions):



Year	Amount
2018	$	54
2017	$	51
2016	$	49
2015	$	46
2014	$	39

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 8 - SEPARATE ACCOUNTS (continued)

The general account of the Company made payments toward separate accounts guarantees as follows for the past five years (in millions):



Year	Amount
2018	$	7
2017	$	7
2016	$	9
2015	$	7
2014	$	4

The general account holds reserves on these guarantees. Refer to Note 12 - Insurance Liabilities, for discussion of GMAB and GMDB reserves.

Information regarding the separate accounts of the Company for the years ended December 31, 2018 and 2017 is as follows (in millions):



	2018
	Non-Indexed Guarantee Less than / Equal to 4%		Non-Indexed Guarantee More than 4%		Non-Guaranteed Separate Accounts		Total
Premiums, considerations or deposits	$	8	$	—	$	1,911	$	1,919
Reserves at 12/31:
For accounts with assets at:
Fair value	$	—	$	—	$	31,382	$	31,382
Amortized cost	5,663		485		—		6,148
Total reserves	$	5,663	$	485	$	31,382	$	37,530
By withdrawal characteristics:
With fair value adjustment	$	5,663	$	485	$	—	$	6,148
At fair value	—		—		31,382		31,382
Total reserves	$	5,663	$	485	$	31,382	$	37,530



	2017
	Non-Indexed Guarantee Less than / Equal to 4%		Non-Indexed Guarantee More than 4%		Non-Guaranteed Separate Accounts		Total
Premiums, considerations or deposits	$	6	$	—	$	1,942	$	1,948
Reserves at 12/31:
For accounts with assets at:
Fair value	$	—	$	—	$	34,098	$	34,098
Amortized cost	5,658		476		—		6,134
Total reserves	$	5,658	$	476	$	34,098	$	40,232
By withdrawal characteristics:
With fair value adjustment	$	5,658	$	476	$	—	$	6,134
At fair value	—		—		34,098		34,098
Total reserves	$	5,658	$	476	$	34,098	$	40,232

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 8 - SEPARATE ACCOUNTS (continued)

The following is a reconciliation of net transfers to (from) the general account to the separate accounts (in millions):



	2018			2017			2016
Transfers as reported in the Separate Accounts Statement:
Transfers to separate accounts	$	1,918		$	1,948		$	1,477
Transfers from separate accounts	(2,128		)	(1,705		)	(1,176		)
Net transfers to (from) separate accounts	(210		)	243			301
Reconciling adjustment:
Reinsurance ceded	—			(3		)	(4		)
Net transfers as reported in the Company’s
Statutory Statements of Operations	$	(210	)	$	240		$	297

NOTE 9 - FAIR VALUE MEASUREMENTS

The Company's financial assets and liabilities carried at fair value have been classified, for disclosure purposes, based on a hierarchy defined by SSAP No. 100, "Fair Value Measurements". Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

The levels of the fair value hierarchy are based on the inputs to the valuation as follows:


Level 1	Fair value is based on unadjusted quoted prices for identical assets or liabilities in an active market. Active markets are defined as a market in which many transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2

Observable inputs other than level 1 prices, such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active for identical or similar assets or liabilities, or other model driven inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations are generally obtained from third-party pricing services for identical or comparable assets or liabilities or through the use of valuation methodologies using observable market inputs.

Level 3

Instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions in pricing the asset or liability. Pricing may also be based upon broker quotes that do not represent an offer to transact. Prices are determined using valuation methodologies such as option pricing models, discounted cash flow models and other similar techniques. Non-binding broker quotes, which are utilized when pricing service information is not available, are reviewed for reasonableness based on the Company’s understanding of the market, and are generally considered Level 3. To the extent the internally developed valuations use significant unobservable inputs, they are classified as Level 3.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)

Determination of Fair Value

The Company has an established and well-documented process for determining fair value. Security pricing is applied using a hierarchy approach whereby publicly available prices are first sought from nationally recognized third-party pricing services. For most private placement securities, the Company applies a matrix-based pricing methodology, which uses spreads derived from third-party benchmark bond indices. For private placement securities that cannot be priced through these processes, the Company uses internal models and calculations. All other securities are submitted to independent brokers for prices. The Company performs various analyses to ascertain that the prices represent fair value. Examples of procedures performed include, but are not limited to, back testing recent trades, monitoring trading volumes, and performing variance analysis of monthly price changes using different thresholds based on asset type. The Company also performs an annual review of all third-party pricing services. During this review, the Company obtains an understanding of the process and sources used by the pricing service to ensure that they maximize the use of observable inputs, the pricing service’s frequency of updating prices, and the controls that the pricing service uses to ensure that their prices reflect market assumptions. The Company also selects a sample of securities and obtains a more detailed understanding from each pricing service regarding how they derived the price assigned to each security. Where inputs or prices do not reflect market participant assumptions, the Company will challenge these prices and apply different methodologies that will enhance the use of observable inputs and data. The Company may use non-binding broker quotes or internal valuations to support the fair value of securities that go through this formal price challenge process.

In addition, the Company has a pricing committee that provides oversight over the Company’s prices and fair value process for securities. The committee is comprised of representatives from the Company’s Investment Management group, Controller’s, Compliance and Security Operations. The committee meets quarterly and is responsible for the review and approval of the Company’s valuation procedures. The committee is also responsible for the review of pricing exception reports as well as the review of significant inputs used in the valuation of assets that are valued internally.

The following tables present the carrying amounts and estimated fair value of the Company’s financial instruments at December 31, 2018 and 2017 (in millions):



	2018
	Fair Value		Carrying Value			Level 1			Level 2			Level 3			NAV as a Practical Expedient			Not Practicable
Assets:
Bonds	$	84,538	$	84,920		$	51		$	81,405		$	3,082		$	—		$	—
Preferred stocks	21		12			—			—			21			—			—
Common stocks⁽¹⁾	1,315		1,315			1,227			—			37			51			—
Mortgage loans	14,183		14,210			—			—			14,183			—			—
Cash, cash equivalents and short-term investments	1,891		1,891			86			1,805			—			—			—
Derivatives	420		418			—			388			32			—			—
Derivatives collateral	3		3			—			3			—			—			—
Other invested assets⁽¹⁾	209		187			—			96			113			—			—
Investment income due and accrued	712		712			—			712			—			—			—
Separate accounts assets	38,466		38,466			32,035			5,284			874			273			—
Total assets	$	141,758	$	142,134		$	33,399		$	89,693		$	18,342		$	324		$	—
Liabilities:
Annuities certain	$	942	$	940	—	$	—	—	$	—	—	$	942	—	$	—	—	$	—
Derivatives	104		104			—			104			—			—			—
Derivatives collateral	302		302			—			302			—			—			—
Amounts payable under securities lending agreements	676		676			—			676			—			—			—
Separate accounts liabilities - derivatives	17		11			—			11			6			—			—
Total liabilities	$	2,041	$	2,033		$	—		$	1,093		$	948		$	—		$	—

⁽¹⁾Excludes investments accounted for under the equity method.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)



	2017
	Fair Value		Carrying Value		Level 1		Level 2		Level 3		Not Practicable
Assets:
Bonds	$	85,271	$	82,299	$	—	$	82,096	$	3,175	$	—
Preferred stocks	19		13		—		2		17		—
Common stocks⁽¹⁾	1,393		1,393		1,354		7		32		—
Mortgage loans	13,939		13,657		—		—		13,939		—
Cash, cash equivalents and short-term investments	2,211		2,211		151		2,060		—		—
Derivatives	239		236		—		235		4		—
Derivatives collateral	22		22		—		22		—		—
Other invested assets⁽¹⁾	228		196		—		89		139		—
Investment income due and accrued	692		692		—		692		—		—
Separate accounts assets	41,475		41,286		34,893		5,535		1,047		—
Total assets	$	145,489	$	142,005	$	36,398	$	90,738	$	18,353	$	—
Liabilities:
Annuities certain	$	868	$	837	$	—	$	—	$	868	$	—
Derivatives	108		108		—		108		—		—
Derivatives collateral	174		174		—		174		—		—
Amounts payable under securities lending agreements	675		675		—		675		—		—
Separate accounts liabilities - derivatives	36		36		—		36		—		—
Total liabilities	$	1,861	$	1,830	$	—	$	993	$	868	$	—

⁽¹⁾Excludes investments accounted for under the equity method.

Bonds

Bonds reported as Level 1 represent investments in certain exchange traded funds, which are allowed to be reported as bonds per the SVO instructions. These assets are priced based on unadjusted quoted prices in an active market. Securities priced using a pricing service are generally classified as Level 2. The pricing service generally uses an income-based valuation approach using a discounted cash-flow model or it may use a market approach by looking at recent trades of a specific security to determine fair value on public securities or a combination of the two. Typical inputs used by these pricing services include, but are not limited to: benchmark yields, reported trades, issuer spreads, bids, offers, benchmark securities, estimated cash flows and prepayment speeds.

Private placement securities are primarily priced using a market approach such as a matrix-based pricing methodology, which uses spreads derived from third-party benchmark bond indices. Specifically, the Barclays Investment Grade Corporate Index is used for investment-grade securities and the Citi High Yield Cash Index is used for below investment-grade securities. These indices are two widely recognized, reliable and well regarded benchmarks by participants in the financial services industry, which represent the broader U.S. public bond markets. The spreads derived from each matrix are adjusted for liquidity. The liquidity premium is standardized and based on market transactions.

Certain private placement securities that cannot be priced using the matrix pricing described above, are priced by an internally developed discounted cash flow model or are priced based on internal calculations. The model uses observable inputs with a discount rate based off spreads of comparable public bond issues, adjusted for liquidity, rating and maturity. The Company assigns a credit rating for private placement securities based upon internal analysis. The liquidity premium is usually based on market transactions. These securities are classified as Level 2.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)

For some of the private placement securities priced through the model, the liquidity adjustments may not be based on market data, but rather, calculated internally. If the impact of the liquidity adjustment, which usually requires the most judgment, is not significant to the overall value of the security, the security is still classified as Level 2. If it is deemed to be significant, the security is classified as Level 3.

The valuation techniques for most Level 3 bonds are generally the same as those described in Level 2. However, if the investments are less liquid or are lightly traded, there is generally less observable market data, and therefore these investments will be classified as Level 3. Circumstances where observable market data are not available may include events such as market illiquidity and credit events related to the security. In addition, certain securities are priced based upon internal valuations using significant unobservable inputs. If a security could not be priced by a third-party vendor or through internal pricing models, broker quotes are received and reviewed by each investment analyst. These inputs may not be observable. Therefore, Level 3 classification is determined to be appropriate.

Included in bonds is an affiliated bond from MCF with a carrying value and a fair value of $1,909 million at December 31, 2018, and a carrying value of $1,875 million and a fair value of $1,989 million at December 31, 2017. The fair value of this security is calculated internally and may include inputs that may not be observable. Therefore, this security is classified as Level 3.

Preferred Stocks

Preferred stocks valued using prices from third-party pricing services generally use a discounted cash flow model or a market approach to arrive at the security's fair value and are classified as Level 2. Preferred stocks classified as Level 3 are valued based on internal valuations where significant inputs are deemed to be unobservable.

Common Stocks

These securities are mostly comprised of exchange traded U.S. and foreign common stock and mutual funds. The fair value of these securities is primarily based on unadjusted quoted prices in active markets that are readily and regularly available and are classified as Level 1. Common stocks priced through an internal valuation where significant inputs are deemed to be unobservable, including securities issued by government organizations where fair value is fixed, are classified as Level 3. For common stocks that do not have a readily available fair value, NAV is used as a practical expedient.

Mortgage Loans

The estimated fair value of mortgage loans is determined using an income approach, based upon the present value of the expected cash flows discounted at an interpolated treasury yield plus a spread. The spread is based on management’s judgment and assumptions and it takes into account property type, LTV and remaining term of each loan. The spread is a significant component of the pricing inputs. These investments are classified as Level 3.

Cash, Cash Equivalents, Short-term Investments and Investment Income Due and Accrued

Cash on hand and money market mutual funds are classified as Level 1. Cash overdrafts (i.e. outstanding checks) are classified as Level 2. Due to the short-term maturities of cash equivalents, short-term investments, and investment income due and accrued, carrying value approximates fair value and are classified as Level 2.

Derivatives

The fair value of derivative instruments is generally derived using valuation models that use an income approach, except for derivatives that are exchange-traded, which are valued using quoted prices in an active market. Where valuation models are used, the selection of a particular model depends upon the contractual terms of, and specific risks inherent in the instrument, as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation model inputs include contractual terms, yield curves, foreign exchange rates, equity prices, credit curves, measures of volatility, and other factors. Exchange traded derivatives are valued using a market approach as fair value is based on quoted prices in an active market and are classified as Level 1. OTC derivatives that trade in liquid markets, where model inputs are observable for substantially the full term, are classified

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)

as Level 2. Derivatives that are valued based upon models with any significant unobservable market inputs or inputs from less actively traded markets, or where the fair value is solely derived using broker quotations, are classified as Level 3.

Derivatives Collateral

The carrying value of these instruments approximates fair value since these assets and liabilities are generally short-term in nature.

Other Invested Assets

Other invested assets are principally comprised of LIHTC investments and other investments with characteristics of debt. The fair value of LIHTC investments is derived using an income valuation approach, which is based on a discounted cash flow calculation using a discount rate that is determined internally and therefore classified as Level 3 (refer to Note 6 - Investments, for details on LIHTC investments). The fair value of the investments with debt characteristics is derived using an income valuation approach, which is based on discounted cash flow calculations that may or may not use observable inputs.

Separate Accounts Assets

Separate accounts assets reported as Level 1 in the fair value hierarchy are mostly comprised of exchange traded funds, common stocks and actively traded open-end mutual funds with a daily net asset value (“NAV”). The NAV can be observed by redemption and subscription transactions between third parties, or may be obtained from third-party asset managers. Common stocks are generally traded on an exchange. Separate accounts assets reported as Level 2 relate to investments in U.S. government and treasury securities, corporate bonds and mortgage-backed securities. These separate accounts assets are valued and assigned within the fair value hierarchy, consistent with the methodologies described herein for similar financial instruments held within the general account of the Company.

The separate accounts also invest in limited partnerships and hedge fund investments. These investments are valued based on the latest NAV received.

The following tables provide additional information for investments that are measured at fair value using NAV as a practical expedient, as allowed under authoritative guidance, for investments that meet specified criteria (in millions):



2018
Category of Investment	Investment Strategy	Fair Value Determined using NAV		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Hedge fund	Multi-strategy	$	249	$	—	Quarterly, Monthly	180 days or less
Hedge fund	Sector investing	23		—		Monthly	30 days
Hedge fund	Long/short equity	1		—		Monthly	30 days
Mutual funds	Multi-strategy, global allocation	51		—		Quarterly, Weekly	5 days - 45 days (Assets subject to lock up periods)
		$	324	$	—

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)

2017

Category of Investment

Investment Strategy

Fair Value Determined using NAV

Unfunded Commitments

Redemption Frequency

Redemption Notice Period

Hedge fund

Multi-strategy

232

—

Quarterly, Monthly

180 days or less

Hedge fund

Sector investing

—

Monthly

30 days

Hedge fund

Long/short equity

—

Monthly

30 days

Mutual funds

Multi-strategy, global allocation

—

Quarterly, Weekly

5 days - 45 days (Assets subject to lock up periods)

264

⁽¹⁾

—

⁽¹⁾ The total fair value determined using NAV at December 31, 2017 included Level 2 and Level 3 investments of $75 million and $182 million, respectively.

Annuities Certain

Fair values for annuities certain liabilities are estimated using discounted cash flow calculations based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued.

Borrowed Money

Borrowed money consists of a financing arrangement. The carrying value of the financing arrangement approximates fair value.

Amounts Payable Under Securities Lending Agreements

Amounts due under securities lending consists of cash collateral received under securities lending agreements. Due to the short-term nature of the transactions, the carrying value approximates fair value.

Separate Accounts Liabilities – Derivatives

For separate accounts derivative instruments, fair value is determined using the same procedures as the general account disclosed above.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)

The following tables represent the balances of assets and liabilities measured at fair value at December 31, 2018 and 2017 (in millions):



	2018
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		NAV as a Practical Expedient		Total
Assets at fair value
Bonds
U.S. corporate	$	—	$	6	$	—	$	—	$	6
Non-agency RMBS	—		1		—		—		1
Non-agency ABS	—		3		21		—		24
Total bonds	—		10		21		—		31
Common stocks	1,227		—		37		51		1,315
Derivatives	—		372		32		—		404
Separate accounts assets	32,025		3		3		273		32,304
Total assets at fair value	$	33,252	$	385	$	93	$	324	$	34,054
Liabilities at fair value
Derivatives	$	—	$	104	$	—	$	—	$	104
Separate accounts liabilities - derivatives⁽¹⁾	—		5		—		—		5
Total liabilities at fair value	$	—	$	109	$	—	$	—	$	109

⁽¹⁾ Separate accounts contract holder liabilities are not included in the table as they are reported at contract value and not fair value in the Company’s statutory financial statements.



	2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets at fair value
Bonds
U.S. corporate	$	—	$	6	$	—	$	6
Non-agency RMBS	—		—		—		—
Non-agency ABS	—		—		1		1
Total bonds	—		6		1		7
Common stocks	1,354		7		32		1,393
Derivatives	—		223		4		227
Separate accounts assets	34,836		77		184		35,097
Total assets at fair value	$	36,190	$	313	$	221	$	36,724
Liabilities at fair value
Derivatives	$	—	$	108	$	—	$	108
Separate accounts liabilities - derivatives⁽¹⁾	—		7		—		7
Total liabilities at fair value	$	—	$	115	$	—	$	115

⁽¹⁾ Separate accounts contract holder liabilities are not included in the table as they are reported at contract value and not fair value in the Company’s statutory financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)

The tables below present a reconciliation of Level 3 assets and liabilities for the years ended December 31, 2018 and 2017 (in millions):



	2018
	Balance at 1/1		Transfers into Level 3		Transfers out of Level 3			Total Gains (Losses) Included in Net Income			Total Gains (Losses) Included in Surplus			Purchases		Issuances		Sales			Settlements			Balance at 12/31
Bonds:
Non-agency ABS	$	1	$	20	$	(1	)	$	—		$	(3	)	$	6	$	—	$	—		$	(2	)	$	21
Total bonds	1		20		(1		)	—			(3		)	6		—		—			(2		)	21
Common stocks	32		3		(3		)	(1		)	5			4		—		(3		)	—			37
Derivatives	4		—		(1		)	(13		)	(2		)	44		—		—			—			32
Separate accounts assets	184		—		—			(2		)	3			—		—		—			—			185
Total	$	221	$	23	$	(5	)	$	(16	)	$	3		$	54	$	—	$	(3	)	$	(2	)	$	275



	2017
	Balance at 1/1		Transfers into Level 3		Transfers out of Level 3			Total Gains (Losses) Included in Net Income			Total Gains (Losses) Included in Surplus			Purchases		Issuances		Sales			Settlements		Balance at 12/31
Bonds:
Non-agency ABS	$	2	$	—	$	(1	)	$	—		$	—		$	—	$	—	$	—		$	—	$	1
Total bonds	2		—		(1		)	—			—			—		—		—			—		1
Common stocks	28		3		—			2			(1		)	3		—		(4		)	—		32
Derivatives	15		—		—			(8		)	(3		)	—		—		—			—		4
Separate accounts assets	223		—		—			10			—			6		—		(55		)	—		184
Total	$	268	$	3	$	(1	)	$	4		$	(4	)	$	9	$	—	$	(59	)	$	—	$	221

Transfers Between Levels

Transfers between levels may occur due to changes in valuation sources, or changes in the availability of market observable inputs, which generally are caused by changes in market conditions such as liquidity, trading volume or bid-ask spreads or as a result of a security measured at amortized cost at the beginning of the period, but measured at estimated fair value at the end of the period, or vice versa due to a ratings downgrade or upgrade.

Transfers between Levels 1 and 2

During the years ended December 31, 2018 and 2017, there were no transfers between Levels 1 and 2.

Transfers into and out of Level 3

The Company’s basis for transferring assets and liabilities into and out of Level 3 is based on changes in the observability of data, a change in the security’s measurement.

Transfers into Level 3 totaled $23 million for the year ended December 31, 2018, which primarily relates to $20 million

of non-agency asset-backed securities which were measured at amortized cost at the beginning of the period and measured at fair value at the end of the period, and common stock securities of $3 million that had a level change from 1 to 3. Transfers out of Level 3 totaled $5 million, which primarily relates to common stock securities of $3 million that had a level change from 3 to 1 and a non-agency asset-backed security of $1 million that had a level change from 3 to 2.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 9 - FAIR VALUE MEASUREMENTS (continued)

Transfers into Level 3 totaled $3 million for the year ended December 31, 2017, which primarily relates to common stock securities that were moved from Level 1 to Level 3 due to the limited market observability on certain inputs used in the valuation model. Transfers out of Level 3 totaled $1 million, which primarily relates to non-agency residential mortgage-backed securities & non-agency asset-backed securities that were measured at fair value at the beginning of the period and measured at amortized cost at the end of the period.

There were no liabilities measured at fair value at December 31, 2018 and 2017.

The tables below present quantitative information on significant internally priced Level 3 assets at December 31, 2018 and 2017 ($ in millions):



	2018
	Fair Value (in millions)		Valuation Techniques	Unobservable Input	Range	Weighted Average
Common stocks	$	6	Market comparable	Revenue multiple	6.1x	N/A



	2017
	Fair Value (in millions)		Valuation Techniques	Unobservable Input	Range	Weighted Average
Non-agency ABS	$	1	Discounted cash flow	Discount rate	9.9	9.9%
Common stocks	$	1	Market comparable	Revenue multiple	4.4x	N/A

The following is a description of the sensitivity to changes in unobservable inputs of the estimated fair value of the Company’s Level 3 assets included above, for which we have access to the valuation inputs, as well as the sensitivity to changes in unobservable inputs of the Level 3 assets that are valued based on external pricing information.

Asset Backed Securities

The asset backed security included in the table above relates to a private deal. For this security, a discounted cash flow calculation is used, the discount rate is calculated internally based on unobservable data and assumptions. A significant increase in the discount rate used to perform the discounted cash flow calculation for these securities, would significantly decrease the fair value of these securities. The opposite effect would occur if there were a significant decrease in the discount rate used.

Common Stocks

The Company’s Level 3 common stock investments mostly relate to the Company’s holdings in the FHLB of Pittsburgh's stock as described in Note 15 - Commitments and Contingencies. As prescribed in the FHLB of Pittsburgh's capital plan, the par value of the capital stock is $100 and all capital stock is issued, redeemed, repurchased or transferred at par value. Since there is not an observable market for the FHLB of Pittsburgh stock, these securities are held at cost and have been classified as Level 3. The cost basis of the FHLB of Pittsburgh stock was $28 million and $26 million at December 31, 2018 and 2017, respectively. For the other common stock investments included in Level 3, the valuation is performed using market comparables such as revenue and price to book multiples. An increase in the value of these inputs would result in an increase in fair value with the reverse being true for decreases in the value of these inputs.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 10 - INVESTMENT INCOME AND CAPITAL GAINS AND LOSSES

The components of net investment income for the years ended December 31, 2018, 2017 and 2016, were as follows (in millions):



	2018				2017			2016
Bonds	$	3,312			$	3,193		$	3,099
Common stocks - unaffiliated	40				37			23
Mortgage loans	609				582			559
Policy loans	54				53			57
Limited partnerships and other invested assets	71			—	71			52
Short-term investments	25				14			11
Derivative instruments	26				35			24
Real estate	4				4			4
Other investments	8				8			10
Gross investment income	4,149				3,997			3,839
Investment expenses	(161		)		(146		)	(132		)
Net investment income	3,988				3,851			3,707
Net gain from separate accounts	43				50			37
Amortization of IMR	44				33			51
Net investment income, including IMR	$	4,075			$	3,934		$	3,795

Due and accrued investment income is excluded from surplus when amounts are over 90 days past due or collection is uncertain.

Bond Prepayments

The following table shows the Company's securities redeemed or otherwise disposed of as a result of a callable feature (including make whole call provisions) and the amount of investment income generated as a result of a prepayment and/or acceleration fee, which is included in Bonds in the table above ($ in millions):



	2018				2017				2016
	General Account		Separate Account		General Account		Separate Account		General Account		Separate Account
Number of cusips	133		64		190		95		139		62
Investment income	$	36	$	2	$	71	$	5	$	66	$	3

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 10 - INVESTMENT INCOME AND CAPITAL GAINS AND LOSSES (continued)

For the years ended December 31, 2018, 2017 and 2016 net investment gains (losses) were as follows (in millions):



	2018			2017			2016
Bonds	$	(2	)	$	44		$	(70	)
Common stocks - unaffiliated	8			57			(2		)
Other long-term investments	(26		)	(13		)	(37		)
Derivatives	(16		)	2			(4		)
Other	—			—			3
Net realized capital gains (losses) before tax and transfers to the IMR	$	(36	)	$	90		$	(110	)
Less:
Capital gains tax expense (benefit)	(24		)	16			(21		)
Net realized capital gains (losses) after tax transferred to IMR	(4		)	40			23
Net realized capital gains (losses) after tax and transfers to the IMR	$	(8	)	$	34		$	(112	)

Proceeds from investments in bonds sold were $1,751 million, $4,015 million and $3,236 million for the years ended December 31, 2018, 2017 and 2016, respectively. Gross gains of $42 million, $117 million and $84 million in 2018, 2017 and 2016, respectively, and gross losses of $33 million, $43 million and $39 million in 2018, 2017 and 2016, respectively, were realized on these sales. The Company computes gains and losses on sales under the specific identification method.

The following table provides a summary of OTTI losses included as realized capital losses for the years ended December 31, 2018, 2017 and 2016 (in millions):



	2018		2017		2016
Bonds	$	25	$	42	$	106
Other long-term investments	15		12		39
Common and preferred stocks	4		1		5
Total	$	44	$	55	$	150

Refer to Note 20 - Loan-Backed and Structured Security Impairments for a list with each loan-backed and structured security at a CUSIP level where the present value of cash flows expected to be collected is less than the amortized cost basis during the current reporting period.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 10 - INVESTMENT INCOME AND CAPITAL GAINS AND LOSSES (continued)

The following tables present the Company’s gross unrealized losses and fair values for bonds and equities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2018 and 2017 (in millions):



	2018
	Less than 12 Months				12 Months or Greater				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses⁽¹⁾
Bonds:
U.S. governments	$	665	$	9	$	2,101	$	126	$	2,766	$	135
All other governments	22		1		75		1		97		2
U.S. special revenue and special assessment	3,104		79		3,705		200		6,809		279
Industrial and miscellaneous unaffiliated	28,600		882		12,352		677		40,952		1,559
Total bonds	32,391		971		18,233		1,004		50,624		1,975
Equity securities (unaffiliated):
Common stocks	593		48		24		1		617		49
Preferred stocks	—		—		—		—		—		—
Total equity securities	593		48		24		1		617		49
Total	$	32,984	$	1,019	$	18,257	$	1,005	$	51,241	$	2,024

⁽¹⁾Includes unrealized losses of $4 million related to NAIC 6 bonds included in the statutory carrying amount.



	2017
	Less than 12 Months				12 Months or Greater				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses⁽¹⁾
Bonds:
U.S. governments	$	941	$	9	$	1,575	$	76	$	2,516	$	85
All other governments	49		—		26		1		75		1
U.S. special revenue and special assessment	1,997		20		2,403		107		4,400		127
Industrial and miscellaneous unaffiliated	8,745		82		5,943		195		14,688		277
Total bonds	11,732		111		9,947		379		21,679		490
Equity securities (unaffiliated):
Common stocks	281		8		2		1		283		9
Preferred stocks	1		—		—		—		1		—
Total equity securities	282		8		2		1		284		9
Total	$	12,014	$	119	$	9,949	$	380	$	21,963	$	499

⁽¹⁾Includes unrealized losses of $1 million related to NAIC 6 bonds included in the statutory carrying amount.

At December 31, 2018, the gross unrealized loss on bonds and equity securities was comprised of approximately 6,101 and 484 different securities, respectively, which are included in the table above. Of the total amount of bond unrealized losses, $1,705 million or 86% is related to unrealized losses on investment grade securities and $271 million or 14% is related to below investment grade securities. At December 31, 2017, the gross unrealized loss on bonds and equity securities was comprised of approximately 2,820 and 185 different securities, respectively, which are included in the table above. Of the total amount of bond unrealized losses, $426 million, or 87%, is related to investment grade securities and $64 million, or 13%, is related to below investment grade securities. Investment grade is defined as a security having a credit rating from the NAIC of 1 or 2; a rating of Aaa, Aa, A or Baa from Moody’s or a rating of AAA, AA, A or BBB from Standard & Poor; or a comparable internal rating if an externally provided rating is not available.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 10 - INVESTMENT INCOME AND CAPITAL GAINS AND LOSSES (continued)

The amount of gross unrealized losses for bonds where fair value had declined by 20% or more of the amortized cost, totaled $74 million. The period of time that each of these securities has continuously been below amortized cost by 20% or more consists of $47 million for six months or less, $3 million for greater than six months through 12 months, and $24 million for greater than 12 months. In accordance with the Company's impairment policy, the Company performed quantitative and qualitative analysis to determine if the decline was temporary. For those securities where the decline was considered temporary, the Company did not recognize an impairment when it had the ability and intent to hold until recovery.

The change in unrealized capital gains (losses) for the years ended December 31, 2018, 2017 and 2016 were as follows (in millions):



	2018			2017			2016
Change in unrealized capital gains (losses) on investments:
Bonds	$	(3	)	$	2		$	—
Common stocks (unaffiliated)	(125		)	89			56
Derivatives	163			(258		)	124
Other invested assets	29			37			45
Total change in unrealized capital gains (losses) on investments	66			(130		)	225
Change in unrealized foreign exchange capital gains (losses) on investments:
Bonds	(148		)	220			(189		)
Common stocks (unaffiliated)	(18		)	28			(10		)
Cash, cash equivalents and short-term investments	(1		)	(1		)	5
Other invested assets	—			1			—
Total change in unrealized foreign exchange capital gains (losses) on investments	(166		)	248			(194		)
Capital gains tax expense (benefit)	28			(18		)	1
Total change in unrealized capital gains, net of tax	$	(73	)	$	100		$	32

NOTE 11 - RELATED PARTY TRANSACTIONS

During 2018, 2017 and 2016, the Company received dividend distributions from MCF of $77 million, $63 million and $56 million, respectively.

During 2018 and 2017, the Company paid dividends of $600 million and $275 million, respectively, to its parent, New York Life. The Company did not pay any dividends to its parent in 2016.

The Company's interests in commercial mortgage loans are held in the form of participations in mortgages originated or acquired by New York Life. A real estate portfolio acquired through foreclosure is called REO Property. The Company's interests in the ownership of REO Property is called REO Ownership Interest. Under the participation agreement for the mortgage loans, it is agreed between the Company and New York Life that the Company's proportionate interest (as evidenced by a participation certificate) in the underlying mortgage, including without limitation, the principal balance thereof, all interest which accrues thereon, and all proceeds generated therefrom, will be pari passu with New York Life's and pro rata based upon the respective amounts funded by New York Life and the Company in connection with the applicable mortgage origination or acquisition. Consistent with the participation arrangement, all mortgage documents name New York Life (and not both New York Life and the Company) as the lender but are held for the benefit of both the Company and New York Life pursuant to the applicable participation agreement. New York Life retains general decision making authority with respect to each mortgage loan, although certain decisions require the Company's approval.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 11 - RELATED PARTY TRANSACTIONS (continued)

On December 31, 2015 and as amended on January 1, 2017, the Company and New York Life entered into a note funding agreement with MCF (the “MCF Note Agreement”) and acquired a variable funding note issued by MCF thereunder (the “2015 Note”). The MCF Note Agreement was further amended on July 1, 2018 and the 2015 Note was cancelled and reissued at July 1, 2018 (the “2018 Note”). The 2015 and 2018 Notes, which are reported as Bonds in the accompanying Statutory Statements of Financial Position, had outstanding balances for the Company of $1,909 million and $1,875 million at December 31, 2018 and 2017, respectively. During 2018, 2017 and 2016, the Company recorded interest income from MCF under the MCF Note Agreement of $93 million, $79 million and $75 million, respectively. Pursuant to the MCF Note Agreement and variable funding note issued thereunder, the Company and New York Life may provide an aggregate of up to $5,200 million in funding to MCF for lending and equity investment commitments, as well as for business expenses. All outstanding advances made to MCF under the MCF Note Agreement, together with unpaid interest thereon, will be due in full on December 31, 2025.

In connection with the acquisition of an office building by REEP-OFC Westory DC, LLC, an indirectly wholly-owned subsidiary of New York Life, the Company provided a first mortgage loan in the principal amount of $83 million to REEP-OFC Westory DC, LLC. The interest-only loan, expected to be due and payable on August 10, 2022, was paid off in October 2017. For each of the years ended December 31, 2017 and 2016, interest earned amounted to approximately $3 million.

In connection with the acquisition of an office building by REEP-OFC 2300 Empire LLC and a pledge of an unleveraged equity interest in the owner of REEP-MF Woodridge IL LLC, an existing multifamily property, the Company provided a first mortgage loan in the principal amount of $83 million to REEP-OFC 2300 Empire LLC and REEP-MF Woodridge, IL LLC. The mortgage loan's maturity date is August 10, 2022 with fixed rate of 3.75% per annum. For the years ended December 31, 2018, 2017 and 2016, interest earned amounted to $3 million, $1 million and less than $1 million, respectively.

In connection with a $150 million land acquisition of a fee simple estate in land underlying an office building and related improvements and encumbered by a ground lease located at 1372 Broadway, New York, New York by New York Life (73.8% interest) and the Company (26.2% interest), the Company and New York Life entered into a Tenancy-in-Common Agreement dated as of June 11, 2012 which agreement sets forth the terms that govern, in part, each entity’s interest in the property. For each of the years ended December 31, 2018, 2017, and 2016, income earned amounted to approximately $3 million.

The Company sold various corporate owned life insurance (“COLI”) policies to New York Life for the purpose of informally funding certain benefits for New York Life employees and agents. These policies were issued on the same terms as policies sold to unrelated customers. At December 31, 2018 and 2017, policyholder reserve balances for these policies amounted to $4,022 million and $3,974 million, respectively, and were included in the Policy reserves and Separate accounts liabilities in the accompanying Statutory Statements of Financial Position.

The Company has also issued various COLI policies to the Voluntary Employees’ Beneficiary Association (“VEBA”) trusts, which were trusts formed for the benefit of New York Life’s retired employees and agents. At December 31, 2018 and 2017, policyholder reserve balances for these policies amounted to approximately $395 million and $414 million, respectively, and were included in Policy reserves and Separate accounts liabilities in the accompanying Statutory Statements of Financial Position.

The Company is the assumed obligor for certain structured settlement agreements with unaffiliated insurance companies, beneficiaries and other non-affiliated entities. To satisfy its obligations under these agreements, the Company owns all rights, title and interest in and to certain structured settlement annuity contracts issued by New York Life. The obligations are based upon the actuarially determined present value of expected future payments. Interest rates used in establishing such obligations ranged from 3.5% to 7.75%. The Company has directed New York Life to make the payments under the annuity contracts directly to the beneficiaries under the structured settlement agreements. At December 31, 2018 and 2017, the carrying value of the interest in annuity contracts and the corresponding obligations under structured settlement agreements amounted to $8,673 million and $8,229 million, respectively.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 11 - RELATED PARTY TRANSACTIONS (continued)

The Company has sold certain annuity contracts to New York Life in order that New York Life may satisfy its third-party obligations under certain structured settlement agreements. Interest rates used in establishing such obligations ranged from 5.5% to 8.75%. The Company has been directed by New York Life to make the payments under the annuity contracts directly to the beneficiaries under these structured settlement agreements. At December 31, 2018 and 2017, the policyholder reserves related to these contracts amounted to $145 million and $149 million, respectively, and are included in Policy reserves in the accompanying Statutory Statements of Financial Position.

The Company was compensated for each New York Life term policy or term rider that was converted to a universal life policy issued by the Company without any additional underwriting. For the years ended December 31, 2018, 2017 and 2016, the Company received $20 million, $19 million and $23 million, respectively, from New York Life for these services.

New York Life provides the Company with certain services and facilities including, but not limited to, accounting, tax and auditing services; legal services; actuarial services; electronic data processing operations and communications operations. New York Life charges the Company for the identified costs associated with these services and facilities under the terms of a service agreement between New York Life and the Company. For the years ended December 31, 2018, 2017 and 2016, the fees incurred associated with these services and facilities, amounted to $891 million, $968 million and $820 million, respectively, and are reflected in Operating expenses and Net investment income in the accompanying Statutory Statements of Operations.

New York Life Investment Management LLC (“NYLIM”), an indirect wholly-owned subsidiary of New York Life, provides the Company with certain services and facilities including, but not limited to, investment management and other administrative services. NYLIM charges the Company for the identified costs associated with these services and facilities under the terms of a service agreement between NYLIM and the Company. For the years ended December 31, 2018, 2017 and 2016, the fees incurred associated with these services and facilities amounted to $11 million, $14 million and $15 million, respectively, and are reflected in Operating expenses in the accompanying Statutory Statements of Operations.

The Company is a party to an investment advisory agreement with NYL Investors, as amended from time to time, whereby NYL Investors provides investment advisory and administrative services to the Company. For the years ended December 31, 2018, 2017 and 2016, the total cost for these services amounted to $131 million, $125 million and $119 million, respectively, which is included in the costs of services billed by New York Life to the Company. These costs are included in Net investment income in the accompanying Statutory Statement of Operations.

In addition, NYLIM has a management agreement with the MainStay VP Funds Trust (“the Fund”), a registered investment company whose shares are sold to various separate accounts of the Company. NYLIM, the administrator of the Fund, and the Company have entered into an agreement regarding administrative services to be provided by the Company. Under the terms of the agreement, NYLIM pays the Company administrative fees for providing services to the Fund. For the years ended December 31, 2018, 2017 and 2016, the Company recorded fee income from NYLIM of $35 million, $37 million and $34 million, which is included in Other income in the accompanying Statutory Statements of Operations.

The Company has a variable product distribution agreement with NYLIFE Distributors LLC (“NYLIFE Distributors”), an indirect wholly-owned subsidiary of New York Life, appointing NYLIFE Distributors as the underwriter and/or wholesale distributor of the Company’s variable product policies. For the years ended December 31, 2018, 2017 and 2016, the Company paid service fees of $45 million, $44 million and $39 million, respectively, under a 12b-1 Plan Services Agreement, in consideration for providing 12b-1 Plan services attributable to the variable products.

The Company has an agreement with NYLIFE Securities LLC (“NYLIFE Securities”), an indirect wholly-owned subsidiary of New York Life, under which registered representatives of NYLIFE Securities solicit sales of the Company's variable product policies. For the years ended December 31, 2018, 2017 and 2016, the Company incurred commission expense to NYLIFE Securities’ registered representatives of $117 million, $119 million and $119 million, respectively, which is included in Operating expenses in the accompanying Statutory Statements of Operations.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 11 - RELATED PARTY TRANSACTIONS (continued)

The Company has a service fee agreement with NYLIFE Securities, whereby NYLIFE Securities charges the Company a fee for management and supervisory services rendered in connection with variable life and variable annuity sales and in-force business. For the years ended December 31, 2018, 2017 and 2016, the fees incurred for these services amounted to $43 million, $43 million and $48 million, respectively, which is included in Operating expenses in the accompanying Statutory Statements of Operations.

At December 31, 2018 and 2017, the Company reported a net amount of $59 million and $294 million, respectively, as amounts payable to parent and affiliates. The terms of the underlying agreements generally require that these amounts be settled in cash within 90 days.

NOTE 12 - INSURANCE LIABILITIES

Liabilities for policy reserves, deposit funds and policy claims at December 31, 2018 and 2017 were as follows (in millions):



	2018		2017
Life insurance reserves	$	26,486	$	21,756
Annuity reserves and supplementary contracts with life contingencies	67,645		64,554
Total policy reserves	94,131		86,310
Deposit funds	1,308		1,176
Policy claims	244		198
Total liabilities for policy reserves, deposit funds and policy claims	$	95,683	$	87,684

Life Insurance Reserves

Reserves for life insurance policies are maintained principally using the 1958 Commissioners’ Extended Term Mortality Table and the 1958, 1980, 2001 and 2017 Commissioners’ Standard Ordinary Mortality Tables under the Commissioners’ Reserve Valuation Method or Net Level Premium Reserve Method with valuation interest rates ranging from 2.0% to 5.8%. Reserves for universal life secondary guarantee products with multiple sets of cost of insurance are determined using the methodology outlined in the November 2011 Life Actuarial Task Force Statement.

In 2018, there were no changes in reserve basis.

The Company has established policy reserves (excluding the effects of reinsurance) on contracts issued January 1, 2001 and later that exceed the minimum amounts determined under Appendix A-820, “Minimum Life and Annuity Reserve Standards” of NAIC SAP by approximately $197 million and $284 million at December 31, 2018 and 2017, respectively.

At December 31, 2018 and 2017, the Company’s liabilities for GMDB reserves, which are associated with certain variable life products, amounted to $20 million and $19 million, respectively, and were recorded in Policy reserves in the accompanying Statutory Statements of Financial Position.

Surrender values are promised in excess of life reserves on certain policies. This excess is included as part of miscellaneous reserves. No surrender values are promised in excess of any other reserves. Additional reserves are held on account of anticipated extra mortality for policies subject to extra premiums.

At December 31, 2018 and 2017, the Company had $12,737 million and $12,177 million, respectively, of insurance in-force for which the gross premiums were less than the net premiums according to the standard of valuation set by the State of Delaware.

The tabular interest has been determined by formula as described in the NAIC instructions except for certain universal life products for which tabular interest has been determined from the basic data for the calculation of policy reserves. The tabular less actual reserves released has been determined by formula as described in the NAIC instructions. The tabular cost has been determined by formula as described in the NAIC instructions.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 12 - INSURANCE LIABILITIES (continued)

The Company has elected to establish reserves pursuant to VM-A and VM-C for contracts issued in 2018 and 2017, as allowed during the first three years following the operating date of the Valuation Manual.

Annuity Reserves and Supplementary Contracts with Life Contingencies

Reserves for single premium immediate annuities, guaranteed future income annuities, and supplementary contracts involving life contingencies purchased prior to 2018 are based principally on 1983 Table A, A2000, 2012 IAR and the Commissioners’ Annuity Reserve Valuation Method (“CARVM”), with assumed interest rates ranging from 3.5% to 8.8%. Purchases in 2018 are reserved with valuation interest rates satisfying both the Maximum Valuation Interest Rates For Income Annuities ("VM-22") and the New York Department of Financial Services maximum valuation rate requirements and 2012 Individual Annuity Reserve Table. The VM-22 rates range from 2.00% to 4.50%.

Reserves for fixed deferred annuities are based principally on 1971 Individual Annuity Mortality, 1983 Table A, A2000, 2012 IAR and the CARVM, with assumed interest rates ranging from 3.5% to 10.0%. Reserves for variable deferred annuities are based principally on 1994 Variable Annuity GMDB Mortality Table and the Variable Annuity Commissioners’ Annuity Reserve Valuation Method ("VM-21"), with assumed interest rates ranging from 3.5% to 8.25%. Generally, owners of the Company’s deferred annuities are able, at their discretion, to withdraw funds from their policies. For some policies, the withdrawals are subject to surrender charges in the early years.

At December 31, 2018 and 2017, the Company’s liabilities for GMDB and GMAB reserves, which are associated with variable annuity products, amounted to $25 million and $17 million, respectively, and were recorded in Policy reserves in the accompanying Statutory Statements of Financial Position.

At December 31, 2018 and 2017, there were no changes to reserve basis.

The tabular interest has been determined by formula as described in the NAIC instructions except for individual deferred annuities for which tabular interest has been determined from the basic data for the calculation of policy reserves. The tabular less actual reserves released has been determined by formula as described in the NAIC instructions. The tabular cost has been determined by formula as described in the NAIC instructions.

Deposit Funds

Deposit funds at December 31, 2018 and 2017 were as follows (in millions):



	2018		2017
Fixed period annuities	$	940	$	837
Supplemental contracts without life contingencies	344		310
Continued interest accounts	24		29
Total deposit funds	$	1,308	$	1,176

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 12 - INSURANCE LIABILITIES (continued)

Withdrawal Characteristics of Annuity Reserves and Deposit Funds

The following table reflects the withdrawal characteristics of annuity reserves and deposit fund liabilities at December 31, 2018 and 2017 ($ in millions):



	2018
	General Account		Separate Accounts Non-guaranteed		Total		% of Total
Subject to discretionary withdrawal:
With fair value adjustment	$	24,895	$	—	$	24,895	27	%
At book value less current surrender charge of 5% or more	6,585		—		6,585		7
At fair value	—		24,533		24,533		26
Total with adjustment or at fair value	31,480		24,533		56,013		60
At book value without adjustment	21,718		—		21,718		23
Not subject to discretionary withdrawal	15,729		—		15,729		17
Total annuity reserves and deposit fund liabilities	$	68,927	$	24,533	$	93,460	100	%



	2017
	General Account		Separate Accounts Non-guaranteed		Total		% of Total
Subject to discretionary withdrawal:
With fair value adjustment	$	21,208	$	—	$	21,208	23	%
At book value less current surrender charge of 5% or more	6,635		—		6,635		7
At fair value	—		26,748		26,748		29
Total with adjustment or at fair value	27,843		26,748		54,591		59
At book value without adjustment	23,560		—		23,560		25
Not subject to discretionary withdrawal	14,310		—		14,310		16
Total annuity reserves and deposit fund liabilities	$	65,713	$	26,748	$	92,461	100	%

NOTE 13 - REINSURANCE

The Company enters into reinsurance agreements in the normal course of its insurance business to reduce overall risk and to be able to issue life insurance policies in excess of its retention limits. Currently, the Company reinsures the mortality risk on new life insurance policies on a quota–share yearly renewable term basis for many products, except for custom guarantee universal life, survivorship custom guarantee universal life and asset flex products. Most of the ceded business is on an automatic basis. The quota–share currently ceded on new business ranges from 10% to 90%. All products are ceded from first dollar with the exception of current performance survivorship universal life, which has a minimum size policy ceded of either $0 or $1 million. Cases in excess of the Company’s retention and certain substandard cases are ceded on a facultative basis. The majority of the Company's facultative reinsurance is for substandard cases which the Company typically cedes 90%.

The ceding of risk does not discharge the Company from its primary obligations to policyholders. To the extent that the assuming companies become unable to meet their obligations under reinsurance contracts, the Company remains contingently liable. Each reinsurer is reviewed to evaluate its financial stability before entering into each reinsurance contract and throughout the period that the reinsurance contract is in place.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 13 - REINSURANCE (continued)

Life insurance ceded was 48% and 60% of total life insurance in-force at December 31, 2018, and 2017, respectively. The reserve reductions taken for life insurance reinsured at December 31, 2018 and 2017 were $550 million and $4,447 million, respectively.

The effects of reinsurance for the years ended December 31, 2018, 2017 and 2016 were as follows (in millions):



	2018			2017			2016
Premiums:
Direct	$	12,771		$	13,928		$	13,360
Assumed	5			4			4
Ceded	(541		)	(616		)	(632		)
Net premiums	$	12,235		$	13,316		$	12,732
Policyholders’ benefits ceded	$	468		$	774		$	715
Reinsurance recoverable	$	76		$	207		$	168

Effective April 1, 2018, the Company’s coinsurance with funds withheld and modified coinsurance agreements with New York Life to cede 90% of a block of inforce life insurance business were terminated and the Company fully recaptured the risks related to the business previously reinsured under the agreements. The Company paid New York Life a recapture fee in the amount of $21 million pre-tax. The recapture of these reinsurance agreements did not have a material impact to the Company’s surplus. Prior to the recapture, the Company had ceded 90% of the retained portion of a block of in-force life insurance business through a reinsurance agreement with New York Life using a combination of coinsurance with funds withheld for the fixed portion maintained in the general account and modified coinsurance (“MODCO”) for policies in the separate accounts. Under both the MODCO and funds withheld treaties, the Company retained the assets held in relation to the policy reserves and separate accounts liabilities. An experience refund was paid to the Company at the end of each accounting period for 100% of New York Life’s profits in excess of $5 million per year. Experience refunds received in 2018, 2017 and 2016 were $3 million, $71 million and $37 million, respectively, which is reported in premiums in the accompanying Statutory Statements of Operations. At December 31, 2017 , the Company ceded reserves under coinsurance with funds withheld and MODCO of $5,347 million.

The Company has reinsurance agreements with New York Life Agents Reinsurance Company (“NYLARC”). NYLARC is a life insurance company wholly-owned by NYLARC Holding Company, Inc., whose shareholders consist of New York Life’s top agents who meet certain criteria and who may also be agents of the Company or NYLIFE Insurance Company of Arizona ("NYLAZ"). NYLARC reinsures a portion of certain life insurance products sold by its shareholders. NYLARC’s purpose is to retain high production agents, and increase the volume and quality of the business that they submit to New York Life, NYLAZ and the Company.

The Company had reinsured certain policies with unauthorized companies that prevent it from recognizing full reinsurance credit. Since these reinsurers are not recognized in the State of Delaware, and the receivable owed to the Company is not secured by cash, securities or other permissible collateral, the Company established a liability equal to the net credit received.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 14 - BENEFIT PLANS

The Company participates in the cost of the following plans sponsored by New York Life: (1) certain postretirement life and health benefits for retired employees and agents including their eligible dependents, (2) certain defined benefit pension plans for eligible employees and agents (3) certain defined contribution plans for substantially all employees and agents and (4) postemployment benefits. The expense for these plans is allocated to the Company in accordance with an intercompany cost sharing agreement. The liabilities for these plans are included with the liabilities for the corresponding plan of New York Life. The Company’s share of the cost of these plans was as follows for the years ended December 31, 2018, 2017 and 2016 (in millions):



	2018		2017		2016
Defined benefit pension	$	31	$	27	$	28
Defined contribution	9		9		9
Postretirement life and health	6		6		6
Total	$	46	$	42	$	43

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Support and Credit Agreements

New York Life Capital Corporation (“NYLCC”), a wholly-owned subsidiary of NYLIFE LLC, has a credit agreement with the Company dated December 23, 2004, as amended, whereby NYLCC has agreed to make loans to the Company in an amount up to, but not exceeding, $490 million from the issuance of commercial paper. At December 31, 2018 and 2017, the Company had no outstanding loan balance to NYLCC. During 2018, 2017 and 2016, the Company had no interest expense.

In addition, the Company has a credit agreement with New York Life dated April 1, 1999, as amended, in which New York Life may borrow from the Company up to $490 million. During 2018 and 2017, the credit facility was not used, no interest was paid and there was no outstanding balance due.

Guarantees

At the inception of a guarantee (except unlimited guarantees), the Company recognizes an initial liability at fair value for the obligations it has undertaken, regardless of the probability of performance under the guarantee. This includes guarantees made on behalf of affiliates unless the guarantee is deemed unlimited. At December 31, 2018 and 2017, the Company had no such guarantees.

Litigation

The Company is a defendant in individual and/or alleged class action suits arising from its agency sales force, insurance (including variable contracts registered under the federal securities law), investment, retail securities, and/or other operations, including actions involving retail sales practices. Some of these actions seek substantial or unspecified compensatory and punitive damages. The Company is also from time to time involved in various governmental, administrative, and investigative proceedings and inquiries.

Notwithstanding the uncertain nature of litigation and regulatory inquiries, the outcome of which cannot be predicted, the Company believes that, after provisions made in the financial statements, the ultimate liability that could result from litigation and proceedings would not have a material adverse effect on the Company’s financial position; however, it is possible that settlements or adverse determinations in one or more actions or other proceedings in the future could have a material adverse effect on the Company’s operating results for a given year.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 15 - COMMITMENTS AND CONTINGENCIES (continued)

Borrowed Money

Refer to Note 6 - Investments for a more detailed discussion of the Company's commitments for loaned securities and repurchase agreements.

Assessments

Most of the jurisdictions in which the Company is licensed to transact business require life insurers to participate in guaranty associations which are organized to pay contractual benefits pursuant to insurance policies issued by impaired, insolvent or failed life insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the line of business in which the impaired, insolvent or failed life insurer is engaged. Some states permit member insurers to recover assessments through full or partial premium tax offsets.

Other Commitments and Contingencies

Prior to July 1, 2002, the Company did business in Taiwan through a branch operation (the "Taiwan Branch"). On July 1, 2002, the Taiwan Branch ceased operations and all of its liabilities and assets, including policy liabilities were transferred to New York Life Insurance Taiwan Corporation ("Taiwan Corporation"), an indirect subsidiary of New York Life. On December 31, 2013, Taiwan Corporation was sold to Yuanta Financial Holding Co. Ltd. ("Yuanta"). Under the terms of the sale agreement, Yuanta has agreed to satisfy in full, or to cause Taiwan Corporation to satisfy in full, all of Taiwan Corporation's obligations under the Taiwan Branch policies that were transferred to Taiwan Corporation on July 1, 2002. However, the Company, under Taiwan law, also remains contingently liable for these policies in the event that neither Taiwan Corporation nor Yuanta meets its obligations. This contingent liability of the Company has not been recognized on the accompanying Statutory Statements of Financial Position because it does not meet the probable and estimable criteria of SSAP No. 5R.

At December 31, 2018 and 2017, the Company and its guaranteed separate accounts had contractual commitments to extend credit for commercial mortgage loans at both fixed and variable rates of interest, which amounted to approximately $1,291 million and $821 million, respectively. These commitments are diversified by property type and geographic location. There were no contractual commitments to extend credit under residential loan agreements at December 31, 2018 and 2017.

At December 31, 2018 and 2017, the Company had outstanding contractual obligations to acquire additional private placement securities amounting to $722 million and $662 million, respectively.

Unfunded commitments on limited partnership, limited liability companies and other invested assets amounted to $312 million and $268 million at December 31, 2018 and 2017, respectively. Unfunded commitments on LIHTC amounted to $11 million and $17 million at December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017, unfunded commitments on LIHTC are included in Limited partnerships and other invested assets, with an offset in Other liabilities in the accompanying Statutory Statement of Financial Position.

Several commercial banks have customary security interests in certain assets of the Company to secure potential overdrafts and other liabilities of the Company that may arise under custody, securities lending and other banking agreements with such banks.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 15 - COMMITMENTS AND CONTINGENCIES (continued)

FHLB Agreement

The Company is a member of the FHLB of Pittsburgh. Membership in the FHLB of Pittsburgh provides the Company with a significant source of alternative liquidity. Advances received by the general account are included in Other liabilities in the accompanying Statutory Statements of Financial Position. When borrowing from the FHLB of Pittsburgh, the Company is required to post collateral in the form of eligible securities, including mortgage-backed, government and agency debt instruments for each of the advances received. Upon any event of default by the Company, the FHLB of Pittsburgh's recovery from the collateral is limited to the amount of the Company's liability to the FHLB of Pittsburgh.

The amount of FHLB of Pittsburgh common stock held, in aggregate exclusively in the Company’s general account at December 31, 2018 and 2017 was as follows (in millions):



	2018		2017
Membership stock - Class B ⁽¹⁾	$	28	$	26
Activity stock	—		—
Aggregate total	$	28	$	26
Actual or estimated borrowing capacity as determined by the insurer	$	5,073	$	4,903

⁽¹⁾ Membership stock is not eligible for redemption.

At December 31, 2018 and 2017, the Company did not have an outstanding balance due to the FHLB of Pittsburgh. The maximum amount borrowed and collateral pledged to the FHLB of Pittsburgh during the years ended December 31, 2018 and 2017 was as follows (in millions):



	Fair Value		Carrying Value		Maximum Amount Borrowed During the Year
Current year general account	$	31	$	31	$	10
Current year separate accounts	$	—	$	—	$	—
Prior year total general and separate accounts	$	17	$	17	$	10

The Company does not have any prepayment obligations for the borrowing arrangement.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 16 - INCOME TAXES

The components of the net DTAs and DTLs were as follows at December 31, 2018 and 2017 (in millions):



	2018						2017						Change
	Ordinary		Capital		Total		Ordinary		Capital		Total		Ordinary			Capital		Total
Gross DTAs	$	1,060	$	164	$	1,224	$	944	$	127	$	1,071	$	116		$	37	$	153
Statutory valuation allowance	—		—		—		—		—		—		—			—		—
Adjusted gross DTAs	1,060		164		1,224		944		127		1,071		116			37		153
Nonadmitted DTAs ⁽¹⁾	296		—		296		88		—		88		208			—		208
Subtotal net admitted DTAs	764		164		928		856		127		983		(92		)	37		(55		)
Gross DTLs	456		146		602		526		121		647		(70		)	25		(45		)
Net admitted DTAs ⁽²⁾	$	308	$	18	$	326	$	330	$	6	$	336	$	(22	)	$	12	$	(10	)

⁽¹⁾ DTAs are nonadmitted primarily because they are not expected to be realized within three years of the Statutory Statement of Financial Position date.

⁽²⁾ The total net admitted DTAs are included in Other assets in the accompanying Statutory Statements of Financial Position.

The admission calculation components are as follows (paragraph references throughout Note 16 are to paragraphs of SSAP No. 101 “Income Taxes, A Replacement of SSAP No. 10R and SSAP No. 10”) (in millions):



	December 31, 2018						December 31, 2017						Change
	Ordinary		Capital		Total		Ordinary		Capital		Total		Ordinary			Capital		Total
Federal income taxes paid in prior years recoverable through loss carrybacks (Paragraph 11.a)	$	—	$	26	$	26	$	—	$	22	$	22	$	—		$	4	$	4
Adjusted gross DTAs expected to be realized (excluding the amount of DTAs from paragraph 11.a above) after application of the threshold limitation (the lesser of paragraph 11.b.i and 11.b.ii below):	292		8		$	300	313		—		313		(21		)	8		(13		)
Adjusted gross DTAs expected to be realized following the balance sheet date. (Paragraph 11.b.i)	292		8		$	300	313		—		313		(21		)	8		(13		)
Adjusted gross DTAs allowed per limitation threshold (Paragraph 11.b.ii)	N/A		N/A		1,239		N/A		N/A		1,328		N/A			N/A		(89		)
Adjusted gross DTAs (excluding the amount of DTAs from paragraphs 11.a and 11.b above) offset by gross DTLs (Paragraph 11.c)	472		130		602		543		105		648		(71		)	25		(46		)
DTAs admitted as the result of application of SSAP 101 (Total of paragraphs 11.a, 11.b, 11.c).	$	764	$	164	$	928	$	856	$	127	$	983	$	(92	)	$	37	$	(55	)

The ratio used to determine the applicable period used in paragraph 11.b.i above and the amount of adjusted capital and surplus used to determine the percentage threshold limitation in paragraph 11.b.ii above are as follows ($ in millions):



	December 31,
	2018			2017
Ratio percentage used to determine recovery period and threshold limitation amount.	1,010		%	1,159		%
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation in paragraph 11.b.ii above.	$	8,260		$	8,852

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 16 - INCOME TAXES (continued)

There was no impact on the Company’s adjusted gross and net admitted DTAs due to tax planning strategies at December 31, 2018 and 2017.

The Company did not use reinsurance in its tax planning strategies. The Company had no unrecognized DTLs at December 31, 2018 and 2017. Additionally, the Company had no adjustments to gross DTAs because of a change in circumstances that causes a change in judgment about the realizability of the related DTAs.

The TCJA was enacted on December 22, 2017 and it significantly changes U.S. tax law primarily by lowering the corporate income tax rate from 35% to 21% beginning in 2018. Deferred taxes were revalued to reflect the 21% corporate income tax rate with the following result (in millions):



	2018			2017
Deferred income tax benefit on change in net unrealized capital gains	$	—		$	14
Decrease in net deferred taxes related to other items	(2		)	(296		)
Decrease to net deferred taxes booked to surplus	(2		)	(282		)
Decrease to nonadmitted deferred taxes	—			325
Total change in net admitted DTAs	$	(2	)	$	43

For tax years beginning January 1, 2018, the TCJA limits life insurance reserves for tax purposes to the greater of the net surrender value or 92.81% of NAIC required reserves effective January 1, 2018. Tax accounting for these changes requires the restatement of December 31, 2017 life insurance tax reserves calculated using pre TCJA rules to the amounts required to be held under the TCJA. This revaluation requires establishing a “gross up” in which a new DTA for the revised statutory to tax difference is recorded and offset by a DTL in an equal amount. The Company has recorded offsetting DTAs and DTLs in the provisional amount of $472 million in 2017. The tax accounting has been completed within the measurement period, as defined in INT 18-01. On the basis of life insurance tax reserve computations that were completed during the reporting period, an additional measurement period tax reserve decrease of $24 million was recognized to the DTL and $24 million offset to the DTA. The restatement of life insurance tax reserves, which has now been determined to be complete, resulted in a total DTL of $448 million with a corresponding adjustment of $448 million to the DTA.

Significant components of the current federal and foreign income taxes for the years ended December 31, 2018, 2017 and 2016 were as follows (in millions):



	2018			2017		2016			Change 2018-2017			Change 2017-2016
Federal⁽¹⁾	$	215		$	248	$	279		$	(33	)	$	(31	)
Foreign	—			1		—			(1		)	1
Subtotal	215			249		279			(34		)	(30		)
Federal income tax on net capital gains (losses)	(24		)	15		(21		)	(39		)	36
Utilization of capital loss carry-forward	—
Other (Prior period correction)	(22		)	—					(22		)	—
Total federal and foreign income taxes	$	169		$	264	$	258		$	(95	)	$	6

⁽¹⁾ The Company had investment tax credits of $30 million, $36 million and $38 million for the years ended December 31, 2018, 2017 and 2016, respectively.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 16 - INCOME TAXES (continued)

The tax effects of temporary differences that give rise to DTAs and DTLs at December 31, 2018 and 2017 were as follows (in millions):



	2018		2017			Change
DTAs
Ordinary:
Pension accrual	$	27	$	29		$	(2	)
Policyholder reserves	733		624			109
Deferred acquisition costs	241		233			8
Fixed assets	2		2			—
Receivables - nonadmitted	4		9			(5		)
Investments	53		47			6
Other	—		(1		)	1
Subtotal	1,060		943			117
Nonadmitted	296		88			208
Admitted ordinary DTAs	764		855			(91		)
Capital:
Investments	164		127			37
Subtotal	164		127			37
Nonadmitted	—		—			—
Admitted capital DTAs	164		127			37
Total admitted DTAs	928		982			(54		)
DTLs
Ordinary:
Investments	45		28			17
Policyholder reserves	410		497			(87		)
Other	1		1			—
Subtotal	456		526			(70		)
Capital:
Investments	146		121			25
Subtotal	146		121			25
Total DTLs	602		647			(45		)
Net admitted DTAs	$	326	$	335		$	(9	)
Deferred income tax (expense)/benefit on change in net unrealized capital gains/(losses)						$	28
Increase in net deferred taxes related to other items						153
Increase in deferred income taxes reported in prior period correction						18
Decrease in DTAs nonadmitted						(190		)
Decrease in DTAs nonadmitted reported in prior period correction						$	(18	)
Total change in net admitted DTAs						$	(9	)

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 16 - INCOME TAXES (continued)

The Company’s income tax expense for the years ended December 31, 2018, 2017 and 2016 differs from the amount obtained by applying the statutory rate of 21%, 35% and 35%, respectively, to net gain from operations after dividends to policyholders and before federal income taxes for the following reasons (in millions):



	2018			2017			2016			Change 2018-2017			Change 2017-2016
Net gain from operations after dividends to policyholders and before federal and foreign income taxes at statutory rate	$	103		$	304		$	409		$	(201	)	$	(105	)
Net realized capital gains (losses) at statutory rate	(7		)	31			(38		)	(38		)	69
Tax exempt income	(22		)	(52		)	(47		)	30			(5		)
Tax credits, net of withholding	(33		)	(40		)	(40		)	7			—
Amortization of IMR	(9		)	(12		)	(18		)	3			6
Impact of TCJA	(2		)	296			—			(298		)	296
Prior year audit liability and settlement	(3		)	(1		)	(36		)	(2		)	35
Non-admitted assets	(6		)	12			(13		)	(18		)	25
Accruals in surplus	(7		)	(4		)	(23		)	(3		)	19
Other	(16		)	12			10			(28		)	2
Income tax incurred and change in net DTAs during period	$	(2	)	$	546		$	204		$	(548	)	$	342
Federal income taxes reported in the Company's Statutory Statements of Operations	$	215		$	249		$	279		$	(34	)	$	(30	)
Capital gains tax expense (benefit) incurred	(24		)	15			(21		)	(39		)	36
Change in net deferred income taxes	(153		)	282			(54		)	(435		)	336
Change in current and deferred income taxes reported in prior period correction	(40		)	—			—			(40		)	—
Total federal and foreign income tax expense	$	(2	)	$	546		$	204		$	(548	)	$	342

The Company’s federal income tax returns are routinely examined by the Internal Revenue Service ("IRS") and provisions are made in the financial statements in anticipation of the results of these audits. The IRS has completed audits through 2010 and tax years 2011 through 2013 are currently under examination. There were no material effects on the Company’s accompanying Statutory Statements of Operations as a result of these audits. The Company believes that its recorded income tax liabilities are adequate for all open years.

The Company did not have any operating loss and tax credit carry forwards available for tax purposes. The total income taxes incurred in prior years that will be available for recoupment in the event of future net losses total $0, $29 million and $0, related to the years ended December 31, 2018, 2017 and 2016, respectively.

The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.

As discussed in Note 3 – Significant Accounting Policies - Federal Income Taxes, the Company’s federal income tax return is consolidated with New York Life, NYLAZ, NYLIFE LLC, New York Life Enterprises LLC, NYL Investments, and NYL Investors.

At December 31, 2018 and 2017, the Company recorded a current income tax receivable of $118 million and $18 million, respectively, which is included in Other assets in the accompanying Statutory Statements of Financial Position.

At December 31, 2018, the Company had no protective tax deposits on deposit with the IRS under Section 6603 of the IRC.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 17 - CAPITAL AND SURPLUS

Capitalization

The Company has 20,000 shares authorized, with a par value of $10,000 per share with 2,500 shares issued and outstanding. All shares are common stock and are owned by New York Life. The Company has no preferred stock.

Other Surplus Adjustments

Other adjustments, net in the accompanying Statutory Statements of Changes in Surplus at December 31, 2018, 2017 and 2016, principally include the effects of the following (in millions):



	2018			2017			2016
Surplus withdrawn from separate accounts	$	48		$	44		$	41
Changes in surplus relating to separate accounts	(43		)	(50		)	(38		)
Change in liability for reinsurance in unauthorized companies	1			2			(4		)
Total	$	6		$	(4	)	$	(1	)

Nonadmitted Assets

Under statutory accounting rules, a nonadmitted asset is defined as an asset having economic value other than that which can be used to fulfill policyholder obligations, or those assets that are unavailable due to encumbrances or other third-party interests. These assets are not recognized in the accompanying Statutory Statements of Financial Position, and are, therefore, considered nonadmitted. The changes between years in nonadmitted assets are charged or credited directly to surplus.

NOTE 18 - DIVIDENDS TO STOCKHOLDER

The Company is subject to restrictions on the payment of dividends to New York Life. Under the Delaware Insurance Code, cash dividends can be paid only out of that part of the Company’s available and accumulated surplus funds which are derived from realized net operating profits on its business and realized capital gains, and dividends (or other distributions) on capital stock can be declared and paid only out of earned surplus (being an amount equal to the unassigned funds of the Company as set forth in its most recent annual statement submitted to the Delaware Insurance Commissioner (“the Commissioner”), including all or part of the surplus arising from unrealized capital gains or revaluation of assets), except as otherwise approved by the Commissioner (provided that stock dividends may be paid out of any available surplus funds). Furthermore, no extraordinary dividend may be paid until 30 days after the Commissioner has received notice of such declaration and has not disapproved such payment within such 30 day period, or the Commissioner has approved such payment within that 30 day period. Extraordinary dividends are defined as any dividend or distribution or cash or other property, whose fair market value, together with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of (1) 10 percent of the Company’s surplus as regards policyholders as of the preceding December 31 or (2) the net gain from operations of the Company for the 12 month period ending on the preceding December 31 (not including pro rata distributions of any class of the Company’s own securities).

At December 31, 2018, the amount of earned surplus of the Company available for the payment of dividends was $4,633 million. The maximum amount of dividends that may be paid in 2019 without prior notice to or approval of the Delaware Insurance Commissioner is $856 million.

Dividends may be declared by the Board of Directors of the Company from available surplus, as it deems appropriate, on a non-cumulative basis. In 2018, the Company paid $600 million in dividends to its sole stockholder, New York Life. In 2017, the Company paid a $275 million dividend to New York Life. In 2016, the Company did not declare or pay a dividend to New York Life.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 19 - LOAN-BACKED AND STRUCTURED SECURITY IMPAIRMENTS

The following table lists each loan-backed and structured security at a CUSIP level where the present value of cash flows expected to be collected is less than the amortized cost basis during the current year (in thousands):



IMPAIRMENTS TAKEN ON CURRENT HOLDINGS DURING THE CURRENT YEAR
(1)	(2)		(3)		(4)		(5)		(6)		(7)
CUSIP^(1,2)	Amortized Cost Before Current Period OTTI		Projected Cash Flows		Current Period Recognized OTTI		Amortized Cost After OTTI		Fair Value		Financial Statement Reporting Period
General Account
02147QAF9	$	349	$	348	$	1	$	348	$	332	12/31/2018
059469AF3	1,066		1,061		5		1,061		1,055		12/31/2018
05948KP52	511		507		4		507		483		12/31/2018
05951KBA0	776		765		12		765		758		12/31/2018
05953YAA9	4,065		4,045		20		4,045		3,912		12/31/2018
12544TAH7	266		251		15		251		260		12/31/2018
12544VAB5	50		48		1		48		48		12/31/2018
12627HAK6	912		894		18		894		867		12/31/2018
12628KAF9	1,053		1,030		23		1,030		952		12/31/2018
12628LAJ9	238		233		5		233		224		12/31/2018
12629EAD7	1,117		1,108		9		1,108		1,057		12/31/2018
126384AQ9	41		37		3		37		38		12/31/2018
12638PAE9	1,329		1,314		16		1,314		1,286		12/31/2018
12667G6W8	1,111		1,089		22		1,089		1,098		12/31/2018
12669GT50	1		—		1		—		—		12/31/2018
17029RAA9	182		23		159		23		7		12/31/2018
17309BAB3	151		147		4		147		146		12/31/2018
251513AV9	1,879		1,818		61		1,818		1,842		12/31/2018
251513BC0	731		696		35		696		714		12/31/2018
32052MAA9	199		195		4		195		117		12/31/2018
3622E8AC9	3,292		3,067		226		3,067		3,089		12/31/2018
3622ELAG1	349		329		20		329		319		12/31/2018
3622MPAT5	40		39		1		39		39		12/31/2018
36244SAC2	4,804		4,451		353		4,451		4,679		12/31/2018
36244SAF5	2,990		2,769		222		2,769		2,910		12/31/2018
466247ZQ9	549		513		37		513		539		12/31/2018
46625YQX4	2,499		2,246		254		2,246		2,109		12/31/2018
46628BBD1	411		397		13		397		396		12/31/2018
61749EAH0	929		871		58		871		881		12/31/2018
61751DAE4	451		417		34		417		422		12/31/2018
61751JAH4	1,773		1,549		224		1,549		1,715		12/31/2018
61751JAJ0	1,760		1,540		220		1,540		1,715		12/31/2018
61752RAH5	439		430		9		430		430		12/31/2018

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 19 - LOAN-BACKED AND STRUCTURED SECURITY IMPAIRMENTS (continued)



IMPAIRMENTS TAKEN ON CURRENT HOLDINGS DURING THE CURRENT YEAR
(1)	(2)	(3)	(4)	(5)	(6)	(7)
CUSIP^(1,2)	Amortized Cost Before Current Period OTTI	Projected Cash Flows	Current Period Recognized OTTI	Amortized Cost After OTTI	Fair Value	Financial Statement Reporting Period
61752RAM4	953	917	36	917	923	12/31/2018
76110VSU3	721	699	22	699	646	12/31/2018
81744HAF0	624	594	30	594	595	12/31/2018
86359B5U1	55	50	5	50	54	12/31/2018
86359DNP8	181	170	11	170	180	12/31/2018
93934FCE0	1,127	1,098	29	1,098	1,102	12/31/2018
00764MCQ8	325	324	—	324	324	9/30/2018
05948KH77	748	741	7	741	746	9/30/2018
059515AE6	1,054	1,053	2	1,053	1,024	9/30/2018
12627HAK6	935	932	3	932	914	9/30/2018
12628KAF9	1,087	1,075	12	1,075	1,051	9/30/2018
12628LAJ9	250	242	8	242	229	9/30/2018
12629EAD7	1,149	1,135	14	1,135	1,120	9/30/2018
12638PAE9	1,401	1,364	37	1,364	1,368	9/30/2018
12667G6W8	805	795	10	795	805	9/30/2018
12669GT50	3	1	2	1	—	9/30/2018
15132EFL7	676	604	72	604	653	9/30/2018
17029RAA9	203	142	62	142	136	9/30/2018
225458Y85	1,179	1,097	82	1,097	1,161	9/30/2018
32052MAA9	227	202	24	202	122	9/30/2018
649603AQ0	123	123	—	123	122	9/30/2018
69335QAL7	6,118	5,657	462	5,657	5,774	9/30/2018
69336QAL6	583	540	42	540	551	9/30/2018
76110VSU3	805	781	23	781	731	9/30/2018
059469AF3	1,203	1,139	64	1,139	1,184	6/30/2018
059515AE6	1,137	1,097	40	1,097	1,069	6/30/2018
059515BM7	1	—	1	—	1	6/30/2018
05951FAK0	359	356	3	356	353	6/30/2018
05951KAZ6	101	99	2	99	99	6/30/2018
05951KBA0	589	555	34	555	580	6/30/2018
12498NAD5	1,106	968	138	968	963	6/30/2018
12544TAH7	365	356	8	356	364	6/30/2018
12544VAB5	55	53	1	53	54	6/30/2018
12627HAK6	1,006	971	35	971	971	6/30/2018
12628LAJ9	264	257	6	257	242	6/30/2018
12629EAD7	1,191	1,180	11	1,180	1,189	6/30/2018
12669GT50	15	14	1	14	13	6/30/2018
15132EJH2	413	353	60	353	391	6/30/2018

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 19 - LOAN-BACKED AND STRUCTURED SECURITY IMPAIRMENTS (continued)



IMPAIRMENTS TAKEN ON CURRENT HOLDINGS DURING THE CURRENT YEAR
(1)	(2)	(3)	(4)	(5)	(6)	(7)
CUSIP^(1,2)	Amortized Cost Before Current Period OTTI	Projected Cash Flows	Current Period Recognized OTTI	Amortized Cost After OTTI	Fair Value	Financial Statement Reporting Period
17029RAA9	373	203	170	203	189	6/30/2018
36185MBN1	9	9	—	9	9	6/30/2018
362375AF4	846	772	73	772	843	6/30/2018
46625YQY2	1,198	—	1,199	—	68	6/30/2018
57643MDW1	95	12	84	12	90	6/30/2018
57643MEU4	4	1	3	1	2	6/30/2018
69335QAL7	6,174	6,153	21	6,153	5,845	6/30/2018
76110VSU3	924	892	32	892	821	6/30/2018
94983PAG3	452	449	3	449	448	6/30/2018
94984FAT6	1,448	1,369	79	1,369	1,441	6/30/2018
94985GBB1	1,285	1,153	131	1,153	1,280	6/30/2018
00011#AA1	1,844	1,844	—	1,844	1,713	3/31/2018
05948KH77	494	493	1	493	494	3/31/2018
05948KP52	629	611	18	611	609	3/31/2018
059515BM7	7	2	5	2	4	3/31/2018
05951KAZ6	110	106	4	106	107	3/31/2018
05951KBA0	1,042	993	49	993	1,023	3/31/2018
1248MBAJ4	4,517	4,455	62	4,455	4,309	3/31/2018
1248MBAL9	1,490	1,468	22	1,468	1,405	3/31/2018
12627HAK6	1,079	1,028	51	1,028	1,006	3/31/2018
12629EAD7	1,288	1,216	72	1,216	1,232	3/31/2018
12638PAE9	1,542	1,451	92	1,451	1,470	3/31/2018
12667GXM0	2,072	2,032	41	2,032	2,038	3/31/2018
12669GJ51	52	41	10	41	52	3/31/2018
12669GT50	42	39	2	39	38	3/31/2018
151314CC3	702	548	155	548	682	3/31/2018
151314DJ7	228	227	—	227	217	3/31/2018
17029RAA9	351	334	17	334	283	3/31/2018
225470S95	794	585	210	585	760	3/31/2018
36185MBN1	182	180	2	180	181	3/31/2018
3622MPAT5	48	47	—	47	48	3/31/2018
45660LHT9	639	588	51	588	606	3/31/2018
46628LBJ6	622	241	380	241	503	3/31/2018
57643MDX9	41	29	12	29	41	3/31/2018
57643MDY7	15	9	6	9	14	3/31/2018
61751DAE4	523	491	32	491	518	3/31/2018
61752RAH5	514	478	36	478	500	3/31/2018
61752RAJ1	1,140	1,059	82	1,059	1,115	3/31/2018

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 19 - LOAN-BACKED AND STRUCTURED SECURITY IMPAIRMENTS (continued)



IMPAIRMENTS TAKEN ON CURRENT HOLDINGS DURING THE CURRENT YEAR
(1)	(2)		(3)		(4)		(5)		(6)		(7)
CUSIP^(1,2)	Amortized Cost Before Current Period OTTI		Projected Cash Flows		Current Period Recognized OTTI		Amortized Cost After OTTI		Fair Value		Financial Statement Reporting Period
69336RDQ0	721		603		118		603		623		3/31/2018
69337VAE0	2,374		2,018		356		2,018		2,207		3/31/2018
76110VSU3	1,007		1,002		5		1,002		920		3/31/2018
78477AAA5	300		300		—		300		252		3/31/2018
863579XV5	337		323		14		323		299		3/31/2018
93934FEM0	1,202		1,132		70		1,132		1,160		3/31/2018
Subtotal - General Account	XXX		XXX		$	7,258	XXX		XXX
Guaranteed Separate Accounts
009451AP0	$	2	$	2	$	—	$	2	$	2	12/31/2018
02147QAF9	466		464		2		464		442		12/31/2018
059469AF3	177		176		1		176		176		12/31/2018
05951KBA0	45		44		1		44		44		12/31/2018
12544VAB5	20		19		1		19		19		12/31/2018
12627HAK6	160		157		3		157		153		12/31/2018
12628KAF9	137		134		3		134		124		12/31/2018
126384AQ9	40		37		3		37		38		12/31/2018
3622E8AC9	70		65		5		65		66		12/31/2018
3622MPAT5	40		39		1		39		39		12/31/2018
36244SAC2	263		244		20		244		256		12/31/2018
36244SAF5	249		231		19		231		243		12/31/2018
61749EAH0	199		187		13		187		189		12/31/2018
61751DAE4	64		60		5		60		60		12/31/2018
76110VSU3	6		6		—		6		6		12/31/2018
86359B5U1	55		50		5		50		54		12/31/2018
059515AE6	124		124		—		124		120		9/30/2018
12627HAK6	164		164		—		164		161		9/30/2018
12628KAF9	142		140		2		140		137		9/30/2018
76110VSU3	7		7		—		7		6		9/30/2018
009451AP0	6		2		4		2		2		6/30/2018
059469AF3	200		189		11		189		197		6/30/2018
059515AE6	134		129		5		129		126		6/30/2018
05951KBA0	253		237		15		237		249		6/30/2018
12544VAB5	22		21		1		21		22		6/30/2018
12627HAK6	177		171		6		171		171		6/30/2018
76110VSU3	8		8		—		8		7		6/30/2018
94984FAT6	27		25		1		25		27		6/30/2018

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 19 - LOAN-BACKED AND STRUCTURED SECURITY IMPAIRMENTS (continued)



IMPAIRMENTS TAKEN ON CURRENT HOLDINGS DURING THE CURRENT YEAR
(1)	(2)	(3)	(4)		(5)	(6)	(7)
CUSIP^(1,2)	Amortized Cost Before Current Period OTTI	Projected Cash Flows	Current Period Recognized OTTI		Amortized Cost After OTTI	Fair Value	Financial Statement Reporting Period
05951KBA0	55	52	3		52	54	3/31/2018
1248MBAL9	229	225	3		225	216	3/31/2018
12627HAK6	189	181	8		181	178	3/31/2018
3622MPAT5	48	47	—		47	48	3/31/2018
45660LHT9	852	784	67		784	809	3/31/2018
61751DAE4	75	70	5		70	74	3/31/2018
76110VSU3	9	9	—		9	8	3/31/2018
Subtotal - Guaranteed Separate Accounts	XXX	XXX	$	213	XXX	XXX
Grand Total	XXX	XXX	$	7,471	XXX	XXX

⁽¹⁾Only the impaired lots within each CUSIP are included within this table.

⁽²⁾CUSIP amounts less than $1 thousand within this table are shown as zero.

NOTE 20 - SUBSEQUENT EVENTS

At March 7, 2019, the date the financial statements were available to be issued, there have been no events occurring subsequent to the close of the Company’s books or accounts for the accompanying statutory financial statements that would have a material effect on the financial condition of the Company.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS

GLOSSARY OF TERMS



Term	Description
ABS	Asset-backed securities
AVR	Asset valuation reserve
CMBS	Commercial mortgage-backed securities
COLI	Corporate owned life insurance
CSAs	Credit support annexes
DRD	Dividends received deduction
DSID (or “statutory accounting practices”)	Delaware State Insurance Department
DTA	Deferred tax asset(s)
DTL	Deferred tax liability(ies)
FHLB	Federal Home Loan Bank
GMAB	Guaranteed minimum accumulation benefit
GMDB	Guaranteed minimum death benefit
IMR	Interest maintenance reserve
INT 18-01	National Association of Insurance Commissioners Interpretation 18-01
IRC	Internal Revenue Code
IRS	Internal Revenue Service
LIHTC	Low-Income Housing Tax Credit
LTV	Loan to value ratio
MCF	Madison Capital Funding LLC
MCF Note Agreement	New York Life note funding agreement with MCF
MODCO	Modified coinsurance
NAIC	National Association of Insurance Commissioners
NAIC SAP	National Association of Insurance Commissioners’ Accounting Practices and Procedures
NAV	Net asset value
NYLARC	New York Life Agents Reinsurance Company
NYLAZ	NYLIFE Insurance Company of Arizona
NYLCC	New York Life Capital Corporation
NYLIFE Distributors	NYLIFE Distributors LLC
NYLIM	New York Life Investment Management LLC
NYL Investments	New York Life Investment Management Holdings LLC
NYL Investors	NYL Investors LLC
NYLIFE Securities	NYLIFE Securities LLC
OTC	Over-the-counter
OTC-cleared	Over-the-counter clearinghouse
OTC-bilateral	Over-the-counter bilateral agreements
OTTI	Other-than-temporary impairment(s)
PBR	Principle-based reserves
RMBS	Residential mortgage-backed securities

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

NOTES TO STATUTORY FINANCIAL STATEMENTS



Term	Description
SSAP	Statement of statutory accounting principle
Taiwan Branch	NYLIAC's former branch operations in Taiwan
Taiwan Corporation	New York Life Insurance Taiwan Corporation
TCJA	Tax Cuts and Jobs Act
TDR	Troubled debt restructuring
U.S. GAAP	Accounting principles generally accepted in the United States of America
UL	Universal life
VA	Variable annuity
VEBA	Voluntary Employees Beneficiary Association Trusts
VUL	Variable universal life
Yuanta	Yuanta Financials Holding Co., Ltd.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 1 - SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA

At and for the Year Ended December 31, 2018

The following is a summary of certain financial information included in exhibits and schedules in the Annual Statement filed with the Delaware Insurance Department subjected to audit procedures by independent auditors and utilized by actuaries in the determination of reserves.



Investment Income Earned:
U.S. government bonds	$	218,869,998
Other bonds (unaffiliated)	3,000,332,624
Bonds of affiliates	92,752,269
Preferred stocks (unaffiliated)	34,621
Preferred stocks of affiliates	—
Common stocks (unaffiliated)	39,857,140
Common stocks of affiliates	—
Mortgage loans	608,633,082
Real estate	4,277,326
Premium notes, policy loans and liens	54,331,946
Cash on hand and on deposit	1,588,475
Short-term investments	25,123,509
Derivative instruments	26,137,370
Other invested assets	70,709,613
Aggregate write-ins for investment income	5,992,161
Gross investment income	$	4,148,640,134

Real Estate Owned - Book Value less Encumbrances	$	56,576,567

Mortgage Loans - Book Value:
	—
Residential mortgages	$	24,451,470
Commercial mortgages	13,317,649,189
Mezzanine real estate loans	867,635,686
Total mortgage loans	$	14,209,736,345

Mortgage Loans by Standing - Book Value:
Good standing	$	14,206,717,793
Good standing with restructured terms	$	—
Interest overdue more than 90 days, not in foreclosure	$	787,084
Foreclosures in process	$	2,231,468

Other Invested Assets - Statement Value	$	1,320,214,434

Collateral Loans	$	—

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 1 - SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA (continued)



Bonds and Stocks of Parent, Subsidiaries and Affiliates - Book Value:
Bonds	$	1,908,690,804
Preferred stocks	$	—
Common stocks	$	—

Bonds and Short-Term Investments by Maturity and NAIC Designation:
Bonds by maturity - statement value:
Due within one year or less	$	6,504,275,403
Over one year through five years	24,937,401,147
Over five years through 10 years	31,246,868,431
Over 10 years through 20 years	23,031,868,331
Over 20 years	1,180,047,616
Total by maturity	$	86,900,460,928

Bonds by NAIC designation - statement value
NAIC 1	$	56,268,989,359
NAIC 2	26,215,197,326
NAIC 3	2,456,182,067
NAIC 4	1,724,283,128
NAIC 5	193,356,235
NAIC 6	42,452,813
Total by NAIC designation	$	86,900,460,928

Total bonds publicly traded	$	54,001,599,071
Total bonds privately placed	$	32,898,861,857

Preferred Stocks - Statement Value	$	11,881,015

Common Stocks - Market Value	$	1,315,476,336

Short-Term Investments - Book Value	$	8,378,146

Options, Caps and Floors Owned - Statement Value	$	65,467,849

Options, Caps and Floors Written and In-Force - Statement Value	$	—

Collar, Swap and Forward Agreements Open - Statement Value	$	248,679,483

Future Contracts Open - Current Value	$	(24,406	)

Cash on Deposit	$	(173,244,351.85	)

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 1 - SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA (continued)



Life Insurance In-Force (in thousands):
Industrial	$	—
Ordinary	$	175,250,618
Credit life	$	—
Group life	$	8,159,273

Amount of Accidental Death Insurance In-Force Under
Ordinary Policies (in thousands):	$	1,150,451

Life Insurance Policies with Disability Provisions In-Force (in thousands):
Industrial	$	—
Ordinary	$	16,219,253
Credit life	$	—
Group life	$	—

Supplementary Contracts In-Force:
Ordinary - not involving life contingencies
Amount on deposit	$	368,048,512
Income payable	$	55,112,866

Ordinary - involving life contingencies
Income payable	$	31,512,544

Group - not involving life contingencies
Amount on deposit	$	—
Income payable	$	—

Group - involving life contingencies
Income payable	$	—

Annuities:
Ordinary
Immediate - amount of income payable	$	1,464,351,685
Deferred - fully paid account balance	$	44,323,486,514
Deferred - not fully paid - account balance	$	28,127,830,831

Group
Amount of income payable	$	86,837,027
Fully paid account balance	$	2,514,251
Not fully paid - account balance	$	—

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 1 - SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA (continued)



Accident and Health Insurance - Premiums In-Force
Ordinary	$	—
Group	$	—
Credit	$	—

Deposit Funds and Dividend Accumulations:
Deposit funds - account balance	$	202,101,079
Dividend accumulations - account balance	$	—

Claim Payments 2018 (in thousands):
Group accident and health - year ended December 31, 2018
2018	$	—
2017	$	—
2016	$	—
2015	$	—
2014	$	—
Prior	$	—

Other accident and health
2018	$	—
2017	$	—
2016	$	—
2015	$	—
2014	$	—
Prior	$	—

Other coverages that use developmental methods to calculate
claims reserves (in thousands):
2018	$	528,192
2017	$	485,765
2016	$	377,370
2015	$	362,968
2014	$	293,352
Prior	$	39,583

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 2 - SUMMARY INVESTMENT SCHEDULE

At and for the Year Ended December 31, 2018



	Gross Investment				Admitted Assets as
Investment Categories	Holdings*				Reported in the Annual Statement
	Amount		Percentage		Amount		Securities Lending Reinvested Collateral Amount	Total Amount		Percentage
Bonds:
U.S. Treasury securities	$	592,051,950	0.564	%	$	592,051,950	—	$	592,051,950	0.564	%
U.S. government agency & corporate obligations (excluding mortgage-backed securities):
Issued by U.S. government agencies	519,202,447		0.494		519,202,447		—	519,202,447		0.494
Issued by U.S. government-sponsored agencies	525,539,588		0.500		525,539,588		—	525,539,588		0.500
Non-U.S. government (including Canada, excluding mortgage-backed securities)	314,446,201		0.299		314,446,201		—	314,446,201		0.299
Securities issued by states, territories, and possessions and political subdivisions in the U.S.:
State, territories and possessions general obligations	—		—		—		—	—		—
Political subdivisions of states, territories and possessions and political subdivisions general obligations	—		—		—		—	—		—
Revenue and assessment obligations	—		—		—		—	—		—
Industrial development and similar obligations	—		—		—		—	—		—
Mortgage-backed securities (including residential and commercial MBS):
Pass-through securities:
Issued or guaranteed by GNMA	3,610,645,378		3.437		3,610,645,378		—	3,610,645,378		3.437
Issued or guaranteed by FNMA and FHLMC	3,318,596,646		3.159		3,318,596,646		—	3,318,596,646		3.159
All other	—		—		—		—	—		—
CMOs and REMICs:
Issued or guaranteed by GNMA, FNMA, FHLMC or VA	8,094,784,277		7.705		8,094,784,277		—	8,094,784,277		7.706
Issued by non-U.S. government issuers and collateralized by mortgage-backed securities issued or guaranteed by agencies shown in line above	—		—		—		—	—		—
All other	7,076,000,054		6.735		7,076,000,054		—	7,076,000,054		6.736
Other debt and other fixed income securities (excluding short-term):
Unaffiliated domestic securities (including credit tenant loans rated by the SVO)	45,566,678,797		43.373		45,566,678,797		—	45,566,678,797		43.380
Unaffiliated foreign securities	13,392,923,881		12.748		13,392,923,881		—	13,392,923,881		12.750
Affiliated securities	1,908,690,804		1.817		1,908,690,804		—	1,908,690,804		1.817

See accompanying notes to financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 2 - SUMMARY INVESTMENT SCHEDULE (continued)



	Gross Investment				Admitted Assets as
Investment Categories	Holdings*				Reported in the Annual Statement
	Amount		Percentage		Amount		Securities Lending Reinvested Collateral Amount		Total Amount		Percentage
Equity interests:
Investments in mutual funds	432,111,791		0.004		432,111,791		—		432,111,791		0.004
Preferred stocks:
Affiliated	—		—		—		—		—		—
Unaffiliated	11,881,015		0.000		11,881,015		—		11,881,015		—
Publicly traded equity securities (excluding preferred stocks):
Affiliated	—		—		—		—		—		—
Unaffiliated	848,504,407		0.008		848,504,407		—		848,504,407		0.008
Other equity securities:
Affiliated	—		—		—		—		—		—
Unaffiliated	34,860,138		0.000		34,860,138		—		34,860,138		—
Other equity interests including tangible personal property under lease:
Affiliated	—		—		—		—		—		—
Unaffiliated	—		—		—		—		—		—
Mortgage loans:
Construction and land development	186,100,565		0.002		186,100,565				186,100,565		0.002
Agricultural	—		—		—		—		—		—
Single family residential properties	24,451,470		0.000		24,451,470				24,451,470		—
Multifamily residential properties	4,185,755,320		0.040		4,185,755,320				4,185,755,320
Commercial loans	8,945,793,304		0.085		8,945,793,304				8,945,793,304
Mezzanine real estate loans	867,635,686		0.008		867,635,686				867,635,686		0.008
Real estate investments:
Property occupied by company	—		—		—		—		—		—
Property held for production of income	55,673,628		0.001		55,673,628				55,673,628		0.001
Property held for sale	902,938		0.000		902,938				902,938		—
Policy loans	906,429,204		0.009		894,340,573				894,340,573
Derivatives	418,065,726		0.004		418,065,726				418,065,726		0.004
Receivables for securities	1,010,251		0.000		1,010,251				1,010,251		—
Securities lending	—		—		—		XXX		XXX		XXX
Cash, cash equivalents and short-term investments	1,891,328,585		0.018		1,891,328,585				1,891,328,585		0.018
Other invested assets	1,326,813,258		0.013		1,323,414,245				1,323,414,245		0.013
Total invested assets	$	105,056,877,309	100.000	%	$	105,041,389,665	$	—	$	105,041,389,665	100.000	%

* Gross investment holdings as valued in compliance with NAIC Accounting Practices & Procedures Manual.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 3 – INVESTMENT RISKS INTERROGATORIES

At and for the Year Ended December 31, 2018



NAIC Group Code: 0826	NAIC Company Code: 91596	EIN: 13-3044743

The Investment Risks Interrogatories are to be filed by April 1. They are also to be included with the Audited Statutory Financial Statements.

Answer the following interrogatories by reporting the applicable U.S. dollar amounts and percentages of the reporting entity’s total admitted assets held in that category of investments.


1.	Reporting entity’s total admitted assets as reported on Page 2 of this annual statement. $114,943,021,028


2.	Ten largest exposures to a single issuer/borrower/investment.



	Description of			Percentage of Total
Issuer	Exposure	Amount		Admitted Assets
New York Life Insurance Company (Madison Capital Funding LLC)	Affiliated Bonds/Limited Partnership	$	2,538,521,397	2.2	%
Wells Fargo & Company	Bonds/Equity	$	1,127,706,471	1.0	%
JPMorgan Chase & Co	Bonds/Equity	$	831,475,311	0.7	%
Morgan Stanley	Bonds	$	695,826,172	0.6	%
GS Mortgage Securities	Bonds	$	592,484,750	0.5	%
General Growth Properties, Inc	Mortgage Loans	$	576,573,695	0.5	%
CitiGroup	Bonds/Equity	$	532,705,389	0.5	%
Global Logistic Properties	Mortgage Loans	$	479,022,581	0.4	%
The Macerich Company	Mortgage Loans	$	464,600,000	0.4	%
Commingled Pension Trust Fund	Mortgage Loans	$	434,236,630	0.4	%


3.	Amounts and percentages of the reporting entity’s total admitted assets held in bonds and preferred stocks by NAIC rating.



Rating	Bonds		Percentage of Total Admitted Assets		Preferred Stocks			Percentage of Total Admitted Assets
NAIC – 1	$	56,268,989,359	49.0	%	P/RP - 1	$	—	—	%
NAIC – 2	$	26,215,197,326	22.8	%	P/RP - 2	$	—	—	%
NAIC – 3	$	2,456,182,067	2.1	%	P/RP - 3	$	184,774	—	%
NAIC – 4	$	1,724,283,127	1.5	%	P/RP - 4	$	—	—	%
NAIC – 5	$	193,356,235	0.2	%	P/RP - 5	$	—	—	%
NAIC – 6	$	42,452,813	—	%	P/RP - 6	$	11,696,240	—	%

See accompanying notes to financial statements.

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 3 – INVESTMENT RISKS INTERROGATORIES (continued)


4.	Assets held in foreign investments:

Are assets held in foreign investments less than 2.5% of the reporting entity’s total admitted assets? Yes [ ] No [X]

If response to 4.01 above is Yes, responses are not required for interrogatories 5-10



Total admitted assets held in foreign investments	$	12,332,878,668	10.7	%
Foreign-currency-denominated investments	$	—	—	%
Insurance liabilities denominated in that same foreign currency	$	—	—	%


5.	Aggregate foreign investment exposure categorized by NAIC sovereign rating:



Countries rated NAIC-1	$	12,138,452,533	10.6	%
Countries rated NAIC-2	$	138,296,675	0.1	%
Countries rated NAIC-3 or below	$	56,129,460	0.0	%


6.	Largest foreign investment exposures by country, categorized by NAIC sovereign rating:



Countries rated NAIC-1:
United Kingdom	$	3,514,212,997	3.1	%
Cayman Islands	$	2,391,198,385	2.1	%
Countries rated NAIC-2:
Mexico	$	74,224,291	0.1	%
Colombia	$	26,033,766	0.0	%
Countries rated NAIC-3 or below:
Bahamas	$	34,872,617	—	%
Barbados	$	7,207,514	—	%



7. Aggregate unhedged foreign currency exposure	$	388,669,665	0.3	%


8.	Aggregate unhedged foreign currency exposure categorized by the country’s NAIC sovereign rating:



Countries rated NAIC-1:	$	375,243,832	0.3	%
Countries rated NAIC-2:	$	6,208,281	—	%
Countries rated NAIC-3 or below:	$	7,217,552	—	%

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 3 – INVESTMENT RISKS INTERROGATORIES (continued)


9.	Largest unhedged foreign currency exposures by country, categorized by the country’s NAIC sovereign rating:



Countries rated NAIC-1:
Australia	$	141,146,704	0.1	%
Luxembourg	$	100,542,163	0.1	%
Countries rated NAIC-2:
Italy	$	2,691,750	—	%
India	$	2,510,922	—	%
Countries rated NAIC-3 or below:
Brazil	$	3,315,373	—	%
Turkey	$	2,754,707	—	%


10.	Ten largest non-sovereign (i.e. non-governmental) foreign issues:



Issuer	NAIC Rating
Smith & Nephew PLC	1	$	144,500,000	0.1	%
Compass Group PLC	1	$	135,000,000	0.1	%
STATNETT SF	1	$	123,800,000	0.1	%
Cooperatieve Rabobank UA	1FE	$	114,111,394	0.1	%
British Land Company PLC	1	$	107,439,667	0.1	%
Angel Trains GRP	2	$	105,581,424	0.1	%
BASF SE	1FE	$	104,587,347	0.1	%
Anglian Water Group LTD	1FE	$	99,383,061	0.1	%
Lesaffre	2Z	$	97,167,732	0.1	%
Intertek Group PLC	2	$	96,000,000	0.1	%


11.	Amounts and percentages of the reporting entity’s total admitted assets held in Canadian investments and unhedged Canadian currency exposure.

Are assets held in Canadian investments less than 2.5% of the reporting entity’s total admitted assets? Yes [X] No [ ]

If response to 11.01 is Yes, detail is not required for the remainder of Interrogatory 11


12.	Report aggregate amounts and percentages of the reporting entity’s total admitted assets held in investments with contractual sales restrictions.

Are assets held in investments with contractual sales restrictions less than 2.5% of the reporting entity’s total admitted assets? Yes[X] No[ ]

If response to 12.01 is Yes, responses are not required for the remainder of Interrogatory 12


13.	Amounts and percentages of admitted assets held in the ten largest equity interests:

Are assets held in equity interest less than 2.5% of the reporting entity’s total admitted assets?

Yes [X] No []

If response to 13.01 above is Yes, responses are not required for the remainder of Interrogatory 13

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 3 – INVESTMENT RISKS INTERROGATORIES (continued)

14. Amounts and percentages of the reporting entity’s total admitted assets held in nonaffiliated, privately placed equities:

Are assets held in nonaffiliated, privately placed equities less than 2.5% of the reporting entity’s total admitted assets? Yes [X] No [ ]

If response to 14.01 above is Yes responses are not required for the remainder of Interrogatory 14

15. Amounts and percentages of the reporting entity’s total admitted assets held in general partnership interests:

Are assets held in general partnership interests less than 2.5% of the reporting entity’s total admitted assets? Yes [X] No [ ]

If response to 15.01 above is Yes responses are not required for the remainder of Interrogatory 15

16. Amounts and percentages of the reporting entity’s total admitted assets held in mortgage loans:

Are mortgage loans reported in Schedule B less than 2.5% of the reporting entity’s total admitted assets? Yes [ ] No [X]

If response to 16.01 above is Yes, responses are not required for the remainder of Interrogatory 16 and Interrogatory 17



Type ( Residential, Commercial, Agricultural)
Commercial	$	405,500,000	0.4	%
Commercial	$	282,488,495	0.2	%
Commercial	$	196,534,087	0.2	%
Commercial	$	189,304,732	0.2	%
Commercial	$	186,944,540	0.2	%
Commercial	$	155,699,999	0.1	%
Commercial	$	155,242,420	0.1	%
Commercial	$	150,032,864	0.1	%
Commercial	$	145,428,179	0.1	%
Commercial	$	143,466,702	0.1	%

Amount and percentage of the reporting entity’s total admitted assets held in the following categories of mortgage loans:



Construction loans	$	181,184,440	0.2	%
Mortgage loans over 90 days past due	$	787,084	—	%
Mortgage loans in the process of foreclosure	$	2,231,468	—	%
Mortgage loans foreclosed	$	862,138	—	%
Restructured mortgage loans	$	—	—	%

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 3 – INVESTMENT RISKS INTERROGATORIES (continued)


17.	Aggregate mortgage loans having the following loan-to-value ratios as determined from the most current appraisal as of the annual statement date:



Loan-to-Value	Residential				Commercial				Agricultural
above 95%	$	0	—	%	$	—	—	%	$	—	—	%
91% to 95%	$	—	—	%	$	—	—	%	$	—	—	%
81% to 90%	$	0	—	%	$	42,630,189	—	%	$	—	—	%
71% to 80%	$	3,375,187	—	%	$	616,497,243	0.5	%	$	—	—	%
Below 70%	$	21,076,282	—	%	$	13,526,157,444	11.8	%	$	—	—	%

18. Amounts and percentages of the reporting entity’s total admitted assets held in each of the five largest investments in real estate:

Are assets held in real estate reported less than 2.5% of the reporting entity’s total admitted assets

Yes [X] No [ ]

If response to 18.01 above is Yes, responses are not required for the remainder of Interrogatory 18

19. Report aggregate amounts and percentages of the reporting entity’s total admitted assets held in investments held in mezzanine real estate loans:

Are assets held in investment held in mezzanine real estate loans less than 2.5% of the reporting entity’s total admitted assets Yes [X] No [ ]

If response to 19.01 above is Yes, responses are not required for the remainder of Interrogatory 19


20.	Amounts and percentages of the reporting entity’s total admitted assets subject to the following types of agreements:



					At End of Each Quarter
	At Year End				1st Qtr		2nd Qtr		3rd Qtr
Securities lending agreements (do not include assets held as collateral for such transactions)	$	684,509,382	0.6	%	$	659,099,831	$	662,687,601	$	664,207,601
Repurchase agreements	$	—	0.0	%	$	—	$	—	$	—
Reverse repurchase agreements	$	220,102,000	0.2	%	$	210,442,000	$	224,600,000	$	219,840,000
Dollar repurchase agreements	$	—	0.0	%	$	—	$	—	$	—
Dollar reverse repurchase agreements	$	—	0.0	%	$	—	$	—	$	—


21.	Amounts and percentages of the reporting entity’s total admitted assets for warrants not attached to other financial instruments, options, caps, and floors:



	Owned			Written

Hedging	$	65,467,849	0.1%	$	—	—%
Income generation	$	—	—%	$	—	—%
Other	$	—	—%	$	—	—%

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

SCHEDULE 3 – INVESTMENT RISKS INTERROGATORIES (continued)


22.	Amounts and percentages of the reporting entity’s total admitted assets of potential exposure for collars, swaps, and forwards:



				At End of Each Quarter
	At Year End			1st Qtr		2nd Qtr		3rd Qtr

Hedging	$	85,863,678	0.1%	$	88,608,627	$	88,964,748	$	89,053,692
Income generation	$	—	—%	$	—	$	—	$	—
Replications	$	—	—%	$	—	$	—	$	—
Other	$	—	—%	$	—	$	—	$	—


23.	Amounts and percentages of the reporting entity’s total admitted assets of potential exposure for futures contracts:



				At End of Each Quarter
	At Year End			1st Qtr		2nd Qtr		3rd Qtr

Hedging	$	198,281	—%	$	174,372	$	184,220	$	187,605
Income generation	$	—	—%	$	—	$	—	$	—
Replications	$	—	—%	$	—	$	—	$	—
Other	$	—	—%	$	—	$	—	$	—