Registration No. 002-86084

811-03830

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

Form N-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 37	☒

and

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 34 ☒

NYLIAC MFA SEPARATE ACCOUNT-II

(Exact Name of Registrant)

NEW YORK LIFE INSURANCE AND

ANNUITY CORPORATION

(Name of Depositor)

51 Madison Avenue,

New York, New York 10010

(Address of Depositor’s Principal Executive Office)

Depositor’s Telephone Number: (212) 576-7000

Richard P. Bowman, Esq.

New York Life Insurance and Annuity Corporation

1 Rockwood Road

Sleepy Hollow, NY 10591

(Name and Address of Agent for Service)

Copy to:

Chip Lunde, Esq. Carlton Fields Jorden Burt 1025 Thomas Jefferson Street, NW Suite 400 East Washington, D.C. 20007-5208 Thomas F. English, Esq. Senior Vice President, Deputy General Counsel and Chief Insurance Counsel New York Life Insurance Company 51 Madison Avenue New York, New York 10010

Approximate Date of Proposed Public Offering: Continuous

It is proposed that this filing will become effective (check appropriate box)

☐ immediately upon filing pursuant to paragraph (b) of Rule 485.

☒ on May 1, 2017 pursuant to paragraph (b) of Rule 485.

☐ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.

☐ on (date) pursuant to paragraph (a)(1) of Rule 485.

If appropriate, check the following box:

☐ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of Securities Being Registered: Units of interest in a separate account under variable annuity contracts.

PROSPECTUS DATED May 1, 2017

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 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, 2017. 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		3
POLICYOWNER AND FUND EXPENSES		5
QUESTIONS AND ANSWERS ABOUT THE FACILTATOR		7
How do I contact NYLIAC?		11
FINANCIAL STATEMENTS		13
CONDENSED FINANCIAL INFORMATION		14
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION AND THE SEPARATE ACCOUNTS		18
New York Life Insurance and Annuity Corporation		18
The Separate Accounts		18
The Portfolios		18
Additions, Deletions, or Substitutions of Investments		19
Reinvestment		20
THE POLICIES		20
Purpose of Policies		20
Purchase Payments		21
Tax-Free Section 1035 Exchanges		21
Payments Returned for Insufficient Funds		22
Total Disability Benefit Rider		22
Transfers		22
Limits on Transfers		22
Speculative Investing		23
Accumulation Period		23
(a) Crediting of Purchase Payments		23
(b) Valuation of Accumulation Units		24
Policyowner Inquiries		24
CHARGES AND DEDUCTIONS		24
Surrender Charges		24
Exceptions to Surrender Charges		25
Other Charges		25
(a) Mortality and Expense Risk Charges		25
(b) Administrative Fee		25
(c) Policy Service Charge		26
(d) Fund Charges		26
Taxes		26
DISTRIBUTIONS UNDER THE POLICY		26
Surrenders and Withdrawals		26
(a) Surrenders		27
(b) Partial Withdrawals		27
(c) Periodic Partial Withdrawals		27
(d) Hardship Withdrawals		27
Cancellations		27
Retirement Date		28
Death Before Retirement Date		28
Income Payments		29
(a) Election of Income Payment Options		29
(b) Fixed Income Payments		29
(c) Other Methods of Payment		30
(d) Proof of Survivorship		30
Delay of Payments		30
Designation of Beneficiary		30
Restrictions Under the Texas Optional Retirement Program		31
Restrictions Under Code Section 403(b)(11)		31
THE FIXED ACCOUNT		32
(a) Interest Crediting		32
(b) Surrender Charges		32
(c) Transfers to Investment Divisions		32
(d) General Matters		33
FEDERAL TAX MATTERS		33
Introduction		33
Taxation of Annuities in General		33
3.8 Percent Tax on Certain Investment Income		34
Partial Section 1035 Exchanges		34
Qualified Policies		35
(a) 403(b) Plans		35
(b) Individual Retirement Annuities		36
(c) Roth Individual Retirement Annuities		36
(d) Deferred Compensation Plans		36
Taxation of Death Benefits		36
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 this 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.

2

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, 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

3

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.

4

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 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, 2016)
Management Fees		0.54	%		0.49	%		0.39	%
Other Expenses		0.05	%		0.04	%		0.05	%
Total Fund Annual Expenses		0.59	%		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:

1. 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	$	963.50	$	1,510.78	$	1,972.86	$	2,886.66
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

2. If you do NOT surrender or annuitize your policy

	1 year		3 years		5 years		10 years
Common Stock Portfolio – Initial Class	$	245.70	$	756.00	$	1,292.59	$	2,758.11
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.

5

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 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, 2016)
Management Fees		0.54	%		0.49	%		0.39	%
Other Expenses		0.05	%		0.04	%		0.05	%
Total Fund Annual Expenses		0.59	%		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:

1. 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	$	844.68	$	1,091.90	$	1,342.20	$	2,221.77
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

2. If you do NOT surrender or annuitize your policy

	1 year		3 years		5 years		10 years
Common Stock Portfolio – Initial Class	$	193.20	$	597.56	$	1,027.12	$	2,221.77
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.

6

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 Common Stock - Initial Class	MainStay VP 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 at least 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. 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”)

7

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.

8

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 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 a 10% penalty tax may apply if you are under the age of 59 ¹/₂. (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 “Death Before Retirement Date” and “Federal Tax Matters”)

9

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 “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 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 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,

10

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 via “My Account” on www.newyorklife.com or the Interactive Voice Response (IVR) system using the toll-free number listed for each applicable Service Center.

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 acceptable, 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 “My Account” on www.newyorklife.com. Electronic delivery is not available for policies that are owned by corporations, trusts or organizations at this time.

11

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.

12

FINANCIAL STATEMENTS

The consolidated balance sheet of NYLIAC as of December 31, 2016 and 2015, and the consolidated statements of income, of stockholder’s equity and of cash flows for each of the three years in the period ended December 31, 2016 (including the report of the independent registered public accounting firm) and each Separate Account’s statement of assets and liabilities as of December 31, 2016, 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.

13

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.

Separate Account I	Single Premium Policies
	Accumulation unit value				Number of accumulation units
	Beginning of period		End of period
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
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
2008		47.86		49.03		191
2007		45.50		47.86		220
MainStay VP Common Stock – Initial Class
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
2008		82.27		51.68		398
2007		79.23		82.27		462
MainStay VP U.S. Government Money Market – Initial Class
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
2008		24.93		25.15		51
2007		24.08		24.93		54

14

	Flexible Premium Policies
	Accumulation unit value				Number of accumulation units
	Beginning of period		End of period
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
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
2008		42.45		43.27		534
2007		40.56		42.45		607
MainStay VP Common Stock – Initial Class
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
2008		72.96		45.61		1,219
2007		70.62		72.96		1,370
MainStay VP U.S. Government Money Market – Initial Class
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
2008		22.11		22.20		104
2007		21.46		22.11		113

15

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.

Separate Account II	Single Premium Policies
	Accumulation unit value				Number of accumulation units
	Beginning of period		End of period
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
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
2008		48.04		49.21		337
2007		45.67		48.04		375
MainStay VP Common Stock – Initial Class
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
2008		82.27		51.68		550
2007		79.23		82.27		638
MainStay VP U.S. Government Money Market – Initial Class
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
2008		24.93		25.16		58
2007		24.08		24.93		67

16

	Flexible Premium Policies
	Accumulation unit value				Number of accumulation units
	Beginning of period		End of period
(Accumulation unit value in dollars and Number of accumulation units in thousands)
MainStay VP Bond – Initial Class
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
2008		42.51		43.33		66
2007		40.62		42.51		73
MainStay VP Common Stock – Initial Class
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
2008		72.96		45.61		134
2007		70.62		72.96		150
MainStay VP U.S. Government Money Market – Initial Class
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
2008		22.11		22.20		16
2007		21.46		22.11		14

17

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 $152.6 billion at the end of 2016. 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 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 Fund’s shares are also available to certain 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.

18

We 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: Cornerstone Capital Management Holdings	MainStay VP Bond MainStay VP U.S. Government Money Market MainStay VP 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 a particular Eligible Portfolio.

NYLIAC does not provide investment advice and does not recommend or endorse any particular 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 selections should be based on a thorough investigation of all of 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.

19

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) will 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.

20

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.

21

Payments Returned for Insufficient Funds

If your premium payment is returned for insufficient funds, we reserve the right to reverse the investment options chosen 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 at least 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 “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

22

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 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.

23

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 acceptable, 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. To correct an error, we must receive your request for correction within 15 days of the date of the confirmation and/or quarterly statement 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:

24

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 “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.

25

(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 “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.”)

26

(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 or medallion signature guarantee. (See “Income Payments”) Faxed and e-mailed requests are not currently acceptable, 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 or a medallion signature guarantee. 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 acceptable, 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

27

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.

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

28

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 “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 “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.

29

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

(c) The check used to pay the premium has not cleared through the banking system. This may take up to 15 days.

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.

30

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. entitled, “How Do I Contact NYLIAC.”

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 59 ¹/₂, 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 59¹/₂, 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.

31

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 “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”)

32

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 acceptable, 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, 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. It is the IRS’s view that a loss on the surrender of a

33

variable annuity contract is treated as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limit.

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 59 ¹/₂, (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 this policy, distributions or withdrawals from this 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

34

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 59 ¹/₂ (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

35

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

36

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, 2016, 2015 and 2014 were $69,181, $142,571 and $50,279, 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.

37

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 Common Stock—Initial Class Investment Division by the net asset value per share of the MainStay VP 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.

38

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 Common Stock—Initial Class Standard Total Return Calculations		4
Other Performance Data		5
MAINSTAY VP SERIES FUND, INC.		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, 2017:

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 in this request form to the Service Center that services your policy.

Name

Address

City State Zip

39

The Facilitator^®:

A retirement annuity

for dynamic financial times

Your Statement of

Additional Information

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, 2017

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, 2017. 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 Common Stock-Initial Class Standard Total Return Calculations		4
Other Performance Data		5
MAINSTAY VP SERIES FUND, INC.		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;

2

(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.

3

For the seven-day period ending December 31, 2016, the annualized yields for the single premium policies for the MainStay VP U.S. Government Money Market—Initial Class Investment Division were -1.24% for NYLIAC MFA Separate Account I and -1.23% 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 -1.73% for NYLIAC MFA Separate Account I and -1.72% for NYLIAC MFA Separate Account II.

For the seven-day period ending December 31, 2016, the effective yield for the single premium policies for the MainStay VP U.S. Government Money Market—Initial Class Investment Division was -1.24% 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 -1.72% for NYLIAC MFA Separate Account I and -1.73% 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)
		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, 2016, the annualized yields for the MainStay VP Bond-Initial Class

Investment Divisions were 0.83% and 0.33% respectively, for single premium policies and flexible premium policies.

MainStay VP Bond—Initial Class and MainStay VP 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 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

4

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, 2016, and the period from January 23, 1984 to December 31, 2016, respectively, the average annual total returns for the single premium policies for the MainStay VP Bond—Initial Class Investment Division were -4.91%, 0.61%, 0.56%, 3.21% and 5.63%, respectively, for NYLIAC MFA Separate Account I, and 4.91%, 0.61%, 0.56%, 3.21% and 5.65%, 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 -5.31%, -1.05%, -0.57%, 2.59% and 5.11%, respectively, for NYLIAC MFA Separate Account I, and -5.31%, -1.05%, -0.57%, 2.59% and 5.12%, respectively, for NYLIAC MFA Separate Account II.

For the one, three, five and ten year periods ending December 31, 2016, and the period from January 23, 1984 to December 31, 2016, respectively, the average annual total returns for the single premium policies for the MainStay VP Common Stock—Initial Class Investment Division were 0.23%, 4.87%, 12.71%, 5.13% and 8.18%, respectively, for NYLIAC MFA Separate Account I. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP Common Stock—Initial Class Investment Division were -0.27%, 3.61%, 11.44%, 4.50% and 7.64%, respectively, for NYLIAC MFA Separate Account I.

For the one, three, five and ten year periods ending December 31, 2016, and the period from January 23, 1984 to December 31, 2016 respectively, the average annual total returns for the single premium policies for the MainStay VP Common Stock—Initial Class Investment Division were 0.23%, 4.87%, 12.71%, 5.13% and 8.16%, respectively, for NYLIAC MFA Separate Account II. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP Common Stock—Initial Class Investment Division were -0.27%, 3.61%, 11.44%, 4.50% and 7.62%, 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, 2016, and the period from January 23, 1984 to December 31, 2016, respectively, the average annual total returns for the single premium policies for the MainStay VP Bond—Initial Class Investment Division were -4.91%, 0.16%, 0.56% , 3.21% and 5.63%, respectively, for NYLIAC MFA Separate Account I, and -4.91%, 0.16%, 0.56% , 3.21% and 5.65%, 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 -5.38%, -1.05%, -0.57%, 2.59% and 5.11%, respectively, for NYLIAC MFA Separate Account I, and -5.38%, -1.05%, -0.57%, 2.59% and 5.12%, respectively, for NYLIAC MFA Separate Account II.

For the one, three, five and ten year periods ending December 31, 2016, and the period from January 23, 1984 to December 31, 2016, respectively, the average annual total returns for the single premium policies for the MainStay VP Common Stock—Initial Class Investment Division were 0.23%, 4.87%, 12.71%, 5.13% and 8.18%, respectively, for NYLIAC MFA Separate Account I. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP Common Stock—Initial Class Investment Division were -0.27%, 3.61%, 11.44%, 4.50%, and 7.64%, respectively, for NYLIAC MFA Separate Account I.

For the one, three, five and ten year periods ending December 31, 2016, and the period from January 23, 1984 to December 31, 2016, respectively, the average annual total returns for the single premium policies for the MainStay VP Common Stock—Initial Class Investment Division were 0.23%, 4.87%, 12.71%, 5.13% and 8.16%, respectively, for NYLIAC MFA Separate Account II. For the same periods, the average annual total returns for flexible premium policies for the MainStay VP Common Stock—Initial Class Investment Division were -0.27%, 3.61%, 11.44%, 4.50%, and 7.62%, respectively, for NYLIAC MFA Separate Account II.

NYLIAC may from time to time also calculate cumulative total returns in conjunction with the standard format

5

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 the 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.

6

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.

7

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. It is important that your confirmation and Quarterly Statements be reviewed immediately to ensure that there are no errors. In order to correct an error, you must call it to our attention within 15 days of the date of the statement.

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.

8

FINANCIAL STATEMENTS

The consolidated balance sheet of NYLIAC as of December 31, 2016 and 2015, and the consolidated statements of income, of stockholder’s equity and of cash flows for each of the three years in the period ended December 31, 2016 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 Separate Account statement of assets and liabilities as of December 31, 2016 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 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.

9

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, 2016

	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	$	19,712,266	$	55,574,864		$	4,522,347	$	12,864,083		$	247,987		$	644,015
Dividends due and accrued	—		—			—		—			2			6
Net receivable from (payable to) New York Life
Insurance and Annuity Corporation	—		(1,366		)	—		(3,390		)	—			(2		)
Net receivable from (payable to) the Fund for
shares sold or purchased	—		1,366			—		3,390			(2		)	(4		)
LIABILITIES:
Liability to New York Life Insurance and Annuity Corporation for:
Mortality and expense risk charges	676		1,907			154		438			8			22
Administrative charges	—		763			—		175			—			9
Total net assets	$	19,711,590	$	55,572,194		$	4,522,193	$	12,863,470		$	247,979		$	643,984
Total shares outstanding	770,052		2,170,980			317,191		902,257			247,937			643,880
Net asset value per share (NAV)	$	25.60	$	25.60		$	14.26	$	14.26		$	1.00		$	1.00
Total units outstanding	150,834		501,701			72,485		243,183			10,893			33,357
Variable accumulation unit value	$	130.65	$	110.78		$	62.39	$	52.90		$	22.79		$	19.32
Identified cost of investment	$	13,653,495	$	39,113,789		$	4,465,358	$	12,652,279		$	247,947		$	643,928

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, 2016

	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	$	292,321		$	838,733		$	121,864		$	351,184		$	34		$	67
Mortality and expense risk charges	(240,900		)	(694,359		)	(58,797		)	(171,001		)	(4,246		)	(8,394		)
Administrative charges	—			(309,208		)	—			(81,008		)	—			(4,857		)
Net investment income (loss)	51,421			(164,834		)	63,067			99,175			(4,212		)	(13,184		)
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments	2,306,477			8,487,574			508,669			1,958,509			204,779			97,133
Cost of investments sold	(2,212,945		)	(7,352,806		)	(461,825		)	(1,796,340		)	(204,759		)	(97,122		)
Net realized gain (loss) on investments	93,532			1,134,768			46,844			162,169			20			11
Realized gain distribution received	1,195,294			3,429,561			18,008			51,896			—			—
Change in unrealized appreciation (depreciation)
on investments	121,226			(623,374		)	(19,060		)	(63,677		)	2			46
Net gain (loss) on investments	1,410,052			3,940,955			45,792			150,388			22			57
Net increase (decrease) in net assets
resulting from operations	$	1,461,473		$	3,776,121		$	108,859		$	249,563		$	(4,190	)	$	(13,127	)

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, 2016

and December 31, 2015

	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
	2016			2015			2016			2015			2016			2015			2016			2015			2016			2015			2016			2015
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)	$	51,421		$	13,337		$	(164,834	)	$	(306,024	)	$	63,067		$	56,150		$	99,175		$	78,109		$	(4,212	)	$	(6,210	)	$	(13,184	)	$	(15,784	)
Net realized gain (loss) on investments	93,532			691,834			1,134,768			2,753,560			46,844			77,762			162,169			144,871			20			12			11			15
Realized gain distribution received	1,195,294			1,583,764			3,429,561			4,619,193			18,008			1,859			51,896			5,501			—			—			—			—
Change in unrealized appreciation (depreciation) on
investments	121,226			(2,358,751		)	(623,374		)	(7,608,995		)	(19,060		)	(184,106		)	(63,677		)	(461,708		)	2			(12		)	46			(14		)
Net increase (decrease) in net assets resulting from
operations	1,461,473			(69,816		)	3,776,121			(542,266		)	108,859			(48,335		)	249,563			(233,227		)	(4,190		)	(6,210		)	(13,127		)	(15,783		)
Contributions and (Withdrawals):
Payments received from policyowners	—			—			119,603			115,309			—			—			55,668			51,210			—			—			4,908			5,630
Policyowners’ surrenders	(1,326,135		)	(1,928,100		)	(4,321,311		)	(4,916,960		)	(228,702		)	(493,734		)	(1,163,323		)	(1,254,608		)	(14,065		)	(66,308		)	(75,078		)	(107,254		)
Policyowners’ annuity and death benefits	(60,809		)	(171,128		)	(602,122		)	(470,276		)	(15,520		)	(114,254		)	(120,713		)	(127,795		)	—			(28,784		)	(3,527		)	(2,259		)
Net transfers from (to) Fixed Account	(293,011		)	(593,652		)	(2,431,833		)	(1,158,899		)	(138,174		)	(89,139		)	(371,758		)	(371,753		)	(186,406		)	(16,685		)	(5,601		)	(22,957		)
Transfers between Investment Divisions	(32,714		)	62,629			628			(84,234		)	32,716			(62,630		)	945			72,825			—			1			(1,581		)	11,409
Net contributions and (withdrawals)	(1,712,669		)	(2,630,251		)	(7,235,035		)	(6,515,060		)	(349,680		)	(759,757		)	(1,599,181		)	(1,630,121		)	(200,471		)	(111,776		)	(80,879		)	(115,431		)
Increase (decrease) in net assets	(251,196		)	(2,700,067		)	(3,458,914		)	(7,057,326		)	(240,821		)	(808,092		)	(1,349,618		)	(1,863,348		)	(204,661		)	(117,986		)	(94,006		)	(131,214		)
NET ASSETS:
Beginning of period	19,962,786			22,662,853			59,031,108			66,088,434			4,763,014			5,571,106			14,213,088			16,076,436			452,640			570,626			737,990			869,204
End of period	$	19,711,590		$	19,962,786		$	55,572,194		$	59,031,108		$	4,522,193		$	4,763,014		$	12,863,470		$	14,213,088		$	247,979		$	452,640		$	643,984		$	737,990

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, 2016

	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	$	27,751,317	$	7,287,656		$	7,073,150	$	1,759,636		$	264,229		$	89,559
Dividends due and accrued	—		—			—		—			2			1
Net receivable from (payable to) New York Life
Insurance and Annuity Corporation	—		(49		)	—		(38		)	—			—
Net receivable from (payable to) the Fund for
shares sold or purchased	—		49			—		38			(2		)	(1		)
LIABILITIES:
Liability to New York Life Insurance and Annuity Corporation for:
Mortality and expense risk charges	953		250			241		60			15			3
Administrative charges	—		100			—		24			—			1
	$	27,750,364	$	7,287,306		$	7,072,909	$	1,759,552		$	264,214		$	89,555
Total shares outstanding	1,084,094		284,685			496,101		123,417			264,178			89,541
Net asset value per share (NAV)	$	25.60	$	25.60		$	14.26	$	14.26		$	1.00		$	1.00
Total units outstanding	212,416		65,786			112,950		33,211			11,609			4,641
Variable accumulation unit value	$	130.66	$	110.78		$	62.63	$	52.98		$	22.79		$	19.32
Identified cost of investment	$	19,022,015	$	5,324,327		$	7,040,380	$	1,731,364		$	264,181		$	89,544

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, 2016

	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	$	415,130		$	108,939		$	194,316		$	47,291		$	30		$	9
Mortality and expense risk charges	(337,754		)	(89,180		)	(95,161		)	(22,880		)	(3,663		)	(1,133		)
Administrative charges	—			(40,959		)	—			(12,121		)	—			(687		)
Net investment income (loss)	77,376			(21,200		)	99,155			12,290			(3,633		)	(1,811		)
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments	2,535,785			819,141			1,021,675			214,614			81,175			9,308
Cost of investments sold	(2,506,348		)	(728,151		)	(922,795		)	(197,651		)	(81,167		)	(9,307		)
Net realized gain (loss) on investments	29,437			90,990			98,880			16,963			8			1
Realized gain distribution received	1,697,460			445,448			28,715			6,988			—			—
Change in unrealized appreciation (depreciation)
on investments	216,523			(25,686		)	(41,600		)	(5,811		)	17			7
Net gain (loss) on investments	1,943,420			510,752			85,995			18,140			25			8
Net increase (decrease) in net assets
resulting from operations	$	2,020,796		$	489,552		$	185,150		$	30,430		$	(3,608	)	$	(1,803	)

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, 2016

and December 31, 2015

	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
	2016			2015			2016			2015			2016			2015			2016			2015			2016			2015			2016			2015
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)	$	77,376		$	21,880		$	(21,200	)	$	(39,265	)	$	99,155		$	93,027		$	12,290		$	9,467		$	(3,633	)	$	(5,205	)	$	(1,811	)	$	(2,163	)
Net realized gain (loss) on investments	29,437			663,978			90,990			245,622			98,880			84,077			16,963			15,964			8			8			1			3
Realized gain distribution received	1,697,460			2,158,902			445,448			569,370			28,715			3,033			6,988			728			—			—			—			—
Change in unrealized appreciation (depreciation) on
investments	216,523			(2,920,646		)	(25,686		)	(842,488		)	(41,600		)	(259,580		)	(5,811		)	(58,157		)	17			(7		)	7			(3		)
Net increase (decrease) in net assets resulting from
operations	2,020,796			(75,886		)	489,552			(66,761		)	185,150			(79,443		)	30,430			(31,998		)	(3,608		)	(5,204		)	(1,803		)	(2,163		)
Contributions and (Withdrawals):
Payments received from policyowners	8,000			—			18,207			23,305			—			2			7,960			10,709			—			(1		)	—			2,015
Policyowners’ surrenders	(809,460		)	(1,416,017		)	(444,533		)	(496,524		)	(223,901		)	(356,163		)	(91,703		)	(103,122		)	(17,477		)	(5,941		)	(5,369		)	(17,338		)
Policyowners’ annuity and death benefits	(893,869		)	(905,341		)	(85,284		)	(241,321		)	(403,795		)	(399,241		)	(48,219		)	(49,243		)	(8,534		)	(118,774		)	(419		)	(11,615		)
Net transfers from (to) Fixed Account	(434,831		)	(384,657		)	(65,017		)	(66,151		)	(267,296		)	(121,062		)	(20,130		)	(3,986		)	(18,419		)	—			(1,681		)	(597		)
Transfers between Investment Divisions	32,544			—			1			1,044			(1		)	—			—			(1,044		)	(33,035		)	—			(2		)	—
Net contributions and (withdrawals)	(2,097,616		)	(2,706,015		)	(576,626		)	(779,647		)	(894,993		)	(876,464		)	(152,092		)	(146,686		)	(77,465		)	(124,716		)	(7,471		)	(27,535		)
Increase (decrease) in net assets	(76,820		)	(2,781,901		)	(87,074		)	(846,408		)	(709,843		)	(955,907		)	(121,662		)	(178,684		)	(81,073		)	(129,920		)	(9,274		)	(29,698		)
NET ASSETS:
Beginning of period	27,827,184			30,609,085			7,374,380			8,220,788			7,782,752			8,738,659			1,881,214			2,059,898			345,287			475,207			98,829			128,527
End of period	$	27,750,364		$	27,827,184		$	7,287,306		$	7,374,380		$	7,072,909		$	7,782,752		$	1,759,552		$	1,881,214		$	264,214		$	345,287		$	89,555		$	98,829

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 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 (formerly MainStay VP Cash Management—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, 2016 were as follows:

	Purchases		Sales
Separate Account-I (Tax-Qualified Policies)
Common Stock Investment Divisions
Single Premium Policies	$	1,840	$	2,306
Flexible Premium Policies	4,503		8,488
Bond Investment Divisions
Single Premium Policies	240		509
Flexible Premium Policies	509		1,959
Money Market Investment Divisions
Single Premium Policies	—		205
Flexible Premium Policies	3		97
Total	$	7,095	$	13,565
Separate Account-II (Non-Qualified Policies)
Common Stock Investment Divisions
Single Premium Policies	2,212		2,536
Flexible Premium Policies	666		819
Bond Investment Divisions
Single Premium Policies	254		1,022
Flexible Premium Policies	82		215
Money Market Investment Divisions
Single Premium Policies	—		81
Flexible Premium Policies	—		9
Total	$	3,214	$	4,682

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, Cornerstone Capital Management Holdings LLC (“Cornerstone Holdings”) 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, Cornerstone Holdings and NYL Investors are indirect, wholly-owned subsidiaries 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 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.

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):

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 0.44% to 0.54% and other expenses were 0.04%. These ranges are shown as a percentage of average net assets as of December 31, 2015, and approximate the ranges as of December  31, 2016.

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, 2016 and 2015 were as follows:

	2016					2015
	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	3	(17	)	(14	)	6	(27	)	(21	)
Flexible Premium Policies	3	(72	)	(69	)	1	(64	)	(63	)
Bond Investment Divisions
Single Premium Policies	1	(7	)	(6	)	3	(15	)	(12	)
Flexible Premium Policies	2	(32	)	(30	)	5	(37	)	(32	)
Money Market Investment Divisions
Single Premium Policies	—	(9	)	(9	)	1	(5	)	(4	)
Flexible Premium Policies	—	(5	)	(5	)	2	(7	)	(5	)
Separate Account-II (Non-Qualified Policies)
Common Stock Investment Divisions
Single Premium Policies	—	(18	)	(18	)	4	(25	)	(21	)
Flexible Premium Policies	2	(7	)	(5	)	—	(8	)	(8	)
Bond Investment Divisions
Single Premium Policies	1	(15	)	(14	)	—	(14	)	(14	)
Flexible Premium Policies	1	(4	)	(3	)	—	(3	)	(3	)
Money Market Investment Divisions
Single Premium Policies	—	(3	)	(3	)	1	(6	)	(5	)
Flexible Premium Policies	—	—		—		1	(2	)	(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 31, 2016, 2015, 2014, 2013 and 2012:

		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	2016	$	19,712		151		$	130.65	7.8%	1.5%
Single Premium Policies	2015	19,963			165		121.24		(0.4)%	1.3%
	2014	22,663			186		121.72		13.1%	1.3%
	2013	21,910			204		107.61		34.0%	1.5%
	2012	18,420			229		80.32		15.3%	1.6%
Common Stock Investment Divisions	2016	$	55,572		502		$	110.78	7.2%	1.5%
Flexible Premium Policies	2015	59,031			571		103.31		(0.9)%	1.3%
	2014	66,088			634		104.24		12.5%	1.3%
	2013	64,223			693		92.62		33.3%	1.5%
	2012	53,435			769		69.48		14.7%	1.6%
Bond Investment Divisions	2016	$	4,522		72		$	62.39	2.2%	2.5%
Single Premium Policies	2015	4,763			78		61.02		(1.0)%	2.3%
	2014	5,571			90		61.65		4.5%	1.9%
	2013	5,945			101		58.99		(3.0)%	1.8%
	2012	6,815			112		60.84		3.4%	2.3%
Bond Investment Divisions	2016	$	12,863		243		$	52.90	1.7%	2.6%
Flexible Premium Policies	2015	14,213			273		52.00		(1.5)%	2.4%
	2014	16,076			305		52.80		4.0%	2.0%
	2013	17,121			337		50.77		(3.5)%	1.9%
	2012	19,405			369		52.63		2.8%	2.4%
Money Market Investment Divisions	2016	$	248		11		$	22.79	(1.2)%	0.0%
Single Premium Policies	2015	453			20		23.07		(1.2)%	0.0%
	2014	571			24		23.36		(1.2)%	0.0%
	2013	609			26		23.65		(1.2)%	0.0%
	2012	709			30		23.94		(1.2)%	0.0%
Money Market Investment Divisions	2016	$	644		33		$	19.32	(1.7)%	0.0%
Flexible Premium Policies	2015	738			38		19.65		(1.7)%	0.0%
	2014	869			43		20.00		(1.7)%	0.0%
	2013	922			45		20.35		(1.7)%	0.0%
	2012	1,074			52		20.71		(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	2016	$	27,750		212		$	130.66	7.8%	1.5%
Single Premium Policies	2015	27,827			230		121.24		(0.4)%	1.3%
	2014	30,609			251		121.72		13.1%	1.3%
	2013	29,224			272		107.61		34.0%	1.5%
	2012	24,851			309		80.32		15.3%	1.6%
Common Stock Investment Divisions	2016	$	7,287		66		$	110.78	7.2%	1.5%
Flexible Premium Policies	2015	7,374			71		103.31		(0.9)%	1.3%
	2014	8,221			79		104.24		12.5%	1.2%
	2013	7,851			85		92.62		33.3%	1.6%
	2012	6,455			93		69.48		14.7%	1.6%
Bond Investment Divisions	2016	$	7,073		113		$	62.63	2.2%	2.6%
Single Premium Policies	2015	7,783			127		61.25		(1.0)%	2.4%
	2014	8,739			141		61.89		4.5%	2.0%
	2013	9,571			162		59.22		(3.0)%	1.8%
	2012	11,308			185		61.07		3.4%	2.4%
Bond Investment Divisions	2016	$	1,760		33		$	52.98	1.7%	2.6%
Flexible Premium Policies	2015	1,881			36		52.08		(1.5)%	2.4%
	2014	2,060			39		52.88		4.0%	2.0%
	2013	2,263			45		50.85		(3.5)%	1.8%
	2012	2,590			49		52.71		2.8%	2.3%
Money Market Investment Divisions	2016	$	264		12		$	22.79	(1.2)%	0.0%
Single Premium Policies	2015	345			15		23.07		(1.2)%	0.0%
	2014	475			20		23.36		(1.2)%	0.0%
	2013	632			27		23.65		(1.2)%	0.0%
	2012	696			30		23.94		(1.2)%	0.0%
Money Market Investment Divisions	2016	$	90		5		$	19.32	(1.7)%	0.0%
Flexible Premium Policies	2015	99			5		19.65		(1.7)%	0.0%
	2014	129			6		20.00		(1.7)%	0.0%
	2013	120			6		20.35		(1.7)%	0.0%
	2012	132			6		20.71		(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.

1 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.

2 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 MFA Separate Accounts-I and II Policyowners:

In our opinion, the accompanying statement of assets and liabilities, the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the investment divisions listed in Note 1 of the New York Life Insurance and Annuity Corporation MFA Separate Account-I and the New York Life Insurance and Annuity Corporation MFA Separate Account-II as of December 31, 2016, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of New York Life Insurance and Annuity Corporation management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 23,2017

F-13

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

CONSOLIDATED FINANCIAL STATEMENTS

(GAAP Basis)

December 31, 2016 and 2015

Table of Contents

	Page Number
Independent Auditor’s Report	1
Consolidated Statements of Financial Position	3
Consolidated Statements of Operations	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Stockholder’s Equity	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated 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	17
Note 5 - Recent Accounting Pronouncements	17
Note 6 - Investments	18
Note 7 - Derivative Instruments and Risk Management	26
Note 8 - Separate Accounts	31
Note 9 - Fair Value Measurements	32
Note 10 - Investment Income and Investment Gains and Losses	54
Note 11 - Related Party Transactions	60
Note 12 - Policyholders’ Liabilities	64
Note 13 - Deferred Policy Acquisition Costs and Sales Inducements	69
Note 14 - Reinsurance	70
Note 15 - Commitments and Contingencies	73
Note 16 - Income Taxes	76
Note 17 - Debt	78
Note 18 - Supplemental Cash Flow Information	79
Note 19 - Statutory Financial Information	79
Note 20 - Subsequent Events	79

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(a wholly owned subsidiary of New York Life Insurance Company)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
	December 31,
	2016		2015
	(in millions)
Assets
Fixed maturities (includes securities pledged to creditors
of $659 and $586 in 2016 and 2015, respectively):
Available-for-sale, at fair value	$	82,556	$	77,160
Securities, at fair value	1,923		1,464
Equity securities:
Available-for-sale, at fair value	34		40
Securities, at fair value	925		501
Mortgage loans, net of allowances	13,705		12,757
Policy loans	872		877
Investments in affiliates	573		540
Other investments	1,755		1,447
Total investments	102,343		94,786
Cash and cash equivalents	1,855		2,288
Deferred policy acquisition costs	3,412		3,530
Interest in annuity contracts	6,808		6,472
Amounts recoverable from reinsurer:
Affiliated	4,251		4,323
Unaffiliated	1,612		1,537
Other assets	1,599		1,502
Separate account assets	30,807		28,755
Total assets	$	152,687	$	143,193
Liabilities
Policyholders’ account balances	$	74,019	$	70,006
Future policy benefits	20,292		18,380
Policy claims	311		300
Obligations under structured settlement agreements	6,808		6,472
Amounts payable to reinsurer:
Affiliated	4,159		4,259
Unaffiliated	66		51
Other liabilities (includes other liabilities carried at fair value of $43 and $37
in 2016 and 2015, respectively)	3,141		2,670
Separate account liabilities	30,807		28,755
Total liabilities	139,603		130,893
Stockholder’s Equity
Capital stock: par value $10,000
(20,000 shares authorized, 2,500 issued and outstanding)	25		25
Additional paid in capital	3,928		3,928
Accumulated other comprehensive income	1,056		975
Retained earnings	8,074		7,369
Total New York Life and Annuity stockholder’s equity	13,083		12,297
Non-controlling interest	1		3
Total stockholder’s equity	13,084		12,300
Total liabilities and stockholder’s equity	$	152,687	$	143,193

The accompanying notes are an integral part of the consolidated financial statements.

3

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(a wholly owned subsidiary of New York Life Insurance Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
		Year Ended December 31,
		2016			2015			2014
		(in millions)
	Revenues
	Premiums	$	2,743		$	2,432		$	3,123
	Fees-universal life and annuity policies	1,112			1,019			1,017
	Net investment income	3,871			3,767			3,730
	Net investment (losses) gains:
	Other-than-temporary impairments on fixed maturities	(119		)	(107		)	(30		)
	Other-than-temporary impairments on fixed maturities
	recognized in accumulated other comprehensive income	14			13			1
	All other net investment gains	195			154			467
	Total net investment gains	90			60			438
	Net revenue from reinsurance	73			97			86
	Other income	107			125			100
	Total revenues	7,996			7,500			8,494
	Expenses
	Interest credited to policyholders’ account balances	2,134			2,061			2,199
	Increase in liabilities for future policy benefits	1,835			1,633			2,451
	Policyholder benefits	1,600			1,491			1,341
	Operating expenses	1,532			1,466			1,129
	Total expenses	7,101			6,651			7,120
	Income before income tax expense and non-controlling interest	895			849			1,374
	Equity in earnings, pre-tax	90			—			—
	Income tax expense	277			224			391
	Net income	708			625			983
	Non-controlling interest	(3		)	—			—
	Net income attributable to New York Life and Annuity	$	705		$	625		$	983

The accompanying notes are an integral part of the consolidated financial statements.

4

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(a wholly owned subsidiary of New York Life Insurance Company)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
		Year Ended December 31,
		2016			2015			2014
		(in millions)
Net income		$	705		$	625		$	983
Other comprehensive (loss) income, net of tax:
	Foreign currency translation adjustment	—			(3		)	(1		)
	Foreign currency translation adjustment, net	—			(3		)	(1		)
	Net unrealized investment gains (losses):
	Net unrealized investment gains (losses) arising during the period	136			(1,130		)	1,175
	Less: reclassification adjustment for net unrealized investment
	gains (losses) included in net income	55			(44		)	73
	Net unrealized investment gains (losses), net	81			(1,086		)	1,102
Other comprehensive income (loss), net of tax		81			(1,089		)	1,101
Comprehensive income (loss), net of tax		786			(464		)	2,084
	Less: comprehensive income attributable to non-controlling interests	(3		)	—			—
Comprehensive income (loss) attributable to New York Life and Annuity		$	783		$	(464	)	$	2,084

The accompanying notes are an integral part of the consolidated financial statements.

5

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(a wholly owned subsidiary of New York Life Insurance Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
Years Ended December 31, 2016, 2015 and 2014
(in millions)
	Capital Stock		Additional Paid In Capital		Accumulated Other Comprehensive Income			Retained Earnings		New York Life and Annuity Stockholder’s Equity			Non- Controlling Interest			Total Stockholder’s Equity
Balance, January 1, 2014	$	25	$	3,928	$	963		$	5,761	$	10,677		$	—		$	10,677
Comprehensive income:
Net income	—		—		—			983		983			—			983
Other comprehensive income, net of tax	—		—		1,101			—		1,101			—			1,101
Total comprehensive income	—		—		1,101			983		2,084			—			2,084
Balance, December 31, 2014	25		3,928		2,064			6,744		12,761			—			12,761
Consolidation of less than 100% owned entities	—		—		—			—		—			3			3
Comprehensive income:
Net income	—		—		—			625		625			—			625
Other comprehensive loss, net of tax	—		—		(1,089		)	—		(1,089		)	—			(1,089		)
Total comprehensive income (loss)	—		—		(1,089		)	625		(464		)	—			(464		)
Balance, December 31, 2015	25		3,928		975			7,369		12,297			3			12,300
Consolidation/ deconsolidation of less than 100% owned entities	—		—		—			—		—			(5		)	(5		)
Comprehensive income:
Net income	—		—		—			705		705			3			708
Other comprehensive income, net of tax	—		—		81			—		81			—			81
Total comprehensive income	—		—		81			705		786			3			789
Balance, December 31, 2016	$	25	$	3,928	$	1,056		$	8,074	$	13,083		$	1		$	13,084

The accompanying notes are an integral part of the consolidated financial statements.

6

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(a wholly owned subsidiary of New York Life Insurance Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
		Year Ended December 31,
		2016			2015			2014
		(in millions)
	Cash Flows from Operating Activities:
	Net income	$	708		$	625		$	983
	Adjustments to reconcile net income to net cash provided
	by operating activities:
	Depreciation and amortization	4			22			23
	Net capitalization of deferred policy acquisition costs	77			(42		)	(314		)
	Universal life and annuity fees	(828		)	(786		)	(743		)
	Interest credited to policyholders’ account balances	2,134			2,061			2,199
	Capitalized interest and dividends reinvested	(167		)	(234		)	(228		)
	Net investment (gains) losses	(90		)	(60		)	(438		)
	Equity in earnings of limited partnerships	(90		)	17			(14		)
	Deferred income tax (benefit) expense	(52		)	(45		)	133
	Net revenue from intercompany reinsurance	3			(2		)	(1		)
	Net change in unearned revenue liability	15			56			60
	Changes in:
	Other assets and other liabilities	3			(45		)	(111		)
	Book overdrafts	68			(14		)	20
	Reinsurance receivables and payables	(4		)	15			4
	Policy claims	11			(47		)	8
	Acquisition of long-term investments	(286		)	—			—
	Sale of long-term investments	118			—			—
	Future policy benefits	1,828			1,661			2,463
	Net cash provided by operating activities	3,452			3,182			4,044
	Cash Flows from Investing Activities:
	Proceeds from:
	Sale of available-for-sale fixed maturities	3,550			3,970			2,474
	Maturity and repayment of available-for-sale fixed maturities	9,435			7,994			7,829
	Sale of equity securities	10			24			78
	Repayment of mortgage loans	1,187			1,340			1,309
	Sale of other investments	18			2,233			1,997
	Sale of securities, at fair value	599			1,571			679
	Maturity and repayment of securities, at fair value	74			13			48
	Cost of:
	Available-for-sale fixed maturities acquired	(17,957		)	(13,505		)	(12,296		)
	Equity securities acquired	(6		)	(29		)	(2		)
	Mortgage loans acquired	(2,131		)	(3,183		)	(2,460		)
	Acquisition of other investments	(197		)	(2,051		)	(2,045		)
	Acquisition of securities, at fair value	(1,448		)	(1,834		)	(1,753		)
	Securities purchased under agreements to resell	—			(165		)	(32		)
	Cash collateral (paid) received on derivatives	1			(1		)	(4		)
	Policy loans	5			1			(6		)
	Other	1			—			—
	Consolidation and deconsolidation of entities	(5		)	24			—
	Net cash used in investing activities	(6,864		)	(3,598		)	(4,184		)
	Cash Flows from Financing Activities:
	Policyholders’ account balances:
	Deposits	10,026			9,764			7,735
	Withdrawals	(5,840		)	(6,191		)	(6,030		)
	Net transfers to the separate accounts	(1,480		)	(1,796		)	(1,761		)
	Increase in loaned securities	75			50			50
	Contributions/ distributions from/ to parent	56			—			—
	Net paydowns from debt	(1		)	(2		)	(1		)
	Cash collateral received (paid) on derivatives	135			159			265
	Net cash provided by financing activities	2,971			1,984			258
	Effect of exchange rate changes on cash and cash equivalents	8			10			(2		)
	Net increase (decrease) in cash and cash equivalents	(433		)	1,578			116
	Cash and cash equivalents, beginning of year	2,288			710			594
	Cash and cash equivalents, end of year	$	1,855		$	2,288		$	710

The accompanying notes are an integral part of the consolidated financial statements.

7

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(GAAP Basis)

DECEMBER 31, 2016, 2015 AND 2014

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 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 offers its insurance and annuity products throughout the United States and its territories, primarily through New York Life’s career agency force with certain products also marketed through third-party banks, brokers and independent financial advisors.

NOTE 2 – BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and reflect the consolidation of the Company with the entities over which the Company exercises control, including its majority owned and controlled subsidiaries and variable interest entities (“VIEs”) in which the Company is considered the primary beneficiary. Refer to Note 3 - Significant Accounting Policies for further discussion. All intercompany transactions have been eliminated in consolidation.

The Delaware State Insurance Department (“DSID”) recognizes only statutory accounting practices 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. Accounting practices used to prepare statutory financial statements for regulatory filings of life insurance companies differ in certain instances from GAAP. Refer to Note 19 - Statutory Financial Information for further discussion.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining deferred policy acquisition costs (“DAC”) and related amortization; valuation of investments including derivatives and recognition of other-than-temporary impairments (“OTTI”); future policy benefits including guarantees; provision for income taxes and valuation of deferred tax assets; and reserves for contingent liabilities, including reserves for losses in connection with unresolved legal matters.

Investments

Fixed maturity investments classified as available-for-sale are reported at fair value. For a discussion on valuation methods for fixed maturities reported at fair value, refer to Note 9 - Fair Value Measurements. The amortized cost of fixed maturities is adjusted for amortization of premium and accretion of discount. Interest income, as well as the related amortization of premium and accretion of discount, is included in Net investment income. The Company accrues interest income on fixed maturities to the extent it is deemed collectible and the security continues to perform under its original contractual terms.

8

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

In the event collectability of interest is uncertain, accrual of interest income will cease and income will be recorded when and if received.

Unrealized gains and losses on available-for-sale fixed maturity investments are reported as net unrealized investment gains or losses in Accumulated other comprehensive income (“AOCI”), net of deferred taxes and related adjustments.

Included within fixed maturity investments are mortgage-backed and asset-backed securities. Amortization of the 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 mortgage-backed and asset-backed 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 mortgage-backed and asset-backed 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 (i.e. interest only securities), the effective yield is adjusted prospectively for any changes in estimated cash flows.

The cost basis of fixed maturities is adjusted for impairments in value deemed to be other-than-temporary, with a loss recognized in Net investment gains or losses. The new cost basis is not adjusted for subsequent increases in estimated fair value. In periods subsequent to the recognition of an OTTI, impaired fixed maturities are accounted for as if purchased on the measurement date of the impairment. Accordingly, the discount (or reduced premium) based on the new cost basis may be accreted into net investment income in future periods, based on prospective changes in cash flow estimates, to reflect adjustments to the effective yield.

Factors considered in evaluating whether a decline in the value of fixed maturities is other-than-temporary include: (1) whether the decline is substantial; (2) the duration of time that the fair value has been less than cost; and (3) the financial condition and near-term prospects of the issuer. Mortgage-backed and asset-backed securities rated below AA at acquisition are deemed other-than-temporary impaired securities when the fair value is below amortized cost and there are negative changes in estimated future cash flows.

With respect to fixed maturities in an unrealized loss position, an OTTI is recognized in earnings when it is anticipated that the amortized cost will not be recovered. The entire difference between the fixed maturity’s cost and its fair value is recognized in earnings only when either the Company (1) has the intent to sell the fixed maturity security or (2) more likely than not will be required to sell the fixed maturity security before its anticipated recovery. If these conditions do not exist, an OTTI would be recognized in earnings (“credit loss”) for the difference between the amortized cost basis of the fixed maturity and the net present value of projected future cash flows expected to be collected. The difference between the fair value and the present value of projected future cash flows expected to be collected represents the portion of OTTI related to other-than credit factors (“non-credit loss”) and is recognized in AOCI. 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 fixed maturity prior to impairment.

The determination of cash flow estimates in the net present value 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, 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 the recovery value if the Company determines that the security is dependent on the liquidation of the collateral for recovery.

Equity securities, which are deemed unaffiliated, are carried at fair value. For a discussion on valuation methods for equity securities, refer to Note 9 - Fair Value Measurements. Unrealized gains and losses on equity securities classified as available-for-sale are recorded as net unrealized investment gains or losses in AOCI, net of deferred taxes and related adjustments.

9

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

When it is determined that a decline in value of an available-for-sale equity security is other-than-temporary, the cost basis of the equity security is reduced to its fair value, with the associated realized loss reported in Net investment gains or losses. The new cost basis is not adjusted for subsequent increases in estimated fair value. Factors considered in evaluating whether a decline in value of an available-for-sale equity security is other-than-temporary include: (1) whether the decline is substantial; (2) the duration that the fair value has been less than cost; and (3) the financial condition and near-term prospects of the issuer. The Company also considers in its OTTI analysis, its intent and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost.

Securities at fair value, both Fixed maturity and Equity securities, include investments for which the fair value option (“FVO”) was elected and investments that are considered to be actively traded or held for only a short period of time. The FVO primarily includes and is generally elected for certain purchases of 20% or more of the outstanding shares or units of mutual funds, trusts or similar financial instruments for which the Net Asset Value (“NAV”) is calculated and published on either a monthly or daily basis. The changes in the fair value of the Securities at fair value are included in Net investment gains or losses while interest and dividend income is reported in Net investment income. The Company accrues interest income to the extent it is deemed collectible and the security continues to perform under its original contractual terms. In the event collectability of interest is uncertain, accrual of interest income will cease and income will be recorded when and if received. Cash flows from acquiring and disposing of the FVO invested assets are classified in Cash flows from investing activities. Cash flows for trading securities are classified in Cash flows from operating activities.

Mortgage loans are carried at unpaid principal balances, net of discounts or premiums, deferred origination fee income, and valuation allowances, and are collateralized. For loans carried at unpaid principal balances, specific valuation allowances are established for the excess carrying value of the mortgage loan over the estimated fair value of the collateral 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 document. Fair value of the collateral for commercial mortgages (excluding credit loans) over $5 million are 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. The Company also has a general valuation allowance for probable incurred, but not specifically identified losses. The general valuation allowance is determined by applying a factor against the commercial and residential mortgage loan portfolios, excluding loans for which a specific allowance has already been recorded, to estimate potential losses in each portfolio. The general allowance factor for the commercial mortgage loan portfolio is based on the Company’s historical loss experience, as well as industry data regarding commercial loan delinquency rates. The Company analyzes industry data regarding specific credit risk, based on geographic locations and property types, as well as probability of default, timing of default and loss severity for each loan in a given portfolio. The general allowance factor for the residential mortgage loan portfolio is also based on the Company’s historical loss experience as well as expected defaults and loss severity of loans deemed to be delinquent. Changes to the specific and general valuation allowances are reflected in Net investment gains or losses.

For commercial and residential mortgage loans, the Company accrues interest income on loans to the extent it is deemed collectible and the loan continues to perform under its original or restructured contractual terms. The Company places loans on non-accrual status and ceases to recognize interest income when management determines that 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 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 loan has investment income due and accrued that is ninety days past due, the investment income shall continue to accrue, if deemed collectible.

Commercial mortgage and other loans are occasionally restructured in a troubled debt restructuring (“TDR”). The Company assesses loan modifications on a case-by-case basis to evaluate whether a TDR has occurred. A specific valuation allowance may be established for mortgage loans restructured in a TDR for the excess carrying value of the mortgage loan over the estimated fair value of the collateral.

The Company closely monitors mortgage loans with the potential for specific valuation allowance by considering a number of factors. For commercial mortgage loans, these factors include, but are not limited to, loan to value (“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. Residential mortgage loans that are sixty or more days delinquent are monitored for potential specific valuation allowance.

10

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Policy loans are carried at the unpaid principal balance of the loan. Because these loans are effectively collateralized by the surrender value of the underlying policies, a valuation allowance is established only when policy loan balances, including capitalized interest, exceeds the related policy’s cash surrender value. Interest income is recorded as earned and included in Net investment income.

Investment in affiliates represents the Company’s equity investment in Madison Capital Funding LLC (“MCF”). For further discussion, refer to Note 6 - Investments and Note 11 - Related Party Transactions.  

Other investments consist primarily of direct investments in limited partnerships and limited liability companies, investments of consolidated investment companies, derivatives (see discussion on Derivative Instruments below), short-term investments, real estate and senior secured commercial loans. Investments in limited partnerships and limited liability companies are accounted for using the equity method of accounting. Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of acquisition and are carried at fair value. Refer to Note 6 - Investments for details of Other investments by component.

In many cases, limited partnerships and limited liability companies that the Company invests in qualify as investment companies and apply specialized accounting practices. The Company retains this specialized accounting practice in consolidation and for the equity method. For limited partnerships accounted for under the equity method, unrealized gains and losses are recorded in Net investment income. For consolidated limited partnerships, the underlying investments, which may consist of various classes of assets, are aggregated and stated at fair value in Other investments.

Real estate held for the production of income are stated at cost less accumulated depreciation. Real estate held for sale is stated at the lower of cost less accumulated depreciation or fair value, less estimated costs to sell, which may result in an other-than-temporary impairment recorded in Net investment gains or losses. Depreciation of real estate 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 lives. Any encumbrances on real estate are recorded in Other liabilities.

Senior secured commercial loans that management has the intent and ability to hold until maturity or payoff are reported at their outstanding unpaid principal balances reduced by any charge-off or loss reserve, net of any deferred fees on originated loans or unamortized premiums or discounts on purchased loans. The Company assesses its loans on a monthly basis for collectability in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, and prevailing economic conditions. Specific loans are considered for impairment when it is probable that the Company will be unable to collect the scheduled payments of principal and interest, when due, according to the contractual terms of the loan document. Factors considered by management in determining impairment include payment status and the financial condition of the borrower. Impaired loan measurement may be based on the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. A loss reserve is established for the calculated impairment. A general valuation allowance for probable incurred, but not specifically identified losses, is determined for the remainder of the portfolio. These loans are assigned internal risk ratings and the Company utilizes a specific reserve percentage for each category of risk rating. The loss reserve rate is multiplied by outstanding loans in each related risk category to determine the general reserve on these loans. Changes to the specific and general valuation allowances are reflected in Net investment gains or losses.

At the time of the funding of a loan, management determines the amount of the loan that will be held-for-sale. The syndication amounts have historically been sold within one year. Loans held for sale are carried at the lower of cost or fair value on an individual asset basis.

Cash equivalents include investments that have remaining maturities of three months or less at date of purchase and are carried at fair value.

Net investment gains or losses on sales for all investments are generally computed using the specific identification method.

Fair value option election provides entities with an alternative to use fair value as the initial and subsequent accounting measurement attribute for assets and liabilities that meet the definition of a financial asset or liability. The decision to elect

11

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

the fair value option is determined on an instrument by instrument basis, and is applied to an entire instrument. The decision is irrevocable once elected. Refer to Note 6 - Investments for more information on the fair value option.

Derivative Instruments

Derivatives are recorded at fair value as assets, within Other investments or as liabilities, within Other liabilities, except for embedded derivatives, which are recorded with the associated host contract. The classification of changes in the fair value of derivatives depends on the characteristics of the transaction, including whether it qualifies and is designated for hedge accounting. Changes in fair value, for derivatives that do not qualify or are not designated for hedge accounting, are included in Net investment gains or losses.

To qualify for hedge accounting, the hedge relationship is designated and formally documented at inception by detailing the particular risk, management objective, and strategy for the hedge. This includes the item and risk that is being hedged, the derivative that is being used, as well as how effectiveness is being assessed and ineffectiveness is measured. 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 hedging relationship is considered highly effective if the changes in fair value or cash flows of the hedging instrument are within 80% to 125% of the inverse changes in the fair value or cash flows of the hedged item. The Company formally assesses effectiveness of its hedging relationships both at the hedge inception and on a quarterly basis over the life of the hedge relationship in accordance with its risk management policy. The Company continually assesses the credit standing of the derivative counterparty and, if the counterparty is deemed to be no longer creditworthy, the hedge relationship will no longer be considered effective.

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

In order to mitigate counterparty credit risk, the Company receives collateral from counterparties with derivatives in a net positive fair value position, which is included in Other liabilities. The Company also posts collateral for derivatives that are in a net liability position, which is included in Other assets. Refer to Note 7 - Derivative Instruments and Risk Management.

Cash Flow Hedges

The Company accounts for the following as cash flow and foreign currency hedges, when they qualify for hedge accounting under the requirements of the authoritative guidance: (1) interest rate swaps used to convert floating rate investments to fixed rate investments; and (2) foreign currency swaps used to hedge the foreign currency cash flow exposure of foreign currency denominated investments.

When a derivative is designated as a cash flow hedge and determined to be highly effective, changes in fair value are recorded as unrealized gains or losses in AOCI and deferred until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, these unrealized gains or losses are reclassified to earnings to the same line item as the associated hedged item’s cash flows, in either Net investment gains or losses, Net investment income, or Interest credited to policyholders’ account balances. Any ineffectiveness is immediately recognized in earnings and included in Net investment gains or losses.

When a derivative is designated as a foreign currency cash flow hedge and is determined to be highly effective, changes in fair value are recorded as unrealized gain or losses in AOCI. The change in fair value of the derivative relative to the changes in foreign exchange rates affect earnings in the same period as the foreign exchange transaction gains and losses on the underlying hedged item in Net investment gains or losses. Any ineffectiveness is immediately recognized in earnings and included as Net investment gains or losses.

12

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Embedded Derivatives

The Company may enter into contracts that are not themselves derivative instruments but contain embedded derivatives. For each contract, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to those of the host contract and determines whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and accounted for as a stand-alone derivative. Such embedded derivatives are recorded with the associated host contract at fair value and changes in their fair value are recorded in earnings. In certain instances, the Company may elect to carry the entire contract at fair value.

For further information on the Company’s derivative instruments and related hedged items and their effect on the Company’s financial position, financial performance and cash flows, refer to Note 7 - Derivative Instruments and Risk Management.

Variable Interest Entities

In the normal course of its investment activities, the Company enters into relationships with various special purpose entities (“SPEs”) and other entities that are deemed to be VIEs. A VIE is an entity that either (1) has equity investors that lack certain essential characteristics of a controlling financial interest (including the ability to control activities of the entity, the obligation to absorb the entity’s expected losses and the right to receive the entity’s expected residual returns) or (2) lacks sufficient equity to finance its own activities without financial support provided by other entities, which in turn would be expected to absorb at least some of the expected losses of the VIE.

The Company is deemed a primary beneficiary of a VIE if it has (1) the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and (2) the obligation to absorb losses of or the right to receive benefits from the VIE that could be potentially significant to the VIE. If both conditions are present, the Company is required to consolidate the VIE.

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 for collateral received on securities lending in Other liabilities . 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 transferred. Securities sold under agreements to repurchase are treated as financing arrangements. 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 repurchase agreements to purchase and resell securities. Securities purchased under agreements to resell are treated as investing activities. 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, and therefore, 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 to be resold is monitored and additional collateral is obtained, where appropriate, to protect against credit exposure. The Company records the repurchase agreements as Securities purchased under agreements to resell.

13

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred Policy Acquisition Costs

Costs that are related directly to the successful acquisition of new and renewal insurance business are deferred as DAC. DAC primarily include commissions paid as well as a portion of employee compensation costs related to underwriting, policy issuance and processing, and medical inspection. These costs have been deferred and recorded as an asset .

For universal life and deferred annuity contracts, such costs are amortized in proportion to estimated gross profits over the estimated life of those contracts. Annually, the Company conducts a review of valuation assumptions relative to current experience and management expectations. To the extent that expectations change as a result of this review, valuation assumptions are updated and the impact is reflected as retroactive adjustments in the current year’s amortization (“unlocking”) and is included in Operating expenses. For these contracts, the carrying amount of DAC is adjusted at each balance sheet date as if the unrealized investment gains or losses had been realized and included in the gross margins or gross profits used to determine current period amortization. The increase or decrease in DAC, due to unrealized investment gains or losses, is recorded in AOCI.

For single premium immediate annuities with life contingencies, all acquisition costs are charged to expense immediately because generally all premiums are received at the inception of the contract.

The Company assesses internal replacements to determine whether such modifications significantly change the contract terms. When the modification substantially changes the contract, DAC is written-off immediately through income and only new deferrable expenses associated with the replacements are deferred. If the contract modifications do not substantially change the contract, DAC amortization on the original policy will continue and any acquisition costs associated with the related modification are expensed. DAC written-off at the date of lapse cannot be restored when a policy subsequently reinstates.

Sales Inducements

For some deferred annuity products, the Company offers policyholders a bonus equal to a specified percentage of the policyholder’s initial deposit and additional credits to the policyholder’s account value related to minimum accumulation benefits, which are considered sales inducements in certain instances. The Company also offers enhanced crediting rates on certain dollar cost averaging programs related to its deferred annuity products. From time to time, the Company conducts term life insurance conversion programs under which certain policyholders are offered additional premium credits, which are considered sales inducements, when converting a term life insurance policy or rider to a permanent life insurance contract. The Company defers these aforementioned sales inducements and generally amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. Deferred sales inducements are reported in Other assets.

Interests in Annuity Contracts and Obligations Under Structured Settlement Agreements

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 are based on prevailing market rates.

Policyholders’ Account Balances

The Company’s liability for Policyholders’ account balances primarily represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. This liability is generally equal to the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balance. This liability also includes amounts that have been assessed to compensate the insurer for services to be performed over future periods, and the fair value of embedded derivatives in the above contracts.

14

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Future Policy Benefits

The Company’s liability for Future policy benefits is mainly comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. For non-participating traditional life insurance and annuity products, expected mortality and/or morbidity for lapse or surrender are generally based on the Company’s historical experience or standard industry tables including a provision for the risk of adverse deviation (“PAD”). Interest rate assumptions are based on factors such as market conditions and expected investment returns. These assumptions are established at the time the policy is issued and are intended to estimate the experience for the period the policy benefits are payable. If experience is less favorable than assumed and future losses are projected under loss recognition testing, then additional liabilities may be required, resulting in a charge to increase in liabilities for future policy benefits. The Company does not establish loss reserves until a loss has occurred.

The Company’s liability for Future policy benefits also includes liabilities for guaranteed minimum benefits related to certain non-traditional long-duration life and annuity contracts and deferred profit on limited pay contracts. Refer to Note 12 - Policyholders’ Liabilities for a discussion on guaranteed minimum benefits.

Policy Claims

The Company’s liability for Policy claims includes a liability for unpaid claims. Unpaid claims include estimates of claims that the Company believes have been incurred but have not yet been reported as of the balance sheet date.

Debt

Debt is generally carried at unpaid principal balance less any deferred debt issuance costs and is included in Other liabilities. Refer to Note 9 - Fair Value Measurements for discussion on the fair value of debt.

Separate Account Assets and Liabilities

The Company has separate accounts, some of which are registered with the U.S. Securities and Exchange Commission (“SEC”). The Company reports separately, as Separate account assets and Separate account liabilities, investments held in separate accounts and liabilities of the separate accounts if (1) such separate accounts are legally recognized; (2) assets supporting the contract liabilities are legally insulated from the Company’s general account liabilities; (3) investments are directed by the contractholder or in accordance with specific investment objectives; and (4) all investment performance, net of contract fees and assessments, is passed through to the contractholder. The separate accounts have varying investment objectives, are segregated from the Company’s general account and are maintained for the benefit of separate account policyholders. Investment risks associated with market value changes are borne by the policyholders, except to the extent of minimum guarantees made by the Company with respect to certain accounts. All separate account assets are stated at fair value. The separate account liabilities represent the policyholders’ interest in the account, and include accumulated net investment income and realized and unrealized gains and losses on the assets.

Contingencies

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

Other Assets and Other Liabilities

Other assets primarily consist of investment income due and accrued, sales inducements, intangible assets and receivables from affiliates. Other liabilities consist primarily of deferred tax liabilities, cash collateral for securities lending and derivative transactions, uncollected premiums and accrued expenses.

Fair Value Measurements

For fair values of various assets and liabilities, refer to Note 9 - Fair Value Measurements.

15

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Recognition of Insurance Income and Related Expenses

Premiums from annuity policies with life contingencies are recognized as income when due. The associated benefits and expenses are matched with income so as to result in the recognition of profits over the life of the policies/contracts. This match is accomplished by providing liabilities for future policy benefits (refer to Note 12 - Policyholders’ Liabilities) and the deferral and subsequent amortization of DAC.

Amounts received under deferred annuity and universal life type contracts are reported as deposits to policyholders’ account balances (refer to Note 12 - Policyholders’ Liabilities). Revenues from these contracts consist of amounts assessed during the period for mortality and expense risk, policy administration and surrender charges, and are included in Fees - universal life and annuity policies. In addition to fees, the Company earns investment income from the investment of policyholders’ deposits in the Company’s general account portfolio. The Company establishes an unearned revenue liability for amounts previously assessed to compensate the Company for services to be performed over future periods. These amounts are deferred and recognized into income over the period benefited, using the same assumptions and factors used to amortize DAC. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policyholders’ account balances.

Premiums for contracts with a single premium or a limited number of premium payments due over a significantly shorter period than the total period over which benefits are provided are recorded as income when due. Any excess profit is deferred and recognized as income in a constant relationship to insurance in-force and, for annuities, in relation to the amount of expected future benefit payments.

Premiums, universal life fee income, benefits and expenses are stated net of reinsurance ceded. Estimated reinsurance ceding allowances are recognized over the life of the reinsured policies using assumptions consistent with those used to account for the underlying policies.

Net revenue from reinsurance primarily represents the experience rated refund, amortization of the deferred gain and the reserve adjustment associated with the reinsurance business ceded to New York Life, refer to Note 14 - Reinsurance. This net revenue adjustment excludes ceded universal life fees and ceded policyholder benefits, which are included on these respective lines.

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 and liabilities are recognized for expected future tax consequences of temporary differences between GAAP and taxable income. Temporary differences are identified and measured using a balance sheet approach whereby GAAP and tax balance sheets are compared to each other. Deferred income taxes are generally recognized based on enacted tax rates and a valuation allowance is recorded if it is more likely than not that any portion of the deferred tax asset will not be realized.

Authoritative guidance requires an evaluation of the recoverability of deferred tax assets and the establishment of a valuation allowance, if necessary, to reduce the deferred tax asset to an amount that is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance many factors are considered, including: (1) the nature of deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carry-back years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various tax jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies the Company would employ to avoid a tax benefit from expiring unused.

The Company is a member of a group that files a consolidated federal income tax return with New York Life. The consolidated income tax liability is allocated among the members of the group in accordance with a tax allocation agreement. The tax allocation agreement provides that each member of the group is allocated its share of the consolidated tax provision or benefit, determined generally on a separate company basis, but may, where applicable, recognize the tax benefits of net

16

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

operating losses or capital losses utilizable in the consolidated group. Intercompany tax balances are generally settled quarterly on an estimated basis with a final settlement within 30 days of the filing of the consolidated return.

In accordance with the authoritative guidance related to income taxes, the Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. The amount of tax benefit recognized for an uncertain tax position is the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Unrecognized tax benefits are included in Other liabilities and are charged to earnings in the period that such determination is made. The Company classifies interest and penalties related to tax uncertainties as Income tax expense.

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 both 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 annuity 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 computer systems to conduct business and to retain confidential information. The failure of the Company’s computer systems for any reason could disrupt its operations, result in the loss of customer business, damage the Company’s reputation, expose the Company to litigation and regulatory action and adversely impact its profitability.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Pronouncements

Effective January 1, 2015, the Company adopted new guidance that permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in Income tax expense. The adoption was applied on a retrospective basis and resulted in the restatement of all years presented with a decrease in Retained earnings of $23 million, at January 1, 2014. New disclosures related to the adoption of this guidance are included in Note 6 - Investments.

Future Adoption of New Accounting Pronouncements

In June 2016, the Financial Accounting Standard Board (“FASB”) issued updated guidance for recognizing credit losses on certain financial instruments based on an estimate of current expected credit losses. Entities will be required to estimate lifetime expected credit losses based on an asset’s amortized cost that reflects losses expected over the remaining contractual life of an asset. The estimate of expected credit losses (ECL) should consider historical information, current information,

17

NOTE 5 – RECENT ACCOUNTING PRONOUNCEMENTS (continued)

and the reasonable and supportable forecasts of future events and circumstances, as well as estimates of prepayments. This includes reflect the risk of loss, even when that risk is remote. The guidance also modifies other-than-temporary impairment guidance for available-for-sale debt securities to require the use of an allowance rather than a direct write down of the investment, and replaces existing guidance for purchased credit deteriorated loans and debt securities. The new guidance is effective for interim and annual periods beginning after December 15, 2019 using a modified retrospective approach. Earlier adoption is permitted for fiscal years beginning after December 15, 2018. The Company is currently assessing the impact of this guidance.

In January 2016, the FASB issued updated guidance that changes the rules regarding recognition and measurement of financial assets and financial liabilities. Amongst other changes, the new guidance eliminates the current classification of the equity securities as trading or available-for-sale and requires that an entity reports all equity securities (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) at fair value with changes in fair value recognized in income. The new standard is effective on January 1, 2018 and requires a cumulative effective adjustment to be recorded for the impact on adoption. The Company is currently assessing the impact on its financial statements.

In May 2014, the FASB issued updated guidance on accounting for revenue recognition, which supersedes most existing revenue recognition guidance. The standard excludes from its scope the accounting for insurance contracts, leases, financial instruments, and other agreements that are governed under other GAAP guidance, but could affect the revenue recognition for certain of our other activities. The guidance requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to, in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from cost incurred to obtain or fulfill a contract. The new guidance is effective for interim and annual periods beginning after December 15, 2017 and may be applied retrospectively or through a cumulative effect adjustment to retained earnings at the date of adoption. Early adoption is permitted to one year as of January 1, 2017. The Company plans to adopt the guidance on its required effective date of January 1, 2018 and is assessing the impact of the guidance on its consolidated financial statements.

NOTE 6 – INVESTMENTS

Fixed Maturities, Available-for-sale

The amortized cost and estimated fair value of fixed maturities available-for-sale at December 31, 2016 and 2015, by contractual maturity, is presented below (in millions). Expected maturities may differ from contractual maturities because issuers may have the right to call or repay obligations with or without call or prepayment penalties.

	2016				2015
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale
Due in one year or less	$	2,465	$	2,487	$	2,798	$	2,825
Due after one year through five years	16,117		16,625		14,328		14,718
Due after five years through ten years	21,535		21,834		21,327		21,216
Due after ten years	12,248		12,865		11,330		11,932
Mortgage-backed and asset-backed securities:
U.S. agency mortgage-backed and asset-backed securities	15,154		15,554		13,440		14,163
Non-agency mortgage-backed securities	6,230		6,288		6,066		6,156
Non-agency asset-backed securities	6,911		6,903		6,158		6,150
Total available-for-sale	$	80,660	$	82,556	$	75,447	$	77,160

18

NOTE 6 – INVESTMENTS (continued)

At December 31, 2016 and 2015, the distribution of gross unrealized gains and losses on investments in fixed maturities were as follows (in millions):

	2016
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair  Value		OTTI in AOCI(1)
Available-for-sale
U.S. Treasury	$	1,620	$	63	$	29	$	1,654	$	—
U.S. government corporations and agencies	1,145		105		13		1,237		—
U.S. agency mortgage-backed and asset-backed securities	15,154		633		233		15,554		—
Foreign governments	331		33		1		363		—
U.S. corporate	37,111		1,501		440		38,172		—
Affiliated bonds	1,780		36		—		1,816		—
Foreign corporate	10,378		300		108		10,569		—
Non-agency residential mortgage-backed securities	960		45		16		989		(7		)
Non-agency commercial mortgage-backed securities	5,270		96		67		5,299		—
Non-agency asset-backed securities(2)	6,911		62		70		6,903		(2		)
Total available-for-sale	$	80,660	$	2,874	$	977	$	82,556	$	(9	)
	2015
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		OTTI in AOCI(1)
Available-for-sale
U.S. Treasury	$	1,062	$	68	$	4	$	1,126	$	—
U.S. government corporations and agencies	1,099		121		2		1,218		—
U.S. agency mortgage-backed and asset-backed securities	13,440		816		93		14,163		—
Foreign governments	355		43		—		398		—
U.S. corporate	34,827		1,382		668		35,541		—
Affiliated bonds	1,707		—		—		1,707		—
Foreign corporate	10,733		257		289		10,701		—
Non-agency residential mortgage-backed securities	1,243		53		24		1,272		(8		)
Non-agency commercial mortgage-backed securities	4,823		88		27		4,884		—
Non-agency asset-backed securities(2)	6,158		56		64		6,150		(2		)
Total available-for-sale	$	75,447	$	2,884	$	1,171	$	77,160	$	(10	)

⁽¹⁾ Represents the amount of OTTI losses in AOCI, which were not included in earnings pursuant to authoritative guidance. The amount excludes $67 million and $33 million for the years ended December 31, 2016 and 2015, respectively, of net unrealized gains on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.

⁽²⁾ Includes auto loans, credit cards, education loans and other asset types.

At December 31, 2016 and 2015, the Company had outstanding contractual obligations to acquire additional private placement securities amounting to $447 million and $275 million, respectively.

The Company had $3 million in fixed maturities that were non-income producing for the last 12 months at December 31, 2016. The Company had $5 million in fixed maturities that were non-income producing for the last 12 months at December 31, 2015.

19

NOTE 6 – INVESTMENTS (continued)

Equity Securities, Available-for-sale

At December 31, 2016 and 2015, the distribution of gross unrealized gains and losses on available-for-sale equity securities were as follows (in millions):

	Cost		Unrealized Gains		Unrealized Losses		Fair Value
2016	$	32	$	3	$	1	$	34
2015	$	32	$	8	$	—	$	40

Fixed Maturity and Equity Securities, at fair value

Securities at fair value include purchases of more than 20% of the outstanding shares or units of mutual funds, trusts or similar financial instruments (collectively funds) for which the NAV is calculated and published on either a monthly or daily basis. The Company generally elects the fair value option for these investments and accounts for them at fair value, instead of equity method accounting. Reporting these investments at fair value based on each fund’s NAV more accurately reflects the value of each investment. At December 31, 2016, the Company held $5 million, in securities at fair value for these investments.

Mortgage Loans

The Company’s mortgage loan investments are diversified by property type, location and borrower and are collateralized by the related properties.

At December 31, 2016 and 2015, contractual commitments to extend credit under mortgage loan documents amounted to $508 million and $513 million, respectively, at fixed and floating interest rates ranging from 2.06% to 6.21% in 2016 and from 1.77% to 6.45% in 2015. These commitments are diversified by property type and geographic region.

20

NOTE 6 – INVESTMENTS (continued)

At December 31, 2016 and 2015, the distribution of the mortgage loan portfolio by property type and geographic region was as follows ($ in millions):

	2016					2015
	Amount			% of Total		Amount			% of Total
Property Type
Office buildings	$	4,217		30.7	%	$	4,247		33.2	%
Apartment buildings	3,967			28.9		3,820			29.9
Retail facilities	3,798			27.7		3,277			25.6
Industrial	1,483			10.8		1,165			9.1
Hotel/ motel	183			1.3		171			1.3
Residential	54			0.4		78			0.6
Other	32			0.2		26			0.3
Total mortgage loans	13,734			100.0	%	12,784			100.0	%
Allowance for credit losses	(29		)			(27		)
Total net mortgage loans	$	13,705				$	12,757
	2016					2015
	Amount			% of Total		Amount			% of Total
Geographic Location
South Atlantic	$	3,571		26.0	%	$	3,307		25.9	%
Central	3,043			22.1		2,824			22.1
Middle Atlantic	2,979			21.7		2,760			21.6
Pacific	2,851			20.8		2,627			20.6
New England	1,188			8.7		1,162			9.1
Other	102			0.7		104			0.7
Total mortgage loans	13,734			100.0	%	12,784			100.0	%
Allowance for credit losses	(29		)			(27		)
Total net mortgage loans	$	13,705				$	12,757

The Company monitors the aging of its mortgage loans receivable on a monthly basis to determine delinquencies. At December 31, 2016 , the Company did not have residential or commercial mortgage loans that were past due greater than 90 days. At December 31, 2015, the Company had $5 million and $26 million, respectively, of recorded investment gross of the allowance for credit losses in residential and commercial mortgage loans that were past due greater than 90 days. There were no residential or commercial investments in mortgage loans that were past due less than 90 days at December 31, 2016 and 2015.

The Company establishes a specific reserve when it is probable that the Company will be unable to collect all amounts due under the contractual terms of the loan agreements, and a general reserve for probable incurred but not specifically identified losses.

21

NOTE 6 – INVESTMENTS (continued)

The activity in the mortgage loan specific and general reserves for the years ended December 31, 2016 and 2015 is summarized below (in millions):

	2016
	Residential		Commercial		Total
Allowance for Credit Losses
Beginning balance	$	2	$	25	$	27
Provision for credit losses	—		2		2
Ending balance	$	2	$	27	$	29
Ending Balance
Collectively evaluated for impairment (general)	$	2	$	27	$	29
Mortgage Loans
Ending balance (recorded investment, gross of allowance for credit losses):
Collectively evaluated for impairment (general)	$	53	$	13,681	$	13,734
Individually evaluated for impairment (specific)	$	1	$	—	$	1
	2015
	Residential		Commercial		Total
Allowance for Credit Losses
Beginning balance	$	2	$	22	$	24
Recoveries	—		3		3
Ending balance	$	2	$	25	$	27
Ending Balance
Collectively evaluated for impairment (general)	$	2	$	25	$	27
Mortgage Loans
Ending balance (recorded investment, gross of allowance for credit losses):
Collectively evaluated for impairment (general)	$	77	$	12,707	$	12,784
Individually evaluated for impairment (specific)	$	1	$	—	$	1

For the year ended December 31, 2014, recoveries were $4 million.

22

NOTE 6 – INVESTMENTS (continued)

The Company uses LTV as one of the key mortgage loan indicators to assess credit quality and to assist in identifying problem loans. At December 31, 2016 and 2015, LTVs on the Company’s mortgage loans, based upon the recorded investment gross of allowance for credit losses, were as follows (in millions):

2016
LTV Ratio	Office Buildings		Apartment Buildings		Retail Facilities		Industrial		Hotel/Motel		Residential		Other		Total
Above 95%	$	—	$	—	$	—	$	24	$	—	$	1	$	—	$	25
91% to 95%	—		—		—		—		—		—		—		—
81% to 90%	44		—		—		—		—		—		—		44
71% to 80%	50		406		184		4		—		9		—		653
Below 70%	4,123		3,561		3,614		1,455		183		44		32		13,012
Total	$	4,217	$	3,967	$	3,798	$	1,483	$	183	$	54	$	32	$	13,734
2015
LTV Ratio	Office Buildings		Apartment Buildings		Retail Facilities		Industrial		Hotel/ Motel		Residential		Other		Total
Above 95%	$	—	$	—	$	—	$	26	$	—	$	1	$	—	$	27
91% to 95%	—		—		—		—		—		—		—		—
81% to 90%	44		—		—		—		—		2		—		46
71% to 80%	88		402		253		11		18		9		—		781
Below 70%	4,115		3,418		3,024		1,128		153		66		26		11,930
Total	$	4,247	$	3,820	$	3,277	$	1,165	$	171	$	78	$	26	$	12,784

Impaired mortgage loans were $1 million at December 31, 2016 and 2015. At December 31, 2016 and 2015, the Company had $28 million and $31 million in impaired loans without a related allowance, respectively.

At December 31, 2016, the Company had $28 million of investments in mortgage loans that have been non-income producing for the last 12 months. At December 31, 2015, the Company did not have any investments in mortgage loans that have been non-income producing for the last 12 months.

For the years ended December 31, 2016 and 2015, there were $156 million million $485 million of mortgage loans acquired, other than through direct origination.

Investments in Affiliates

Investments in affiliates consisted of an equity investment in MCF of $573 million and $540 million at December 31, 2016 and 2015, respectively.

23

NOTE 6 – INVESTMENTS (continued)

Other Investments

The components of Other investments at December 31, 2016 and 2015 were as follows (in millions):

	2016		2015
Limited partnerships and limited liability companies	$	536	$	544
Investment, at fair value, of consolidated    investment companies	212		68
Senior secured commercial loans	7		12
Derivatives	458		342
Real estate	53		53
Short-term investments	90		13
Securities purchased under agreement to resell	298		298
Other invested assets	101		117
Total other investments	$	1,755	$	1,447

Senior secured commercial loans are typically collateralized by all assets of the borrower. The Company’s senior secured commercial loans, before loss reserve, amounted to $7 million and $13 million at December 31, 2016 and 2015, respectively. There was no loss reserve at December 31, 2016 and $1 million of loss reserve at December 31 2015. Refer to Note 3 – Significant Accounting Policies for further details.

Unfunded commitments on limited partnerships, limited liability companies and senior secured commercial loans amounted to $257 million and $288 million at December 31, 2016 and 2015, respectively.

There was no accumulated depreciation on real estate for the years ended December 31, 2016 or 2015. There was no depreciation expense for the years ended December 31, 2016, 2015, or 2014.

There were no investments in real estate that have been non-income producing for the last 12 months at December 31, 2016 and 2015, respectively.

The Company receives tax credits related to its investments in qualified affordable housing projects. At December 31, 2016 and 2015, the Company had $128 million and $130 million, respectively, in qualified affordable housing investments, included in limited partnerships and limited liability companies above. The investment balance includes $32 million and $14 million of unfunded commitment as of December 31, 2016 and 2015, respectively. During 2016, 2015 and 2014, the Company recorded amortization on these investments under the proportional amortization method of $32 million, $40 million, and $40 million, respectively. The Company recorded tax credits and other tax benefits on these investments of $42 million, $49 million, and $56 million for 2016, 2015 and 2014, respectively. Both the amortization of the investments as well as the tax credits and tax benefits are recognized as a component of income tax expense (benefit).

24

NOTE 6 – INVESTMENTS (continued)

Variable Interest Entities

The following table presents the carrying value of assets and liabilities of all of the Company’s consolidated VIEs at December 31, 2016 and 2015 (in millions):

	2016						2015
Consolidated Statements of Financial Position Line Item	Managed VIEs		Other Consolidated VIEs		Total		Managed VIEs		Other Consolidated VIEs		Total
Other investments	$	204	$	45	$	249	$	—	$	—	$	—
Cash and cash equivalents	7		—		7		—		—		—
Investment income due and accrued	1		—		1		—		—		—
Other assets	—		—		—		—		46		46
Total assets	$	212	$	45	$	257	$	—	$	46	$	46
Debt	$	—	$	45	$	45	$	—	$	1	$	1
Other liabilities	55		—		55		—		—		—
Total liabilities	$	55	$	45	$	100	$	—	$	1	$	1

Managed VIEs

The Company invests in securities issued by certain collateralized and other investment structures. These structures are managed by the affiliates of the Company for which they earn a fee income. The Company analyzes these relationships to determine whether it has (1) the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and (2) the obligation to absorb losses or the right to receive benefits of the entity that could be potentially significant and thus determined to be the primary beneficiary. This analysis includes a review of the affiliates’ rights and responsibilities as investment manager, the fees received by the affiliates and other interest (if any) held by the affiliates and the Company. The Company is not required to provide, and has not provided, material financial or other support to any VIE for which the affiliates are the investment manager.

The Company has analyzed these relationships and determined that it is the primary beneficiary for certain collateralized and other investment structures and consolidates these entities. The assets of these VIEs are restricted and must be used to settle liabilities of the VIE. Creditors have no recourse against the Company in the event of default by these VIEs, nor does the Company have any significant implied or unfunded commitments to these VIEs.

The Company’s financial or other support provided to these VIEs is limited to its original investment. The Company’s maximum exposure to loss resulting from its relationship with the VIEs managed by its affiliates is limited to its investment in the structures. At December 31, 2016 and 2015, the Company’s maximum exposure to loss was $149 million and $26 million, respectively.    

Other Consolidated VIEs

At December 31, 2016 and 2015, the Company consolidated other VIEs for which it was determined to be the primary beneficiary. These VIEs consisted of certain entities where the affiliates of the Company are not the investment manager. Creditors have no recourse against the Company in the event of default by these VIEs. The Company’s maximum exposure to loss resulting from its relationship with these structures is limited to its investment. At December 31, 2016 and 2015, the Company’s maximum exposure to loss was $43 million and $44 million, respectively.

Unconsolidated VIEs

In the normal course of its activities, the Company invests in structured investments including VIEs for which it is not the primary beneficiary. These structured investments typically invest in fixed income investments that are managed by third-parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities. The Company’s maximum exposure to loss on these structured investments, both VIEs and non-VIEs, is limited

25

NOTE 6 – INVESTMENTS (continued)

to the amount of its investment. The Company has not provided financial or other support, other than its direct investment, to these structures. The Company has determined that it is not the primary beneficiary of these structures due to the fact that it does not have the power to direct the activities that significantly impact the VIEs’ economic performance. The Company classifies these investments as Fixed maturities – Available-for-sale and Securities, at fair value. The maximum exposure to loss associated with these investments was $28,850 million and $27,932 million at December 31, 2016 and 2015, respectively.

In the normal course of its activities, the Company invests in joint ventures, limited partnerships and limited liability companies. These investments include hedge funds, private equity funds and real estate related funds that may or may not be VIEs. The Company’s maximum exposure to loss on these investments, both VIEs and non-VIEs, is limited to the amount of its investment. The Company has determined that it is not the primary beneficiary of these structures because it does not have the power to direct the activities that significantly impact the entities economic performance. The Company classifies these investments as Other investments and its maximum exposure to loss associated with these entities was $536 million and $544 million at December 31, 2016 and 2015, respectively.

These investments are subject to ongoing review for impairment and for events that may cause management to reconsider whether or not it is the primary beneficiary. The Company has no additional economic interest in these structures in the form of derivatives, related guarantees, credit enhancement or similar instruments and obligations. Creditors have no recourse against the Company in the event of default. The Company has unfunded commitments in joint ventures, limited partnerships and limited liability companies which are discussed in the Other investments section above.

Restricted Assets and Special Deposits

Assets with a carrying value of $19 million and $9 million at December 31, 2016 and 2015, respectively, were on deposit with governmental authorities or trustees as required by certain state insurance laws and are included in Fixed maturities – Available-for-sale, at fair value. Refer to Note 15 – Commitments and Contingencies for additional discussion on assets pledged as collateral.

NOTE 7 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

The Company uses derivative instruments to manage interest rate, currency, and equity risk. These derivative instruments include foreign currency forwards, interest rate futures, interest rate and equity options, and interest rate, equity and foreign currency swaps. The Company does not engage in derivative instrument transactions for speculative purposes. Refer to Note 3 – Significant Accounting Policies for a discussion on the accounting for derivative instruments.

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

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, when the Company enters into OTC-cleared derivatives, it becomes subject to 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 arrangements with OTC-bilateral counterparties and adjusts transaction levels, when appropriate, to minimize risk. The Company’s policy is not to offset the fair value recognized for derivatives executed with the same OTC-bilateral counterparty under the same master netting agreements with the associated collateral.

26

NOTE 7 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

The following table presents recognized derivative instruments that are subject to enforceable master netting agreements at December 31, 2016 and 2015 (in millions):

	2016
	Gross amounts of recognized derivative instruments (1)			Gross amounts offset in the Statement of Financial Position		Gross amounts presented in the Statement of Financial Position			Gross amounts not offset in Statement of Financial Position			Cash collateral			Securities collateral			Net amounts of recognized derivative instruments
Assets	$	458		$	—	$	458		$	(37	)	$	(405	)	$	(10	)	$	6
Liabilities	$	(43	)	$	—	$	(43	)	$	37		$	3		$	—		$	(4	)
	2015
	Gross amounts of recognized derivative instruments (1)			Gross amounts offset in the Statement of Financial Position		Gross amounts presented in the Statement of Financial Position			Gross amounts not offset in Statement of Financial Position			Cash collateral			Securities collateral			Net amount of recognized derivative instruments
Assets	$	342		$	—	$	342		$	(28	)	$	(285	)	$	(29	)	$	—
Liabilities	$	(37	)	$	—	$	(37	)	$	28		$	9		$	—		$	—

⁽¹⁾ The gross amounts exclude investment income due and accrued and accrued investment expense on derivatives, which are included in Other assets and Other liabilities, respectively.

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 (“CSA’s”) 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 a few cases, these CSAs provide that the counterparties are not required to post collateral below a specified threshold; however the agreements governing these bilateral relationships also include credit contingent provisions whereby the threshold declines on a sliding scale with declines in the OTC-bilateral counterparties’ ratings. 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. If the credit contingent features had been triggered at December 31, 2016, 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.

27

NOTE 7 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

The following table presents the notional amount and gross fair 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 (excluding embedded derivatives) at December 31, 2016 and 2015 (in millions):

			2016						2015
			Fair Value (1)						Fair Value (1)
		Primary Risk Exposure	Notional Amount (2)		Asset		Liability		Notional Amount (2)		Asset		Liability
Derivatives Qualifying and Designated:
Cash Flow Hedges:
	Foreign currency swaps	Currency	$	68	$	13	$	—	$	144	$	31	$	—
	Interest rate swaps	Interest	12		4		—		37		7		—
	Total derivatives qualifying and designated		80		17		—		181		38		—
Derivatives Not Designated:
	Interest rate corridor options	Interest	7,505		6		—		9,262		5		—
	Equity options	Equity	652		53		—		779		51		—
	Equity swaps	Equity	93		5		2		73		—		3
	Foreign currency forwards	Currency	114		5		—		27		2		—
	Foreign currency swaps	Currency	2,287		325		7		1,870		194		4
	Futures	Interest	8		—		—		4		—		—
	Interest rate caps	Interest	19,242		12		—		24,972		15		—
	Interest rate swaps	Interest	3,662		29		34		3,706		31		31
	Swaptions	Interest	3,129		6		—		5,425		6		—
	Total derivatives not designated		36,692		441		43		46,118		304		38
Total derivatives			$	36,772	$	458	$	43	$	46,299	$	342	$	38

⁽¹⁾ The fair value amounts exclude investment income due and accrued, and accrued investment expense on derivatives, which are included in Other assets and Other liabilities, respectively. Refer to Note 9 – Fair Value Measurements for discussion of valuation methods for derivative instruments.

⁽²⁾ Notional amounts of derivative instruments generally do not represent the amounts exchanged between the parties engaged in the transaction.

Interest Rate Risk Management

The Company enters into various types of interest rate swaps and options 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 caps and swaptions are entered into by the Company to hedge the disintermediation risk of increasing interest rates on policyholder liability obligations. The Company will receive payments from counterparties should interest rates exceed an agreed upon strike price.

Interest rate (Treasury) futures are exchange traded contracts to buy or sell at a specific price at a future date. The Company enters into interest rate futures to manage the duration of the Company’s fixed income portfolio.

The Company enters into interest rate corridor options 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

28

NOTE 7 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

reached and payments will continue to increase under the option contracts until an agreed upon interest rate ceiling is reached.

Currency Risk Management

The primary purpose of the Company’s foreign currency hedging activities is to protect the values 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, 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 and enters into equity swaps to minimize exposure to the market risk associated with guarantees on certain underlying policyholder liabilities. Options require upfront fees paid at the time the agreements are entered into. Equity swaps are agreements between parties to exchange interest payments for an equity return.

Cash Flow Hedges

The following table presents the effects of derivatives in qualified cash flow hedging relationships, for the years ended December 31, 2016, 2015 and 2014 (in millions):

	Gain (loss) recognized in OCI (effective portion)(1)			Gain (loss) reclassified from AOCI into net income (effective portion)
				Net investment gains (losses)			Net investment income
2016
Foreign currency swaps	$	(7	)	$	9		$	1
Interest rate swaps	—			1			1
Total	$	(7	)	$	10		$	2
2015
Foreign currency swaps	$	24		$	—		$	2
Interest rate swaps	—			—			1
Total	$	24		$	—		$	3
2014
Foreign currency swaps	$	12		$	(4	)	$	1
Interest rate swaps	1			—			1
Total	$	13		$	(4	)	$	2

⁽¹⁾ The amount of gain or loss recognized in OCI is reported as a change in net unrealized investment gains or losses, a component of AOCI.

In 2016, 2015 and 2014, there were no instances in which the Company discontinued cash flow hedge accounting because the forecasted transactions, for which a hedge was entered into, did not occur on the anticipated date or in the additional time period permitted under the authoritative guidance on derivatives and hedging.

There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments.

29

NOTE 7 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

For derivatives which are designated for hedge accounting, there were no components of the derivative’s gain or loss excluded from the assessment of effectiveness for the years ended December 31, 2016, 2015 and 2014.

Presented below is a rollforward of the components of AOCI, before taxes, related to cash flow hedges (in millions):

	2016			2015			2014
Balance, beginning of year	$	34		$	13		$	(3	)
Gains deferred in AOCI on the effective      portion of cash flow hedges	(7		)	24			13
Losses (gains) reclassified to net income	(12		)	(3		)	3
Balance, end of year	$	15		$	34		$	13

At December 31, 2016, gains of $1 million on derivatives in AOCI were expected to be reclassified to earnings within the next 12 months.

Derivatives Not Designated

The Company has derivative instruments that are not designated or do not qualify for hedge accounting treatment.

The following table provides gains and losses on derivative instruments not designated for hedging accounting, which are included in Net investment gains or losses for the years ended December 31, 2016, 2015 and 2014 (in millions):

	2016			2015			2014
Derivative Type
Interest rate corridor options	$	—		$	(1	)	$	(1	)
Equity options	(13		)	(2		)	(10		)
Equity swaps	7			(4		)	3
Foreign currency forwards	5			3			3
Foreign currency swaps	144			165			74
Futures	—			—			(1		)
Interest rate caps	(3		)	(10		)	(6		)
Interest rate swaps	12			36			246
Swaptions	(1		)	(5		)	(25		)
Total	$	151		$	182		$	283

Embedded Derivatives

The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. At December 31, 2016 and 2015, there were no embedded derivatives that could not be separated from their host contracts.

The following table presents the fair value of the Company’s embedded derivatives in host contracts at December 31, 2016 and 2015 (in millions):

	Consolidated Statements of Financial Position Line Item
		2016		2015
Other(1)	Other liabilities	$	3	$	2
Guaranteed minimum accumulation benefits(1)	Policyholders’ account balances	180		155
Total		$	183	$	157

⁽¹⁾ For further information on these embedded derivatives refer to Note 9 – Fair Value Measurements.

30

NOTE 7 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT (continued)

The following table presents the changes in fair value related to embedded derivatives in host contracts for the years ended December 31, 2016, 2015 and 2014 (in millions):

	2016		2015			2014
Net revenue from reinsurance	$	1	$	2		$	(1	)
Interest credited to policyholders’ account balances	25		(26		)	112

NOTE 8 – SEPARATE ACCOUNTS

Separate Accounts Registered with the SEC

The Company maintains separate accounts, which are registered with the SEC, for its variable deferred annuity and variable life insurance products with assets of $28,819 million and $26,868 million at December 31, 2016 and 2015, respectively. The assets of these separate accounts are comprised of investments in shares of the New York Life sponsored MainStay VP Funds Trust and other non-proprietary insurance-dedicated funds.

Separate Accounts Not Registered with the SEC

The Company also maintains separate accounts, which are not registered with the SEC, with assets of $1,988 million and $1,887 million at December 31, 2016 and 2015, respectively. The assets in these separate accounts are comprised of investments in MainStay VP Funds Trust, non-proprietary mutual funds and limited partnerships. The assets in these separate accounts are carried at fair value.

Refer to Note 12 – Policyholders’ Liabilities for information regarding separate accounts with contractual guarantees for minimum death benefits (“GMDB”), guaranteed minimum accumulation benefits (“GMAB”), enhanced beneficiary benefit (“EBB”) and guaranteed future income benefits (“GFIB”).

31

NOTE 9 – FAIR VALUE MEASUREMENTS

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. The Company’s assets and liabilities recorded at fair value, except certain assets for which the NAV per share is used as a practical expedient, are measured and classified in accordance with a fair value hierarchy consisting of three levels based on the observability of the inputs used in measuring the fair value. The level is determined based on the lowest level input that is significant to the fair value measurement.

The levels of the fair value hierarchy based on the inputs to the valuation are 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 assets or liabilities in active markets; 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.

Determination of Fair Value

The Company has an established and well-documented process for determining fair value of its financial instruments.

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 of 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 which go through this formal price challenge process.

32

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

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.

33

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

The following tables represent the balances of assets and liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 (in millions):

		2016
		Level 1		Level 2		Level 3		NAV as a Practical Expedient(3)		Total
Fixed maturities - available-for-sale
	U.S. Treasury	$	—	$	1,654	$	—	$	—	$	1,654
	U.S. government corporations and agencies	—		1,213		24		—		1,237
	U.S. agency mortgage-backed and asset-backed securities	—		15,552		2		—		15,554
	Foreign governments	—		357		6		—		363
	U.S. corporate	—		38,072		101		—		38,173
	Affiliated bonds	—		—		1,816		—		1,816
	Foreign corporate	—		10,566		2		—		10,568
	Non-agency residential mortgage-backed securities	—		983		6		—		989
	Non-agency commercial mortgage-backed securities	—		5,067		232		—		5,299
	Non-agency asset-backed securities	—		5,921		982		—		6,903
Total fixed maturities - available-for-sale		—		79,385		3,171		—		82,556
Fixed maturities - securities, at fair value
	U.S agency mortgage-backed and asset-backed securities	—		5		—		—		5
	U.S. corporate	—		326		—		—		326
	Foreign corporate	—		1,492		—		—		1,492
	Non-agency residential mortgage-backed securities	—		4		—		—		4
	Non-agency commercial mortgage-backed securities	—		41		2		—		43
	Non-agency asset-backed securities	—		51		2		—		53
Total fixed maturities - securities, at fair value		—		1,919		4		—		1,923
Equity securities - available-for-sale
	Common stock	—		—		19		—		19
	Non-redeemable preferred stock	—		1		14		—		15
Total equity securities - available-for-sale		—		1		33		—		34
Equity securities - securities, at fair value
	Common stock	559		—		2		—		561
	Mutual funds	359		—		—		5		364
Total equity securities - securities, at fair value		918		—		2		5		925
Derivative assets		—		429		29		—		458
Securities purchased under agreements to resell		—		298		—		—		298
Investments, at fair value of consolidated
investment companies		181		31		—		—		212
Other invested assets		—		15		—		—		15
Cash equivalents		119		1,671		—		—		1,790
Short-term investments		—		90		—		—		90
Separate account assets		30,444		—		—		363		30,807
Total assets accounted for at fair value     on a recurring basis		$	31,662	$	83,839	$	3,239	$	368	$	119,108
Policyholders’ account balances (1)		$	—	$	—	$	180	$	—	$	180
Derivative liabilities		—		41		2		—		43
Total liabilities accounted for at fair value     on a recurring basis (2)		$	—	$	41	$	182	$	—	$	223

⁽¹⁾ Policyholders’ account balances represent embedded derivatives bifurcated from hostcontracts.

⁽²⁾ Separate account liabilities are not included above, as they are reported at contract value in accordance with the Company’s policy (refer to Note 3 – Significant Accounting Policies).

⁽³⁾ The fair value amounts presented in the category are intended to permit reconciliation of the total assets in this table to the amounts presented in the statements of financial position.

34

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

		2015
		Level 1		Level 2		Level 3		NAV as a Practical Expedient(3)		Total
Fixed maturities - available-for-sale
	U.S. Treasury	$	—	$	1,126	$	—	$	—	$	1,126
	U.S. government corporations and agencies	—		1,194		24		—		1,218
	U.S. agency mortgage-backed and asset-backed securities	—		14,161		2		—		14,163
	Foreign governments	—		391		7		—		398
	U.S. corporate	—		35,434		107		—		35,541
	Affiliated bonds	—		—		1,707		—		1,707
	Foreign corporate	—		10,701		—		—		10,701
	Non-agency residential mortgage-backed securities	—		1,263		9		—		1,272
	Non-agency commercial mortgage-backed securities	—		4,469		415		—		4,884
	Non-agency asset-backed securities	—		5,309		841		—		6,150
Total fixed maturities - available-for-sale		—		74,048		3,112		—		77,160
Fixed maturities - securities, at fair value
	U.S. agency mortgage-backed and asset-backed securities	—		5		—		—		5
	U.S. corporate	—		172		—		—		172
	Foreign corporate	—		1,195		—		—		1,195
	Non-agency residential mortgage-backed securities	—		7		—		—		7
	Non-agency commercial mortgage-backed securities	—		47		2		—		49
	Non-agency asset-backed securities	—		33		3		—		36
Total fixed maturities - securities, at fair value		—		1,459		5		—		1,464
Equity securities - available-for-sale
	Common stock	8		—		26		—		34
	Non-redeemable preferred stock	—		1		5		—		6
Total equity securities - available-for-sale		8		1		31		—		40
Equity securities - securities, at fair value
	Common stock	427		—		—		—		427
	Mutual funds	71		—		3		—		74
Total equity securities - securities, at fair value		498		—		3		—		501
Derivative assets		—		342		—		—		342
Securities purchased under agreements to resell		—		298		—		—		298
Other invested assets		—		80		—		—		80
Cash equivalents		9		2,243		—		—		2,252
Short-term investments		—		13		—		—		13
Separate account assets		28,325		—		—		430		28,755
Total assets accounted for at fair value     on a recurring basis		$	28,840	$	78,484	$	3,151	$	430	$	110,905
Policyholders’ account balances (1)		$	—	$	—	$	155	$	—	$	155
Derivative liabilities		—		34		3		—		37
Total liabilities accounted for at fair value     on a recurring basis (2)		$	—	$	34	$	158	$	—	$	192

⁽¹⁾ Policyholders’ account balances represent embedded derivatives bifurcated from hostcontracts.

⁽²⁾ Separate account liabilities are not included above, as they are reported at contract value in accordance with the Company’s policy (refer to Note 3 – Significant Accounting Policies).

⁽³⁾ The fair value amounts presented in the category are intended to permit reconciliation of the total assets in this table to the amounts presented in the statements of financial position.

35

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

The following represents a summary of significant valuation techniques for assets and liabilities used to determine fair value, as well as the general classification of such instruments in the valuation hierarchy.

Fixed maturities available-for-sale and Securities at fair value

Fixed maturity securities priced using a pricing service are generally classified as Level 2. The pricing service generally uses a discounted cash flow model or market approach to determine fair value on public securities. 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 matrix-based pricing methodology, which uses spreads derived from third-party benchmark bond indices. Specifically, the Barclays Credit 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 recognizable, reliable and well regarded benchmarks by participants in the financial industry, which represents the broader U.S. public bond markets.

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.

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.

The valuation techniques for most Level 3 fixed maturity securities 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.

Equity securities

Equity securities valued using unadjusted quoted prices in active markets that are readily and regularly available are classified as Level 1. Those securities valued using a market approach in which market quotes are available but are not considered actively traded are classified as Level 2. Securities priced through an internal valuation where significant inputs are deemed to be unobservable, which includes securities of a government organization, are classified as Level 3.

36

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

Derivative assets and liabilities

The fair value of derivative instruments is generally derived using valuation models, except for derivatives, which are either exchange-traded, or the fair value is derived using broker quotations. 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, non-performance risk and other factors. Exchange-traded derivatives are valued using quoted prices in an active market and are classified as Level 1. OTC derivatives that trade in liquid markets, such as currency forwards, swaps and options, where model inputs are observable for substantially the full term, are classified as Level 2. Derivatives that are valued based upon models with 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.

When appropriate, valuations of OTC-bilateral derivatives are adjusted for non-performance risk. The Company uses default estimates implied by CDS spreads on senior obligations of the counterparty in order to provide an objective basis for such estimates. When in a liability position, the Company uses its own medium term note spread to estimate the default rate. The non-performance risk adjustment is applied only to the uncollateralized portion of the OTC-bilateral derivative assets and liabilities. OTC-bilateral derivative contracts are executed under master netting agreements with counterparties with a CSA, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels. These agreements protect the interests of the Company and its counterparties should either party suffer a credit-rating deterioration. The vast majority of the Company’s derivative agreements are with highly rated major international financial institutions.

Securities purchased under agreements to resell

Due to the short-term nature (generally one month) of this investment, the asset’s carrying value approximates fair value. These investments are classified as Level 2.

Other invested assets

Level 2 assets represent surplus note investments, priced by a third-party pricing service, where the inputs to the valuation are deemed to be observable. Level 3 assets represent residual interests of securitizations, priced by a third-party pricing service, where inputs to the valuation are deemed to be unobservable.

Cash equivalents

These include money market funds, treasury bills, commercial paper and other highly liquid instruments. The highly liquid instruments are classified as Level 1. All other investments are classified as Level 2, since due to their short term nature, amortized cost is used as the best estimate of fair value.

Short term investments

For short term investments, amortized cost is used as the best estimate of fair value, and are classified as Level 2.

Separate account assets

Assets within the separate account are primarily invested in equities and fixed maturities. The fair value of investments in the separate accounts is calculated using the same procedures used for equities and fixed maturities in the general account. The separate accounts also invest in limited partnerships and hedge funds. These investments are valued based on the latest net asset value (NAV) using NAV as a practical expedient.

37

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

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):

		2016
Category of Investment	Investment Strategy	Fair Value Determined Using NAV		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Hedge Fund	Multi-strategy	$	337	$	—	Monthly, Quarterly, Semi-annual, Annual	180 days or less
Hedge Fund	Sector Investing	$	24	$	—	Monthly	30 days
Hedge Fund	Long/Short Equity	$	2	$	—	Monthly	30 days
Mutual Funds	Global Allocation	$	5	$	—	Weekly	5 days (Assets subject to lock up periods)
		2015
Category of Investment	Investment Strategy	Fair Value Determined Using NAV		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Hedge fund	Multi-strategy	$	273	$	—	Quarterly, Semi-annual, Annual	More that 90 days
Hedge fund	Multi-strategy	$	157	$	—	Quarterly, Monthly	90 days or less

Policyholders’ account balances

Policyholders’ account balances carried at fair value consist of embedded derivatives bifurcated from the host contracts, which represent the embedded derivatives for GMAB contracts.

The fair values of GMAB liabilities are equal to the present value of future expected payments to customers less the present value of assessed or imputed rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various policyholder behavior assumptions. The expected cash flows are discounted using the treasury rate, plus a spread based upon the Company’s medium term notes. The spread reflects the market’s perception of the Company’s non-performance risk. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally developed models. Significant inputs to these models include capital market assumptions, such as interest rate, equity market and implied volatility assumptions, as well as various policyholder behavior assumptions that are actuarially determined, including lapse rates, benefit utilization rates, mortality rates and withdrawal rates. These assumptions are reviewed at least annually, and updated based upon historical experience. Since many of the assumptions utilized are unobservable and are considered to be significant inputs to the liability valuation, the liability included in policyholders’ account balances has been classified as Level 3.

38

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

Level 3 Assets and Liabilities by Price Source

The following tables present the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources at December 31, 2016 and 2015 (in millions):

	2016
	Internal (1)		External (2)		Total
Fixed maturities - available-for-sale
U.S. government corporations and agencies	$	—	$	24	$	24
U.S. agency mortgage-backed and asset-backed securities	—		2		2
Foreign governments	—		6		6
U.S. corporate	49		52		101
Affiliated bonds	1,816		—		1,816
Foreign corporate	—		2		2
Non-agency residential mortgage-backed securities	—		6		6
Non-agency commercial mortgage-backed securities	123		109		232
Non-agency asset-backed securities	168		814		982
Total fixed maturities - available-for-sale	2,156		1,015		3,171
Fixed maturities - securities, at fair value
Non-agency commercial mortgage-backed securities	—		2		2
Non-agency asset-backed securities	—		2		2
Total fixed maturities - securities, at fair value	—		4		4
Equity securities
Common stock	20		1		21
Non-redeemable preferred stock	14		—		14
Total equity securities	34		1		35
Derivative assets	—		29		29
Total assets accounted for at fair value     on a recurring basis	$	2,190	$	1,049	$	3,239
Policyholders’ account balances	$	180	$	—	$	180
Derivative liabilities	—		2		2
Total liabilities accounted for at fair value     on a recurring basis	$	180	$	2	$	182

⁽¹⁾ Represents valuations reflecting both internally-derived and market inputs, as well as third-party pricing information, where pricing inputs are deemed to be unobservable.

⁽²⁾ Primarily represents independent non-binding broker quotes, where pricing inputs are not readily available.

39

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	2015
	Internal (1)		External (2)		Total
Fixed maturities - available-for-sale
U.S. government corporations and agencies	$	—	$	24	$	24
U.S. agency mortgage-backed and asset-backed securities	—		2		2
Foreign governments	—		7		7
U.S. corporate	20		87		107
Affiliated bonds	1,707		—		1,707
Non-agency residential mortgage-backed securities	—		9		9
Non-agency commercial mortgage-backed securities	82		333		415
Non-agency asset-backed securities	81		760		841
Total fixed maturities - available-for-sale	1,890		1,222		3,112
Fixed maturities - securities, at fair value
Non-agency commercial mortgage-backed securities	—		2		2
Non-agency asset-backed securities	—		3		3
Total fixed maturities - securities, at fair value	—		5		5
Equity securities
Common stock	26		—		26
Non-redeemable preferred stock	5		—		5
Mutual fund	—		3		3
Total equity securities	31		3		34
Total assets accounted for at fair value     on a recurring basis	$	1,921	$	1,230	$	3,151
Policyholders’ account balances	$	155	$	—	$	155
Derivative liabilities	—		3		3
Total liabilities accounted for at fair value     on a recurring basis	$	155	$	3	$	158

⁽¹⁾ Represents valuations reflecting both internally-derived and market inputs, as well as third-party pricing information, where pricing inputs that are deemed to be unobservable.

⁽²⁾ Primarily represents independent non-binding broker quotes, where pricing inputs are not readily available.

40

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

Quantitative Information Regarding Internally - Priced Level 3 Assets and Liabilities

The following tables present quantitative information on significant internally priced Level 3 assets and liabilities at December 31, 2016 and 2015 (in millions):

	2016
	Fair Value		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Assets:
U.S. corporate	$	49	Discounted Cash Flow	Discount Rate	2.2% - 13.8%			(10%)
Affiliated bonds	$	1,816	Cost
Non-agency asset-backed securities	$	168	Discounted Cash Flow	Discount Rate	3.5% - 10.4%			(6.5%)
Non-agency commercial mortgage-backed securities	$	123	Discounted Cash Flow	Discount Rate	3.1% - 12.0%			(3.9%)
Equity securities	$	33	FHLB of Pittsburgh Capital Plan	Cost
			Market Comparable	Price to Book Multiple	0.62x
			Market Comparable	EBITA Multiple	5.6x - 26.1x
Liabilities:
Policyholders’ account balances	$	180	Discounted Cash Flow	Discount Rate	1.5	%	-	7.9%
			(GMAB)	Equity Returns	1.5	%	-	7.3%
				Equity Volatility Curve	17.5	%	-	62.1%
				Lapse Rate	1.0	%	-	32.0%
				Mortality Rate	0.1	%	-	50.0%
				Utilization Rate	—	%	-	100.0%
				Withdrawal Rate	2.5	%	-	8.3%

41

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	2015
	Fair Value		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Assets:
U.S. corporate	$	20	Discounted Cash Flow	Discount Rate	2.3% - 7.2% (3.4%)
Affiliated bonds	$	1,707	Cost
Non-agency asset-backed securities	$	81	Discounted Cash Flow	Discount Rate	3.8% - 10.8% (8.7%)
Non-agency commercial mortgage-backed securities	$	82	Discounted Cash Flow	Discount Rate	3.0% - 12.0% (3.1%)
Equity securities	$	31	FHLB of Pittsburgh Capital Plan	Price to Book Multiple	.7X
Liabilities:
Policyholders’ account balances	$	155	Discounted Cash Flow (GMAB)	Discount Rate	1.3% - 11.2%
				Equity Returns	0.8% - 10.8%
				Equity Volatility Curve	18.4% - 39.9%
				Lapse Rate	1.5% - 21.0%
				Mortality Rate	0.1% - 33.4%
				Utilization Rate	10.0% - 100%
				Withdrawal Rate	2.5% - 7.2%

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.

U.S. corporate securities

Most corporate securities are valued using a discounted cash flow analysis based on the expected cash flows of each security. The most significant unobservable input to the valuation of these securities is the discount rate, as it usually includes spread adjustments. Significant spread widening would decrease the value of these securities. The opposite effect would occur if spreads tightened significantly. Default rates are also a component of the valuation. If expected default rates on these securities significantly increase, the fair value will decrease, with the opposite being true for significant decreases in default rates.

Affiliated bonds

This security relates to an affiliated bond with Madison Capital Funding which was acquired at December 31, 2016 and therefore cost approximates fair value. The valuation of this bond in the future may include unobservable inputs and is therefore classified as Level 3.

Non-agency commercial mortgage-backed and asset-backed securities

These securities are mainly valued using discounted cash flow models. Significant spread widening, spread tightening and increases and decreases in default rates will have the same impact on the fair values of these securities as described above under U.S. corporate securities. Significant increases in loss severity assumptions will decrease the estimated fair value of these securities, with the opposite being true for decreases in expected loss severities.

42

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

Equity securities

The equity securities included in the table above mostly relate to the Company’s holdings in the Federal Home Loan Bank of Pittsburgh ( the “FHLB of Pittsburgh”) stock, refer to Note 12 - Debt. 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 a visible market for the FHLB of Pittsburgh stock, these securities have been classified as Level 3.

Policyholders’ account balances

Policyholders’ account balances consist of embedded derivatives bifurcated from host contracts, which represent the embedded derivatives for GMAB contracts.

The fair values of GMAB liabilities are equal to the present value of future expected payments to customers, less the present value of assessed rider fees attributable to the embedded derivative feature. Generally, higher (lower) equity returns will result in a lower (higher) fair value of the liability, while higher (lower) implied volatility assumptions will result in a higher (lower) fair value of the liability.

Transfers between Levels

Transfers between levels may occur as a result of 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. The Company’s policy is to assume the transfer occurs at the beginning of the period.

Transfers between Levels 1 and 2

Periodically, the Company has transfers between Level 1 and Level 2 assets and liabilities.

Transfers between Levels 1 and 2 were not significant during the 12 months ended December 31, 2016 and 2015.

Transfers into and out of Level 3

The Company’s basis for transferring assets and liabilities into and/or out of Level 3 is based on the changes in the observability of data.

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

During the years ended December 31, 2016 and 2015, the Company transferred $228 million and $38 million, respectively, of securities into Level 3 consisting of fixed maturities available-for-sale securities and separate account assets in 2016 and 2015. The transfers into Level 3 related to fixed maturities available-for-sale securities were primarily due to unobservable inputs utilized within valuation methodologies and the use of broker quotes (that could not be validated) when previously, information from third-party pricing services (that could be validated) was utilized. For the separate account assets, transfers into Level 3 are related to limited partnership investments that are restricted with respect to transfers or withdrawals.

Transfers out of Level 3 of $526 million and $540 million during the years ended December 31, 2016, and 2015, respectively, were primarily due to significant increases in market activity, or one or more significant input(s) becoming observable, or a change in the valuation technique for fixed maturities available-for-sale, equity securities available-for-sale and other invested assets in 2016 and 2015.

43

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

The following tables present the changes in fair value of all Level 3 assets and liabilities for the years ended December 31, 2016, 2015 and 2014 (in millions):

	U.S. government corporations and agencies		U.S. agency mortgage-backed and asset-backed			Foreign governments			U.S. corporate			Affiliated bonds
Fair Value, December 31, 2013	$	24	$	111		$	8		$	249		$	—
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—		—			—			1			—
Net investment income(1)	—		—			—			—			—
Other comprehensive loss	—		—			—			(1		)	—
Purchases	—		10			—			71			—
Sales	—		(50		)	—			(8		)	—
Settlements	—		—			—			(37		)	—
Transfers into Level 3(2)	—		—			—			45			—
Transfers out of Level 3(2)	—		(44		)	—			(54		)	—
Fair Value, December 31, 2014	24		27			8			266			—
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—		—			—			(1		)	—
Net investment income(1)	—		(1		)	—			—			—
Other comprehensive loss	—		—			—			3			1,707
Sales	—		(6		)	—			(15		)	—
Settlements	—		—			(1		)	(8		)	—
Transfers into Level 3(2)	—		—			—			3			—
Transfers out of Level 3(2)	—		(18		)	—			(141		)	—
Fair Value, December 31, 2015	24		2			7			107			1,707
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—		—			—			(16		)	—
Net investment income(1)	—		—			—			(1		)	—
Other comprehensive loss	—		—			—			10			36
Purchases	—		—			—			14			555
Sales	—		—			—			—			—
Issuances	—		—			—			(16		)	—
Settlements	—		—			(1		)	(34		)	(482		)
Transfers into Level 3(2)	—		—			—			84			—
Transfers out of Level 3(2)	—		—			—			(47		)	—
Fair Value, December 31, 2016	$	24	$	2		$	6		$	101		$	1,816

⁽¹⁾ Net investment income/loss includes amortization of discount and premium on fixed maturities.

⁽²⁾ Transfers into or out of Level 3 are reported at the value as of beginning of the period.

44

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	Foreign corporate			Non-agency residential mortgage-backed securities			Non-agency commercial mortgage-backed securities			Non-agency asset-backed securities			Total fixed maturities- available-for-sale
Fair Value, December 31, 2013	$	31		$	58		$	133		$	1,041		$	1,655
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			2			—			1			4
Net investment income(1)	—			—			—			1			1
Other comprehensive loss	(1		)	(1		)	5			21			23
Purchases	12			—			58			321			472
Sales	—			—			—			(8		)	(66		)
Settlements	(2		)	(43		)	(2		)	(154		)	(238		)
Transfers into Level 3(2)	1			—			—			9			55
Transfers out of Level 3(2)	—			—			1			(415		)	(512		)
Fair Value, December 31, 2014	41			16			195			817			1,394
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			1			(2		)	—			(1		)
Net investment income(1)	—			—			—			—			(1		)
Other comprehensive loss	—			(1		)	—			(7		)	(9		)
Purchases	—			—			233			446			2,389
Sales	—			(1		)	(1		)	—			(23		)
Settlements	(18		)	(6		)	(12		)	(90		)	(135		)
Transfers into Level 3(2)	—			—			2			33			38
Transfers out of Level 3(2)	(23		)	—			—			(358		)	(540		)
Fair Value, December 31, 2015	—			9			415			841			3,112
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			—			(1		)	(14		)	(31		)
Net investment income(1)	—			—			—			—			(1		)
Other comprehensive loss	—			—			(1		)	7			52
Purchases	2			(1		)	37			444			1,051
Sales	—			—			—			—			—
Issuances	—			—			—			—			(16		)
Settlements	—			(3		)	(3		)	(159		)	(682		)
Transfers into Level 3(2)	—			1			3			114			202
Transfers out of Level 3(2)	—			—			(218		)	(251		)	(516		)
Fair Value, December 31, 2016	$	2		$	6		$	232		$	982		$	3,171

⁽¹⁾ Net investment income/loss includes amortization of discount and premium on fixed maturities.

⁽²⁾ Transfers into or out of Level 3 are reported at the value as of beginning of the period.

45

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	Non-agency commercial mortgage-backed securities		Non-agency asset-backed securities			Total fixed maturities - securities, at fair value			Common stock			Non-redeemable preferred stock
Fair Value, December 31, 2013	$	—	$	6		$	6		$	3		$	—
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—		(2		)	(2		)	(1		)	—
Net investment income(1)	—		—			—			—			—
Other comprehensive loss	—		—			—			—			—
Purchase	2		—			2			—			2
Sales	—		—			—			—			—
Settlements	—		—			—			—			—
Transfers into Level 3(2)	—		—			—			—			—
Transfers (out of) Level 3(2)	—		—			—			—			—
Fair Value, December 31, 2014	2		4			6			2			2
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—		(1		)	(1		)	—			—
Net investment income(1)	—		—			—			—			—
Other comprehensive loss	—		—			—			(1		)	—
Purchases	—		—			—			26			3
Sales	—		—			—			(1		)	—
Settlements	—		—			—			—			—
Transfers into Level 3(2)	—		—			—			—			—
Transfers (out of) Level 3(2)	—		—			—			—			—
Fair Value, December 31, 2015	2		3			5			26			5
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—					—			—			—
Net investment income(1)	—		—			—			—			—
Other comprehensive loss	—		—			—			—			3
Purchases	—		2			2			2			6
Sales	—		—			—			—			—
Issuances	—		—			—			—			—
Settlements	—		(3		)	(3		)	—			—
Transfers into Level 3(2)	—		—			—			—			—
Transfers (out of) Level 3(2)	—		—			—			(7		)	—
Fair Value, December 31, 2016	$	2	$	2		$	4		$	21		$	14

⁽¹⁾ Net investment income/loss includes amortization of discount and premium on fixed maturities.

⁽²⁾ Transfers into or out of Level 3 are reported at the value as of beginning of the period.

46

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	Mutual fund			Total equity securities			Derivatives			Other invested assets		Amounts recoverable from reinsurers
Fair Value, December 31, 2013	$	—		$	3		$	3		$	—	$	1
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			(1		)	1			—		—
Net investment income(1)	—			—			—			—		—
Other comprehensive loss	—			—			—			—		(1		)
Purchases	—			2			—			—		—
Sales	—			—			—			—		—
Settlements	—			—			—			—		—
Transfers into Level 3(2)	—			—			—			—		—
Transfers (out of) Level 3(2)	—			—			—			—		—
Fair Value, December 31, 2014	—			4			4			—		—
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			—			(6		)	—		—
Net investment income(1)	—			—			—			—		—
Other comprehensive loss	—			(1		)	—			—		—
Purchases	3			32			2			—		—
Sales	—			(1		)	—			—		—
Settlements	—			—			—			—		—
Transfers into Level 3(2)	—			—			—			—		—
Transfers (out of) Level 3(2)	—			—			—			—		—
Fair Value, December 31, 2015	3			34			—			—		—
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			—						—		—
Net investment income(1)	—			—			—			—		—
Other comprehensive loss	—			3			—			—		—
Purchases	—			8			3			—		—
Sales	—			—			—			—		—
Issuances	—			—			—			—		—
Settlements	—			—			—			—		—
Transfers into Level 3(2)	—			—			26			—		—
Transfers (out of) Level 3(2)	(3		)	(10		)	—			—		—
Fair Value, December 31, 2016	$	—		$	35		$	29		$	—	$	—

⁽¹⁾ Net investment income/loss includes amortization of discount and premium on fixed maturities.

⁽²⁾ Transfers into or out of Level 3 are reported at the value as of beginning of the period.

47

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	Separate account assets			Total assets			Policyholders’ account balances			Derivative liabilities			Total liabilities
Fair Value, December 31, 2013	$	244		$	1,912		$	69		$	—		$	69
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	15			17			—			—			—
Net investment income(1)	2			3			—			—			—
Other comprehensive loss	—			22			—			—			—
Interest credited to policyholders’    account balances	—			—			80			—			80
Purchases	5			481			32			—			32
Sales	(7		)	(73		)	—			—			—
Settlements	—			(238		)	—			—			—
Transfers into Level 3(2)	1			56			—			—			—
Transfers (out of) Level 3(2)	—			(512		)	—			—			—
Fair Value, December 31, 2014	260			1,668			181			—			181
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			(8		)	—			3			3
Net investment income(1)	—			(1		)	(62		)	—			(62		)
Other comprehensive loss	—			(10		)	(2		)	—			(2		)
Interest credited to policyholders’ account balances	—			—			—			—			—
Purchases	—			2,423			—			—			—
Sales	—			(24		)	38			—			38
Settlements	—			(135		)	—			—			—
Transfers into Level 3(2)	—			38			—			—			—
Transfers (out of) Level 3(2)	(260		)	(800		)	—			—			—
Fair Value, December 31, 2015	—			3,151			155			3			158
Total gains (losses) (realized and unrealized):
Included in earnings
Net investment gains	—			(31		)	—			(1		)	(1		)
Net investment income(1)	—			(1		)	(14		)	—			(14		)
Other comprehensive loss	—			55			—			—			—
Interest credited to policyholders’ account balances	—			—			—			—			—
Purchases	—			1,064			40			—			40
Sales	—			—			—			—			—
Issuances	—			(16		)
Settlements	—			(685		)	(1		)	—			(1		)
Transfers into Level 3(2)	—			228			—			—			—
Transfers (out of) Level 3(2)	—			(526		)	—			—			—
Fair Value, December 31, 2016	$	—		$	3,239		$	180		$	2		$	182

⁽¹⁾ Net investment income/loss includes amortization of discount and premium on fixed maturities.

⁽²⁾ Transfers into or out of Level 3 are reported at the value as of beginning of the period.

48

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

The following tables include the unrealized gains or losses for the years ended December 31, 2016, 2015 and 2014 by category for Level 3 assets still held at December 31, 2016, 2015 and 2014, respectively (in millions):

	2016
	U.S. corporate			Bonds to subsidiaries and affiliates			Non-agency commercial mortgage-backed securities			Non-agency asset-backed residential securities			Total fixed maturities - available-for-sale
Earnings
Total gains (losses) (realized/unrealized)
included in earnings:
Net investment gains (losses)	$	(16	)	$	—		$	(1	)	$	(14	)	$	(31	)
Net investment income	(1		)	—			—			—			(1		)
Other comprehensive losses	11			36			(1		)	7			53
Total change in unrealized gains (losses)	$	(6	)	$	36		$	(2	)	$	(7	)	$	21
	Non-redeemable preferred stock			Total assets
Earnings
Total gains (losses) (realized/unrealized)
included in earnings:
Net investment losses	$	—		$	(31	)
Net investment income	—			(1		)
Other comprehensive losses	3			20
Total change in unrealized gains (losses)	$	3		$	24

There were no unrealized or realized gains or losses recorded for Level 3 liabilities held at December 31, 2016.

49

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	2015
	U.S. corporate			Non-agency residential mortgage-backed securities			Non-agency commercial mortgage-backed securities			Non-agency asset-backed securities			Total fixed maturities - available-for-sale
Earnings
Total gains (losses) (realized/unrealized)
included in earnings:
Net investment gains (losses)	$	—		$	1		$	(2	)	$	1		$	—
Net investment income	(1		)	—			—			—			(1		)
Other comprehensive losses	—			(2		)	—			(10		)	(12		)
Total change in unrealized gains (losses)	$	(1	)	$	(1	)	$	(2	)	$	(9	)	$	(13	)
	Non-agency asset-back securities			Total fixed maturities - securities, at fair value			Common stock			Total assets
Earnings
Total gains (losses) (realized/unrealized)
included in earnings:
Net investment losses	$	(2	)	$	(2	)	$	—		$	(2	)
Net investment income	—			—			—			(1		)
Other comprehensive losses	—			—			(1		)	(13		)
Total change in unrealized gains (losses)	$	(2	)	$	(2	)	$	(1	)	$	(16	)

There were no unrealized or realized gains or losses recorded for Level 3 liabilities held at December 31, 2015.

50

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

	2014
	U.S. agency mortgage-backed and asset-backed securities		Foreign corporate			U.S. corporate			Non-agency residential mortgage-backed securities			Non-agency commercial mortgage-backed securities
Earnings
Total gains (losses) (realized/unrealized)
included in earnings:
Net investment losses	$	—	$	—		$	(1	)	$	(1	)	$	—
Net investment income	—		—			—			—			—
Other comprehensive gains (losses)	1		(1		)	1			2			5
Total change in unrealized gains (losses)	$	1	$	(1	)	$	—		$	1		$	5
	Non-agency asset-backed securities		Total fixed maturities - available-for-sale			Non-agency asset-back securities			Total fixed maturities - securities, at fair value			Total assets
Earnings
Total gains (losses) (realized/unrealized)
included in earnings:
Net investment losses	$	—	$	(2	)	$	(1	)	$	(1	)	$	(3	)
Net investment income	1		1			—			—			1
Other comprehensive gains	22		30			—			—			30
Total change in unrealized gains (losses)	$	23	$	29		$	(1	)	$	(1	)	$	28

Non-recurring Fair Value Measurements

Assets and liabilities measured at fair value on a non-recurring basis include mortgage loans, which are described in detail below.

The following tables represent certain assets measured at estimated fair value during the years ended and still held at December 31, 2016 and 2015 (in millions):

	2016
	Carrying Value Prior to Impairment		Estimated Fair Value After Impairment
Mortgage loans	$	1	$	1
	2015
	Carrying Value Prior to Impairment		Estimated Fair Value After Impairment
Mortgage loans	$	1	$	1

The impaired mortgage loans presented above were written down to the estimated fair value of the collateral at the date the impairments were recognized and have been categorized as Level 3.

For a description of the Company’s valuation process and controls, refer to “Determination of Fair Value” section above.

51

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

Fair Value of Other Financial Instruments

Authoritative guidance related to financial instruments requires disclosure of fair value information of financial instruments, whether or not fair value is recognized in the Consolidated Statements of Financial Position, for which it is practicable to estimate fair value.

The carrying value and estimated fair value of financial instruments not otherwise disclosed in Notes 6, 12, 15 and 17 of Notes to the Consolidated Financial Statements at December 31, 2016 and 2015 are presented below (in millions):

	2016
	Carrying		Estimated Fair Value
	Value		Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	13,705	$	—	$	—	$	13,972	$	13,972
Senior secured commercial loans	7		—		—		7		7
Cash and cash equivalents	65		65		—		—		65
Other invested assets	207		—		53		182		235
Liabilities
Policyholders’ account balances - investment contracts	$	40,736	$	—	$	—	$	39,834	$	39,834
Collateral received on securities lending and    repurchase agreements	675		—		675		—		675
Collateral received on derivative transactions	398		—		398		—		398
Debt	1		—		1		—		1
	2015
	Carrying		Estimated Fair Value
	Value		Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	12,757	$	—	$	—	$	13,140	$	13,140
Senior secured commercial loans	12		—		—		11		11
Cash and cash equivalents	36		36		—		—		36
Other invested assets	225		—		8		247		255
Liabilities
Policyholders’ account balances - investment contracts	$	37,927	$	—	$	—	$	37,237	$	37,237
Collateral received on securities lending and    repurchase agreements	600		—		600		—		600
Collateral received on derivative transactions	264		—		264		—		264
Debt	1		—		1		—		1

Mortgage loans

The estimated fair value of mortgage loans is determined 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, which take into account property type, LTV and remaining term of each loan. The spread is a significant component of the pricing inputs.

52

NOTE 9 – FAIR VALUE MEASUREMENTS (continued)

Senior secured commercial loans

The estimated fair value for the loan portfolio is based on prevailing interest rate spreads in the market. Fair value is calculated by discounting future cash flows using prevailing interest rates on similar loans plus a spread adjustment. The spread is based on management’s judgment and assumptions and is significant to the valuation.

Cash and cash equivalents

The Company believes that due to the short-term nature of cash and cash equivalents, the fair value approximates carrying value.

Other invested assets

These assets include collateral posted on derivative transactions, third-party loans, and investments in qualified affordable housing projects. The fair value for derivative transactions approximates the carrying amount as they are short term in nature. The third-party loans are fair valued by discounting estimated cash flows for each loan at the prevailing interest rates on similar loans plus spread adjustment. The spread is based on management’s judgment and assumptions and is significant to the valuation. The fair value of investments in qualified affordable housing projects is based on a discounted cash flow calculation using a discount rate that is determined internally.

Policyholders’ account balances – investment contracts

These contracts include continued interest accounts, supplementary contracts without life contingencies and other deposit type contracts where account value approximates fair value. For fixed deferred annuities, fair value is based upon a stochastic valuation using risk neutral assumptions for financial variables and company specific assumptions for lapses, mortality and expenses. The cash flows are discounted using the yield on the Company’s medium term notes. For funding agreements backing medium term notes, fair values are based on available market prices for the notes. For annuity certain liabilities, fair values 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.

Debt

The fair value of the Company’s non-recourse debt and other debt approximates carrying value.

Collateral received on securities lending, repurchase agreements and derivative transactions

The carrying value of the liability approximates fair value since these borrowings are generally short-term in nature.

53

NOTE 10 – INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES

The components of Net investment income for the years ended December 31, 2016, 2015 and 2014 were as follows (in millions):

	2016			2015			2014
Fixed maturities	$	3,299		$	3,139		$	3,138
Equity securities	23			18			23
Mortgage loans	591			548			486
Policy loans	57			57			59
Other investments	34			129			133
Gross investment income	4,004			3,891			3,839
Investment expenses	(133		)	(124		)	(109		)
Net investment income	$	3,871		$	3,767		$	3,730

For the years ended December 31, 2016, 2015 and 2014, Net investment gains or losses were as follows (in millions):

	2016			2015			2014
Fixed maturities
Total OTTI losses	$	(119	)	$	(107	)	$	(30	)
Portion of OTTI losses recognized in OCI	14			13			1
Net OTTI losses on fixed maturities recognized in earnings	(105		)	(94		)	(29		)
All other (losses) gains	(23		)	(29		)	170
Fixed maturities, net	(128		)	(123		)	141
Equity securities	45			(20		)	11
Mortgage loans	(2		)	(3		)	4
Derivative instruments	159			182			279
Other	16			24			3
Net investment gains	$	90		$	60		$	438

The net investment losses on Securities, at fair value (both fixed maturities and equity securities) amounted to $25 million, $212 million and $17 million for the years ended December 31, 2016, 2015 and 2014, respectively. Of these losses, $5 million, $196 million and $31 million were related to changes in fair value.

Gains and losses for Securities at fair value are included in Net investment gains or losses.

Realized gains on sales of available-for-sale fixed maturities were $111 million, $193 million and $187 million for the years ended December 31, 2016, 2015 and 2014, respectively; and realized losses were $68 million, $32 million and $12 million, respectively. Realized gains on sales of available-for-sale equity securities were $10 million, $9 million and $65 million for the years ended December 31, 2016, 2015 and 2014, respectively; and realized losses were $0 million, $1 million and $46 million, respectively.

Losses from OTTI on equity securities (included in net investment gains or losses on equity securities above) were $0 million, less than $1 million and $1 million for the years ended December 31, 2016, 2015 and 2014, respectively.

54

NOTE 10 – INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES (continued)

The following tables present the Company’s gross unrealized losses and fair values for fixed maturities and

equity securities, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, at December 31, 2016 and 2015 (in millions):

					2016
	Less than 12 months				Greater than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Fixed maturities
U.S. Treasury	$	1,204	$	29	$	—	$	—	$	1,204	$	29
U.S. government corporations and agencies	252		13		—		—		252		13
U.S. agency mortgage-backed and asset-backed securities	5,109		213		306		20		5,415		233
Foreign governments	48		1		—		—		48		1
U.S. corporate	9,730		375		1,010		65		10,740		440
Foreign corporate	2,490		66		455		42		2,945		108
Non-agency residential mortgage-backed securities	96		2		275		14		371		16
Non-agency commercial mortgage-backed securities	1,824		59		266		8		2,090		67
Non-agency asset-backed securities	2,337		50		1,170		20		3,507		70
Total fixed maturities	$	23,090	$	808	$	3,482	$	169	$	26,572	$	977

					2015
	Less than 12 months				Greater than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Fixed maturities
U.S. Treasury	$	717	$	4	$	—	$	—	$	717	$	4
U.S. government corporations and agencies	58		1		35		1		93		2
U.S. agency mortgage-backed and asset-backed securities	1,690		45		1,053		48		2,743		93
Foreign governments	2		—		—		—		2		—
U.S. corporate	10,910		561		1,392		107		12,302		668
Foreign corporate	3,831		238		437		51		4,268		289
Non-agency residential mortgage-backed securities	169		5		349		19		518		24
Non-agency commercial mortgage-backed securities	1,873		25		163		2		2,036		27
Non-agency asset-backed securities	3,342		48		780		16		4,122		64
Total fixed maturities	22,592		927		4,209		244		26,801		1,171
Equity securities
Preferred stock	3		—		—		—		3		—
Total equity securities	3		—		—		—		3		—
Total	$	22,595	$	927	$	4,209	$	244	$	26,804	$	1,171

At December 31, 2016, the unrealized loss amount consisted of approximately 3,304 different fixed maturities and 1 equity security.

At December 31, 2016, unrealized losses on investment grade fixed maturities were $881 million or 90% of the Company’s total fixed maturities’ unrealized losses. Investment grade is defined as a security having a credit rating from the National Association of Insurance Commissioners (“NAIC”) of 1 or 2; a rating of Aaa, Aa, A or Baa from Moody’s; or a rating of

55

NOTE 10 – INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES (continued)

AAA, AA, A or BBB from Standard & Poor’s (“S&P”); or a comparable internal rating if an externally provided rating is not available. Unrealized losses on fixed maturities with a rating below investment grade represent $95 million or 10% of the Company’s total fixed maturities’ unrealized losses at December 31, 2016.

The amount of gross unrealized losses for fixed maturities where the fair value had declined by 20% or more of amortized cost totaled $50 million. The amount of time that each of these securities has continuously been 20% or more below the amortized cost consist of $29 million for 6 months or less, $0 million for greater than 6 months through 12 months and $21 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 take an impairment when it did not have the intent to sell the security or it was more likely than not that it would not be required to sell the security before its anticipated recovery.

Net Unrealized Investment Gains or Losses

Net unrealized investment gains or losses on available-for-sale investments are included in the Consolidated Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments for prior period net unrealized gains or losses that have been recognized as realized gains or losses during the current year and are included in Net investment gains or losses.

The components of Net unrealized investment gains or losses reported in AOCI at December 31, 2016, 2015 and 2014 are as follows (in millions):

	2016			2015			2014
Fixed maturities, available-for-sale - all other	$	1,838		$	1,690		$	3,784
Fixed maturities on which an OTTI loss has been recognized	58			22			34
Total fixed maturities	1,896			1,712			3,818
Equity securities, available-for-sale	2			8			15
Derivatives designated as cash flow hedges	15			34			13
Other investments	2			2			2
Subtotal	1,915			1,756			3,848
Amounts recognized for:
DAC	(321		)	(279		)	(727		)
Other assets (sales inducements)	(5		)	(7		)	(17		)
Policyholders’ account balances and future policy benefits	39			33			70
Deferred taxes	(569		)	(525		)	(1,110		)
Net unrealized gains on investments	$	1,059		$	978		$	2,064

56

NOTE 10 – INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES (continued)

The net unrealized gains or losses for the years ended December 31, 2016, 2015 and 2014, are presented separately for amounts related to fixed maturities on which an OTTI loss has been recognized and all other net unrealized investment gains or losses, are as follows (in millions):

Net unrealized investment gains and losses on fixed maturities on which an OTTI loss has been recognized
	Net Unrealized Gains (Losses) on Investments			DAC			Sales Inducements		Policyholders’ Account Balances and Future Policy Benefits			Deferred Income Tax Asset (Liability)			AOCI Related to Net Unrealized Investment Gains (Losses)
Balance, December 31, 2013	$	(11	)	$	13		$	—	$	(1	)	$	—		$	1
Net investment gains (losses) on investments      arising during the period	42			—			—		—			(14		)	28
Reclassification adjustment for (gains) losses      included in net income	1			—			—		—			*			1
Reclassification adjustment for OTTI losses      excluded from net income (1)	2			—			—		—			(1		)	1
Impact of net unrealized investment (gains)      losses on DAC and sale inducements	—			(14		)	*		—			5			(9		)
Impact of net unrealized investment (gains)      losses on policyholders’ account balances      and future policy benefits	—			—			—		1			(1		)	—
Balance, December 31, 2014	34			(1		)	—		—			(11		)	22
Net investment gains (losses) on investments arising during the period	(10		)	—			—		—			4			(6		)
Reclassification adjustment for (gains) losses included in net income	(2		)	—			—		—			1			(1		)
Reclassification adjustment for OTTI losses excluded from net income (1)	—			—			—		—			—			—
Impact of net unrealized investment (gains) losses on DAC and sale inducements	—			2			—		—			(1		)	1
Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits	—			—			—		—			—			—
Balance, December 31, 2015	22			1			—		—			(7		)	16
Net investment gains (losses) on investments arising during the period	50			—			—		—			(17		)	33
Reclassification adjustment for (gains) losses included in net income	(6		)	—			—		—			2			(4		)
Reclassification adjustment for OTTI losses excluded from net income (1)	(8		)	—			—		—			3			(5		)
Impact of net unrealized investment (gains) losses on DAC and sale inducements	—			(6		)	—		—			2			(4		)
Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits	—			—			—		—			—			—
Balance, December 31, 2016	$	58		$	(5	)	$	—	$	—		$	(17	)	$	36
*Amounts less than $1 million.

⁽¹⁾ Represents “transfers out” related to the portion of OTTI losses and/or changes in non-credit losses recognized during the period that were not recognized in earnings for securities with no prior OTTI loss.

57

NOTE 10 – INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES (continued)

All other net unrealized gains and losses in AOCI
	Net Unrealized Gains (Losses) on Investments(1)			DAC			Sales Inducements			Policyholders’ Account Balances and Future Policy Benefits			Deferred Income Tax Asset (Liability)			AOCI Related to Net Unrealized Investment Gains (Losses)
Balance, December 31, 2013	$	2,073		$	(620	)	$	(18	)	$	43		$	(517	)	$	961
Net investment gains (losses) on investments arising during the period	1,910			—			—			—			(650		)	1,260
Reclassification adjustment for (gains) losses included in net income	(167		)	—			—			—			40			(127		)
Reclassification adjustment for OTTI losses excluded from net income (2)	(2		)	—			—			—			1			(1		)
Impact of net unrealized investment (gains) losses on DAC and sale inducements	—			(106		)	1			(1		)	37			(69		)
Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits	—			—			—			28			(10		)	18
Balance, December 31, 2014	3,814			(726		)	(17		)	70			(1,099		)	2,042
Net investment gains (losses) on investments arising during the period	(2,146		)	—			—			—			750			(1,396		)
Reclassification adjustment for (gains) losses included in net income	66			—			—			—			(23		)	43
Reclassification adjustment for OTTI losses excluded from net income (2)	—			—			—			—			—			—
Impact of net unrealized investment (gains) losses on DAC and sale inducements	—			445			10			—			(159		)	296
Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits	—			—			—			(36		)	13			(23		)
Balance, December 31, 2015	1,734			(281		)	(7		)	34			(518		)	962
Net investment gains (losses) on investments arising during the period	193			—			—			—			(68		)	125
Reclassification adjustment for (gains) losses included in net income	(78		)	—			—			—			27			(51		)
Reclassification adjustment for OTTI losses excluded from net income (2)	8			—			—			—			(3		)	5
Impact of net unrealized investment (gains) losses on DAC and sale inducements	—			(35		)	2			—			12			(21		)
Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits	—			—			—			5			(2		)	3
Balance, December 31, 2016	$	1,857		$	(316	)	$	(5	)	$	39		$	(552	)	$	1,023

⁽¹⁾ Includes cash flow hedges. Refer to Note 7 – Derivative Instruments and Risk Management for information on cash flow hedges.

⁽²⁾ Represents “transfers out” related to the portion of OTTI losses and/or changes in non-credit losses recognized during the period that were not recognized in earnings for securities with no prior OTTI loss.

58

NOTE 10 – INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES (continued)

The following table provides a rollforward of the cumulative credit loss component of OTTI losses recognized in earnings for fixed maturities still held for which a portion of the loss was recognized in AOCI (in millions):

	2016			2015
Balance at beginning of year	$	158		$	175
Additions
Credit loss impairments recognized in the current period on securities previously not impaired	34			4
Additional credit loss impairments recognized in the current period on securities previously impaired	6			5
Reductions
Credit loss impairments previously recognized on securities which matured, paid down, prepaid or sold during the period	(16		)	(26		)
Balance at end of year	$	182		$	158

The balance of and changes in each component of AOCI attributable to the Company were as follows (in millions):

	Foreign CTA			Net Unrealized Investment Gains (Losses)(1)			Net Unrealized Gains (Losses) on OTTI Fixed Maturity Investments			Total AOCI
Balance, December 31, 2013	$	1		$	961		$	1		$	963
Change in net unrealized investment gains (losses),    net of related offsets, reclassification adjustments    and income taxes	—			1,081			21			1,102
Change in foreign currency translation adjustment,    net of income taxes	(1		)	—			—			(1		)
Balance, December 31, 2014	—			2,042			22			2,064
Change in net unrealized investment gains (losses), net of related offsets, reclassification adjustments and income taxes	—			(1,080		)	(6		)	(1,086		)
Change in foreign currency translation adjustment, net of income taxes	(3		)	—			—			(3		)
Balance, December 31, 2015	(3		)	962			16			975
Change in net unrealized investment gains (losses), net of related offsets, reclassification adjustments and income taxes	—			61			20			81
Balance, December 31, 2016	$	(3	)	$	1,023		$	36		$	1,056

⁽¹⁾ Includes cash flow hedges. Refer to Note 7 - Derivative Instruments and Risk Management for information on cash flow hedges.

59

NOTE 10 – INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES (continued)

The amounts reclassified out of AOCI⁽¹⁾ for the years ended December 31, 2016, 2015 and 2014 were as follows (in millions):

	2016			2015			2014			Affected Line Item in the Consolidated Statements of Operations
Net unrealized investment (gains) losses
(Gains)/ losses on cash flow hedges:
Interest rate swaps	$	(1	)	$	1		$	1		Net investment income
Interest rate swaps	(1		)							Net investment gains (losses)
Currency swaps	(1		)	2			1			Net investment income
Currency swaps	(10		)							Net investment gains (losses)
(Gains)/ losses on available-for-sale securities:
Impairment losses	(6		)	(2		)	(1		)	Net investment gains (losses)
All other	(65		)	66			(167		)	Net investment gains (losses)
	(84		)	67			(166		)	Total before tax
	(29		)	23			(40		)	Income tax benefit (expense)
Total reclassifications for the period	$	(55	)	$	44		$	(126	)	Net income

⁽¹⁾ Negative amounts indicate gains/benefits reclassified out of AOCI. Positive amounts indicate losses/costs reclassified out of AOCI.

NOTE 11 – RELATED PARTY TRANSACTIONS

The Company has significant transactions with New York Life and its affiliates. Because of these relationships, it is possible that the terms of the transactions are not the same as those that would result from transactions among wholly unrelated parties.

New York Life provides the Company with certain services and facilities including, but not limited to, the following: 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. The fees incurred associated with these services and facilities, amounted to $820 million, $823 million and $813 million for the years ended December 31, 2016, 2015 and 2014, respectively, and were reflected in Operating expenses and Net investment income.

The Company’s interests in commercial mortgage loans (and, in one instance, a single asset real estate owned property acquired through foreclosure (“REO Property”)) are held in the form of participations in mortgages originated or acquired by New York Life (and, in the case of the REO Property, a participation in the ownership of the REO Property (“REO Ownership Interest”)). During 2015, the Company’s REO Ownership Interest was purchased by New York Life. 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.

The Company has entered into investment advisory and administrative services agreements with NYLIM to provide investment advisory and administrative services to the Company. On March 31, 2014, NYLIM assigned its investment advisory rights and obligations under this agreement to NYL Investors LLC, a wholly owned subsidiary of New York Life. For the years ended December 31, 2016, 2015 and 2014, the total cost for these services amounted to $119 million, $110 million and $100 million, respectively, which is included in the cost of services billed by New York Life to the Company. These costs were included in Operating expenses.

60

NOTE 11 – RELATED PARTY TRANSACTIONS (continued)

NYLIM has an investment advisory 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 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. The Company recorded fee income from NYLIM of $34 million, $35 million and $35 million for the years ended December 31, 2016, 2015 and 2014, respectively, and was included in Fee-universal life and annuity policies.

NYLIM provides the Company with certain services and facilities including, but not limited to, the following: management and other support. 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. The Company incurred fees associated with the services and facilities in the amounts of $15 million, $33 million and $26 million for the years ended December 31, 2016, 2015 and 2014, respectively. Prior to 2014, NYLIM also provided information technology and infrastructure support which are now provided by New York Life.

The Company has a variable product distribution agreement with NYLIFE Distributors LLC (“Distributors”), an indirect wholly owned subsidiary of New York Life, granting Distributors the exclusive right to distribute and to be the underwriter and/or agent of the Company’s variable product policies. For the years ended December 31, 2016, 2015 and 2014, the Company received service fees of $39 million, $39 million and $36 million, respectively, under this agreement, in consideration for providing 12b-1 Plan services attributable to the variable products.

The Company has an agreement with NYLIFE Securities LLC (“Securities”), an indirect wholly owned subsidiary of New York Life, under which registered representatives of Securities solicit sales of multi-funded annuity contracts and variable life policies. For the years ended December 31, 2016, 2015 and 2014, the Company incurred commission expense to Securities’ registered representatives of $119 million, $139 million and $150 million, respectively.

On July 1, 2008, as amended on July 1, 2009, the Company entered into a service agreement with Securities, whereby 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, 2016, 2015 and 2014, the Company incurred an expense of $48 million, $51 million and $47 million, respectively.

The Company has an arrangement with New York Life whereby a policyholder may convert a New York Life term policy or term rider to a universal life policy issued by the Company, without any additional underwriting. As compensation for this arrangement, the Company received from New York Life $23 million, $41 million and $21 million for the years ended December 31, 2016, 2015 and 2014, respectively, and was included in Other income.

New York Life Capital Corporation (“NYLCC”), an indirect wholly owned subsidiary of New York Life, 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, 2016 and 2015, the Company had no outstanding loan balance to NYLCC. During 2016, 2015 and 2014, the Company had no interest expenses recorded by the Company in relation to this agreement.

The Company has a credit agreement with New York Life, dated September 30, 1993, as amended, whereby the Company may borrow up to $490 million from New York Life. During 2016, 2015 and 2014, the credit facility was not used, no interest was paid and there was no outstanding balance due.

In addition, the Company has a credit agreement with New York Life, dated April 1, 1999, as amended, wherein New York Life may borrow up to $490 million from the Company. During 2016, 2015 and 2014, the credit facility was not used, no interest was paid and there was no outstanding balance due.

Prior to December 31, 2015, the Company entered into a revolving loan agreement with MCF, which was a wholly owned subsidiary of NYL Investments (as amended from time to time, the “MCF Loan Agreement”). Under this agreement, the Company provided funding to MCF for lending and equity investment commitments entered into by MCF on or after January 1, 2010. The aggregate amount advanced by the Company to MCF under the MCF Loan Agreement, when aggregated with all other funding provided to or on behalf of MCF by the Company, could not exceed 2.75% of the Company’s statutory cash and invested assets as stated on the Company’s most recent quarterly statement. During 2015 and 2014, the Company received interest payments from MCF totaling $100 million and $94 million, respectively, which are included in Net

61

NOTE 11 – RELATED PARTY TRANSACTIONS (continued)

investment income. All outstanding advances made to MCF under the MCF Loan Agreement, together with unpaid interest or accrued return thereon was due in full on July 1, 2025. At December 31, 2015, all outstanding advances made to MCF under the MCF Loan Agreement, together with unpaid interest or accrued return thereon, were paid in full and the agreement was terminated.

On December 31, 2015, the Company entered into a note funding agreement with MCF and New York Life (the “MCF Note Agreement”) and acquired a variable funding note issued by MCF thereunder (the “Note”). The Note, which is reported as a bond, had outstanding balances for the Company of $1,780 million and $1,707 million at December 31, 2016 and 2015, respectively, and were reported in Fixed maturities, available-for-sale. 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 $4,700 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. During 2016, the Company received interest payments from MCF totaling $56 million. On December 30, 2016, MCF paid a dividend of $56 million to the Company.

The Company has purchased from MCF participations in collateralized loans to third-parties underwritten by MCF. Under the participation agreements, the Company assumes the performance risk on these loans with no recourse against MCF. In 2016 and 2015, the Company did not purchase any new loans. At December 31, 2016, the Company held loans with an outstanding balance of $7 million and has commitments to fund additional amounts on these existing loans of $2 million. At December 31, 2015, the Company held loans with an outstanding balance of $12 million and had commitments to fund additional amounts on these existing loans of $3 million. These loans were reported in Other investments.

To satisfy its obligations under structured settlement 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 range from 3.33% to 7.81%. The Company has directed New York Life to make the payments under the annuity contracts directly to the payees under the structured settlement agreements. At December 31, 2016 and 2015, the carrying value of the Interest in annuity contracts and the Obligations under structured settlement agreements amounted to $6,808 million and $6,472 million, respectively.

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 was 5.84% for 2016. 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, 2016 and 2015, the policyholder reserves related to these contracts amounted to $160 million and were included in liabilities of Future policy benefits.

The Company has issued 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 basis as policies sold to unrelated customers. At December 31, 2016 and 2015, the policyholder reserves balances for these policies amounted to $3,725 million and $3,588 million, respectively, and were included in liabilities of Policyholders’ account balances and Separate account liabilities.

The Company has also issued various COLI policies to 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, 2016 and 2015, the policyholder liability balances for these policies amounted to $364 million and $354 million, respectively, and were included in Policyholders’ account balances and Separate account liabilities.

In connection with the 2012 acquisition of an office building by REEP-OFC Westory DC LLC, an indirect 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 mortgage loan is interest-only throughout the term and all outstanding principal shall be due and payable on August 10, 2022. For the years ended December 31, 2016, 2015 and 2014, interest earned amounted to $3 million.

In connection with a $150 million acquisition of a fee estate containing an office building and related improvements and encumbered by a ground lease 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 sets forth the terms that

62

NOTE 11 – RELATED PARTY TRANSACTIONS (continued)

will govern, in part, each entity’s interest in the property. For the years ended December 31, 2016, 2015 and 2014, income earned amounted to $3 million.

Effective December 31, 2004, the Company entered into a reinsurance agreement with New York Life. Refer to Note 14 – Reinsurance for more details.

The Company has an over-retention agreement with New York Life. Refer to Note 14 – Reinsurance for more details.

At December 31, 2016 and 2015, the Company recorded amounts payable to parent and affiliates of $239 million and $250 million, respectively, and is included in Other liabilities. At December 31, 2016 and 2015, the Company recorded amounts due from parent and affiliates of $33 million and $35 million, respectively, and is included in Other assets. The terms of the underlying agreements generally require that these amounts be settled in cash within 90 days.

63

NOTE 12 – POLICYHOLDERS’ LIABILITIES

Policyholders’ Account Balances

Policyholders’ account balances at December 31, 2016 and 2015 were as follows (in millions):

	2016		2015
Deferred annuities	$	43,241	$	40,457
Universal life contracts	29,425		28,353
Other	1,353		1,196
Total policyholders’ account balances	$	74,019	$	70,006

Policyholders’ account balances on the above contracts are equal to cumulative deposits and interest credited, less withdrawals and mortality and expense charges, where applicable.

The following table highlights the interest rate assumptions generally utilized in calculating Policyholders’ account balances, as well as certain withdrawal characteristics associated with these accounts at December 31, 2016:

Product	Interest Rate	Withdrawal/Surrender Charges
Deferred annuities	0.05% to 10.00%	Surrender charges 0% to 10% for up to 10 years
Universal life contracts	2.75% to 8.00%	Various up to 19 years
Annuities certain	0.05% to 5.00%	No surrender or withdrawal charges
Supplementary contracts without life contingencies	1.00% to 3.50%	No surrender or withdrawal charges

Less than 1% of policyholders’ account balances have interest crediting rates of 6% and greater.

Future Policy Benefits

Future policy benefits at December 31, 2016 and 2015 were as follows (in millions):    

	2016		2015
Life insurance:
Taiwan business - 100% coinsured	$	1,320	$	1,236
Other life insurance	262		270
Total life insurance	1,582		1,506
Individual and group payout annuities	18,629		16,782
Other contract liabilities	81		92
Total future policy benefits	$	20,292	$	18,380

64

NOTE 12 – POLICYHOLDERS’ LIABILITIES (continued)

The following table highlights the key assumptions generally utilized in the calculation of liabilities for future policy benefits at December 31, 2016:

Product	Mortality	Interest Rate	Estimation Method
Individual and group payout annuities	Based upon best estimates at time of policy issuance with PAD	2.53% to 8.75%	Present value of expected future payments at a rate expected at issue with PAD

Less than 1% of future policy benefits are based on an interest rate of 6% and greater.

Guaranteed Minimum Benefits

At December 31, 2016 and 2015, the Company had fixed and variable annuities with guarantees. The Company’s variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive. For guarantees of amounts in the event of death, the net amount at risk is defined as the current GMDB in excess of the current account balance at the balance sheet date. For contracts with the EBB optional feature, the net amount at risk is defined as the additional benefit amount that equals to a percentage of earnings in the contract, subject to certain maximums. For guarantees of accumulation balances, the net amount at risk is defined as GMAB minus the current account balance at the balance sheet date. For guarantees of income, the net amount at risk is defined as the minimum account balance in excess of the current account balance needed to fund the GFIB or guaranteed lifetime income withdrawal benefits (“GLWB”).

Variable Annuity Contracts – GMDB, EBB, GMAB and GFIB

The Company issues certain variable annuity contracts with a GMDB feature that guarantees either:

a) Return of deposits: the benefit is the greater of current account value or premiums paid (adjusted for

withdrawals)

b)Ratchet: the benefit is the greatest of the current account value, premiums paid (adjusted for withdrawals),

or the highest account value on any contractually specified anniversary up to contractually specified ages

(adjusted for withdrawals)

Contracts with an optional EBB feature provides an additional death benefit amount equal to a percentage of earnings in the contract at time of death, subject to certain maximums.

The Company issues certain variable annuity contracts with a GMAB feature that guarantees a minimum contract value equal to 100% or 150%, depending on the election of the amount of eligible premiums (adjusted for withdrawals) at the end of the guaranteed period. The minimum contract value can be reset after issue, and in such case, is set equal to the account value at the time of reset. The older contracts must be surrendered in order to receive the guaranteed amount.

The Company issues variable annuity contracts with a GFIB feature. This feature provides a minimum fixed annuity payment guarantee that will start on a date chosen by the policyholder.

65

NOTE 12 – POLICYHOLDERS’ LIABILITIES (continued)

The following tables provide the account value, net amount at risk and average attained age of contract holders at December 31, 2016 and 2015 for GMDBs, GMABs, EBBs and GFIBs ($ in millions):

	2016
	Return of Net Deposits						Ratchet				Income
In the Event of Death		Accumulation at Specified Date		Additional Death Benefits		In the Event of Death		In the Event of Death		Accumulation at Specified Date
(GMDB)		(GMAB)		(EBB)		(GMDB)		(GMAB)		(GFIB)
Account value	$	18,270	$	5,839	$	56	$	9,874	$	1,520	$	226
Net amount at risk	$	48	$	84	$	6	$	172	$	19	$	1
Average attained age of contract holders	55		58		68		61		62		60
	2015
	Return of Net Deposits						Ratchet				Income
In the Event of Death		Accumulation at Specified Date		Additional Death Benefits		In the Event of Death		In the Event of Death (1)		Accumulation at Specified Date
(GMDB)		(GMAB)		(EBB)		(GMDB)		(GMAB)		(GFIB)
Account value	$	16,184	$	5,256	$	58	$	10,102	$	1,519	$	213
Net amount at risk	$	139	$	186	$	6	$	518	$	47	$	5
Average attained age of contract holders	58		58		67		64		61		59

The following summarizes the general account liabilities for guarantees on variable contracts, included in liabilities for Future policy benefits for GMDB, EBB and GFIB, and liabilities for Policyholders’ account balances for GMAB (in millions):

	GMDB			GMAB			EBB		GFIB			Total
Balance at December 31, 2014	$	66		$	181		$	1	$	3		$	251
Incurred guarantee benefits	14			(26		)	1		3			(8		)
Paid guarantee benefits	(6		)	—			—		—			(6		)
Balance at December 31, 2015	74			155			2		6			237
Incurred guarantee benefits	(21		)	26			—		(2		)	3
Paid guarantee benefits	(7		)	(1		)	—		—			(8		)
Balance at December 31, 2016	$	46		$	180		$	2	$	4		$	232

For GMABs, incurred guaranteed minimum benefits incorporate all changes in fair value other than amounts resulting from paid guarantee benefits. GMABs are considered to be embedded derivatives and changes in fair value are recorded in Interest credited to Policyholders’ account balances (refer to Note 9 – Fair Value Measurements).

The GMDB and EBB liabilities are determined each period end by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments in accordance with applicable guidance. The Company regularly evaluates assumptions and adjusts the additional liability, with a related charge or credit recorded to Increase in liabilities for future policy benefits, if actual experience or other evidence suggests that earlier assumptions should be revised.

66

NOTE 12 – POLICYHOLDERS’ LIABILITIES (continued)

The following assumptions and methodology were used to determine the GMDB liability at December 31, 2016 and 2015, respectively:

• Data used was 1,000 stochastically generated investment performance scenarios.

• Mean investment performance assumptions ranged from 1.29% to 11.90% for 2016 and 1.13% to 9.10% for 2015.

• Volatility assumption ranged from 2.78% to 29.56% for 2016 and from 1.32% to 29.14% for 2015.

• Mortality was assumed to be 101.2% of an internally developed mortality table for 2016 and 100.5% for 2015.

• Lapse rates vary by contract type and duration and ranged from 1.00% to 30.00% , with an average of 5.10% for 2016 and from 1.00% to 32.00%, with an average of 5.16% for 2015.

• Partial withdrawal rates ranged from 2.50% to 11.70% for 2016 and from 2.5% to 11.4% for 2015.

• Discount rate was 4.50% and ranged from 4.29% to 7.61% for 2016 and 2015, respectively.

The GFIB liability is determined each period by estimating the expected guaranteed minimum income benefit amounts, less the benefit amounts funded by income benefit purchases, and recognizing the excess ratably over the accumulation period based on total expected assessments in accordance with applicable guidance. The Company regularly evaluates estimates and adjusts the liability balance, with a related charge or credit recorded to Increase in liabilities for future policy benefits, if actual experience or other evidence suggests that earlier assumptions should be revised.

The following assumptions and methodology were used to determine the GFIB liability at December 31, 2016 and 2015, respectively:

• Data used was 1,000 stochastically generated investment performance scenarios.

• Mean investment performance assumption ranged from 1.29% to 11.90% for 2016 and 1.13% to 9.10% for 2015.

• Volatility assumption ranged from 2.78% to 29.56% for 2016 and from 1.32% to 29.14% for 2015.

• Mortality assumption used to project future claims is the GLI 12(15) Mortality Table for 2016 and 2015.

• Lapse rates vary by contract type and duration and range from 1.00% to 20.00%, with an average of 2.32% for 2016 and from 1.50% to 21.00%, with an average of 1.65% for 2015.

• Partial withdrawal rates ranged from 3.20% to 8.00% for 2016 and 2015.

• Discount rate was 4.50% and ranged from 4.29% to 6.64% for 2016 and 2015, respectively.

67

NOTE 12 – POLICYHOLDERS’ LIABILITIES (continued)

The following table presents the aggregate fair value of assets at December 31, 2016 and 2015, by major investment fund options (including the general and separate account fund options), held by variable annuity products that are subject to GMDB, GMAB, GFIB, EBB and GLWB benefits and guarantees. Since variable contracts with GMDB guarantees may also offer GMAB, GFIB and EBB guarantees in each contract, the GMDB, GMAB, GFIB and EBB amounts listed are not mutually exclusive (in millions):

	2016
	GMDB		GMAB		EBB		GFIB
Separate account
Equity	$	13,722	$	3,923	$	30	$	134
Fixed income	6,222		1,926		14		70
Balanced	4,379		1,247		8		22
Total separate account	24,323		7,096		52		226
General account	3,821		263		4		—
Total	$	28,144	$	7,359	$	56	$	226
	2015
	GMDB		GMAB		EBB		GFIB
Separate account
Equity	$	12,842	$	3,643	$	32	$	127
Fixed income	5,496		1,634		13		68
Balanced	4,271		1,213		9		15
Total separate account	22,609		6,490		54		210
General account	3,677		285		4		3
Total	$	26,286	$	6,775	$	58	$	213

Fixed Annuity Contracts - GLWB

In 2014, the Company began offering fixed annuity contracts with a GLWB feature. The benefit must be elected at the time of contract issuance, and provides for a percentage of the contract holder’s benefit base, subject to certain restrictions, to be available for withdrawal for life as early as age 59 1/2. This benefit base grows for up to 10 years or until lifetime income payments commence, whichever comes first.

The GLWB liability is determined each period end by estimating the expected payments after the account balance is depleted and recognizing the excess ratably over the accumulation period based on total expected assessments in accordance with applicable guidance. The Company regularly evaluates estimates and adjusts the additional liability balance, with a related charge or credit to Increase in liabilities for future policy benefits, if actual experience or other evidence suggests that earlier assumptions should be revised.

The following assumptions and methodology were used to determine the GLWB liability at December 31, 2016 and 2015, respectively:

• Data used was 1,000 stochastically generated investment performance scenarios.

• Mortality was assumed to be 100% of the GLI 12(15) Mortality Table for 2016 and 2015.

• Lapse rates vary by contract type and duration, and range from 1.00% to 10.00%, with an average of 1.00% for 2016 and 2015.

• Partial withdrawal rates ranged from 4.25% to 6.75% for 2016 and 2015.

• Discount rates ranged from 0.64% to 13.79% for 2016 and 2.21% to 15.30% for 2015.

At December 31, 2016 and 2015, the GLWB liability was $17 million and $1 million, respectively.

68

NOTE 12 – POLICYHOLDERS’ LIABILITIES (continued)

Additional Liability for Individual Life Products

Certain individual life products require additional liabilities for contracts with excess insurance benefit features. These excess insurance benefit features are generally those that result in profits in early years and losses in subsequent years. For the Company’s individual life contracts, this requirement primarily affects universal life policies with secondary guarantees. For these policies, we define excess insurance benefits as death benefits paid in excess of account balance released on death when the policy is either being held in force by the presence of a no lapse guarantee or when an amount in excess of the account balance results from a GMDB.

Generally, the Company has separately defined an excess insurance benefit to exist when expected mortality exceeds all assessments. This insurance benefit is in addition to the base mortality feature, which the Company defines as expected mortality not in excess of assessments. The liability for excess insurance benefit features reflected in the general account and included in liabilities for Future policy benefits was $162 million and $165 million at December 31, 2016 and 2015, respectively.

NOTE 13 – DEFERRED POLICY ACQUISITION COSTS AND SALES INDUCEMENTS

Deferred Policy Acquisition Costs

The following is a rollforward of DAC for the years ended December 31, 2016, 2015 and 2014 (in millions):

		2016			2015			2014
Balance at beginning of year		$	3,530		$	3,041		$	2,847
	Current year additions	461			514			468
	Amortization - current year	(522		)	(435		)	(533		)
	Amortization - impact of assumption and experience unlocking	(16		)	(37		)	90
	Amortization - impact of extending the useful life(1)	—			—			289
	Balance at end of year before related adjustments	3,453			3,083			3,161
	Adjustment for changes in unrealized net investment gains	(41		)	447			(120		)
Balance at end of year		$	3,412		$	3,530		$	3,041

⁽¹⁾ The Company reviewed the reasonableness of the assumptions used to determine the amortization period for certain universal life and variable deferred annuity contracts and determined, based on better than expected persistency of these products, that the useful life should be extended, resulting in a positive impact to DAC amortization in 2014.

69

NOTE 13 – DEFERRED POLICY ACQUISITION COSTS AND SALES INDUCEMENTS (continued)

Sales Inducements

The following is a rollforward of deferred sales inducements included in Other assets for the years ended December 31, 2016, 2015 and 2014 (in millions):

		2016			2015			2014
Balance at beginning of year		$	657		$	634		$	549
	Current year additions	76			113			117
	Amortization - current year	(78		)	(82		)	(44		)
	Amortization - impact of assumption and experience unlocking	7			(18		)	12
	Balance at end of year before related adjustments	662			647			634
	Adjustment for changes in unrealized net investment gains	2			10			—
Balance at end of year		$	664		$	657		$	634

NOTE 14 – 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. 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 and survivorship universal life, survivorship variable universal life (SVUL) and asset preserver products. Most of the reinsured business is on an automatic basis. For new life insurance policies reinsured automatically, the Company retains between 10% and 60% of each risk, with a minimum size policy ceded of $1 million for survivorship variable universal life and no minimum size for custom performance survivorship universal life or single life. Cases in excess of the Company’s retention and certain substandard cases are reinsured facultatively. The Company does not have any individual life reinsurance agreements that do not transfer risk or contain risk-limiting features.

The Company remains liable for reinsurance ceded if the reinsurer fails to meet its obligation on the business it has assumed. The Company periodically reviews the financial condition of its reinsurers and amounts recoverable in order to minimize its exposure to losses from reinsurer insolvencies. When necessary, an allowance is recorded for reinsurance which the Company cannot collect.

70

NOTE 14 – REINSURANCE (continued)

The Company also participates in assumed reinsurance with third parties in acquiring additional business.The effects of reinsurance on the Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014 were as follows (in millions):

	2016			2015			2014
Direct	$	2,804		$	2,497		$	3,198
Assumed	4			4			3
Ceded	(65		)	(69		)	(78		)
Premiums	$	2,743		$	2,432		$	3,123
Fees - universal life and annuity policies ceded	$	(684	)	$	(621	)	$	(601	)
Direct	$	2,268		$	2,048		$	1,859
Assumed	7			2			2
Ceded	(674		)	(559		)	(520		)
Policyholder benefits	$	1,601		$	1,491		$	1,341
Direct	$	1,832		$	1,647		$	2,463
Ceded	3			(14		)	(12		)
Increase in liabilities for future policy benefits	$	1,835		$	1,633		$	2,451

The effects of reinsurance on the Consolidated Statements of Financial Position for the years ended December 31, 2016 and 2015 were as follows (in millions):

	2016		2015
Reinsurance recoverable	$	5,863	$	5,860
Reinsurance payable	$	4,225	$	4,310

Significant Reinsurance Transactions

Four reinsurance companies account for 77% and 79% of the in-force reinsurance ceded at December 31, 2016 and 2015, respectively.

The Company ceded 53% of its total life insurance in-force at both December 31, 2016 and 2015.

Ceded Reinsurance

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 were transferred to New York Life Insurance Taiwan Corporation (“Taiwan Corporation”), an indirect subsidiary of New York Life, that was sold to Yuanta Financials Holding Co., Ltd. (“Yuanta”) on December 31, 2013. Under the terms of the sale agreement, Yuanta agreed to satisfy in full, or 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. The Company accounts for the policies issued prior to July 2002 as 100% coinsured, and records policyholder liabilities associated with those policies, as well as a reinsurance recoverable asset from Taiwan Corporation/Yuanta of an equal amount.

71

NOTE 14 – REINSURANCE (continued)

The effect of this reinsurance agreement with Taiwan Corporation/Yuanta for the years ended December 31, 2016, 2015 and 2014 was as follows (in millions):

	2016		2015		2014(1)
Amounts recoverable from reinsurer(2)	$	1,320	$	1,236	$	1,205
Premiums ceded	$	61	$	67	$	74
Benefits ceded	$	53	$	29	$	46

⁽¹⁾ Beginning in 2014, the results for this transaction are recorded on a quarter lag. The amounts recoverable from reinsurer and policyholder liabilities represent balances as of September 30th. Premiums ceded and benefits ceded represent balances for the nine months ended September 30th plus an estimate for the three months ended December 31st.

⁽²⁾ The Company recorded policyholder liabilities of $1,320 million, $1,236 million, and $1,205 million at December 31, 2016, 2015, and 2014, respectively.

In December 2004, the Company reinsured 90% of a block of in-force life insurance business, consisting of universal life, variable universal life (“VUL”), Target Life and Asset Preserver, with New York Life. The agreement uses a combination of coinsurance with funds withheld for the fixed portion maintained in the general account and modified coinsurance (“MODCO”) for the VUL policies in the Separate Accounts. Under both the MODCO and funds withheld treaties, the Company retains the assets held in relation to the policyholders’ account balances and separate account liabilities. An experience refund is paid to the Company at the end of each quarterly accounting period for 100% of the profits in excess of $5 million per year. Under authoritative guidance related to derivatives and hedging, the funds withheld and the MODCO treaties, along with the experience rating refund represents an embedded derivative, which is required to be carried at fair value. Refer to Note 7 - Derivative Instruments and Risk Management for additional details.

In connection with the reinsurance agreement with New York Life, the Company recorded a deferred gain of $244 million, which includes the $25 million purchase price and $219 million of GAAP reserves recoverable from the reinsurer in excess of the funds withheld liability. For the years ended December 31, 2016, 2015 and 2014, $1 million of the deferred gain was amortized and is included in the Net revenue from reinsurance.

The effect of this reinsurance agreement with New York Life for the years ended December 31, 2016, 2015 and 2014 was as follows (in millions):

	2016		2015		2014
Fees-universal life policies ceded	$	262	$	241	$	241
Net revenue from reinsurance	$	74	$	99	$	85
Policyholder benefits ceded	$	184	$	136	$	151
Amounts recoverable from reinsurer	$	4,150	$	4,252	$	4,364
Amounts payable to reinsurer	$	4,154	$	4,255	$	4,366
Other liabilities (deferred gain, net of amortization)	$	10	$	11	$	13

The Company obtains coverage of mortality risk in excess of its retention limits from New York Life on a yearly renewable term basis. The premiums for this coverage were $23 million, $11 million and $19 million for the years ended December 31, 2016, 2015 and 2014, respectively.

72

NOTE 15 – COMMITMENTS AND CONTINGENCIES, LOANED SECURITIES AND REPURCHASE AGREEMENTS

Litigation

The Company and/or its subsidiaries are defendants in individual and/or alleged class action suits arising from their agency sales force, insurance (including variable contracts registered under the federal securities law), investment, retail securities, employment and/or other operations, including actions involving retail sales practices. Some of the actions seek substantial or unspecified compensatory and punitive damages. The Company and/or its subsidiaries are 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 consolidated 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.

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.

The Company received notification of the insolvency of various life insurers. It is expected that these insolvencies will result in guaranty fund assessments against the Company of approximately $2 million at December 31, 2016 and 2015, which have been accrued in Other liabilities. The Company expects to recover $10 million and $16 million at December 31, 2016 and 2015, respectively, of premium offsets reflected in Other assets.

Guarantees

The Company, in the ordinary course of its business, has numerous agreements with respect to its related parties and other third-parties. In connection with such agreements there may be related commitments or contingent liabilities, which may take the form of guarantees. The Company believes the ultimate liability that could result from any such guarantees would not have a material adverse effect on the Company’s financial position.

73

NOTE 15 – COMMITMENTS AND CONTINGENCIES, LOANED SECURITIES AND REPURCHASE AGREEMENTS (continued)

Loaned Securities and Repurchase Agreements

The following table represents recognized repurchase agreements that are subject to an enforceable master netting agreement or similar agreements at December 31, 2015 (in millions). There were no repurchase agreements subject to an enforceable master netting agreement at December 31, 2016. The Company’s dollar rolls repurchase agreements to sell and repurchase securities are not done under master netting agreements or similar agreements and therefore are not included in this table:

	2016
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Securities Collateral(1)			Net Amount
Offsetting of financial assets
Securities purchased under agreement to resell	$	298	$	—	$	298	$	(298	)	$	—
Total assets	$	298	$	—	$	298	$	(298	)	$	—
	2015
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Securities Collateral(1)			Net Amount
Offsetting of financial assets
Securities purchased under agreement to resell	$	298	$	—	$	298	$	(298	)	$	—
Total assets	$	298	$	—	$	298	$	(298	)	$	—

⁽¹⁾ At December 31, 2016, the actual collateral that is held by the custodian was $304 million, which were capped at the amount recorded in the Consolidated Statements of Financial Position in accordance with the authoritative guidance.

⁽²⁾ At December 31, 2015, the actual collateral that is held by the custodian was $304 million, which were capped at the amount recorded in the Consolidated Statements of Financial Position in accordance with the authoritative guidance.

74

NOTE 15 – COMMITMENTS AND CONTINGENCIES, LOANED SECURITIES AND REPURCHASE AGREEMENTS (continued)

The following table represents recognized securities lending transactions that are subject to an enforceable master netting agreement or similar agreement at December 31, 2016 and 2015 (in millions):

	2016
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Securities Collateral(1)			Net Amount
Offsetting of financial liabilities
Securities entered into a security    lending agreement	$	675	$	—	$	675	$	(675	)	$	—
Total liabilities	$	675	$	—	$	675	$	(675	)	$	—
	2015
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statements of Financial Position		Net Amounts Presented in the Statements of Financial Position		Securities Collateral(1)			Net Amount
Offsetting of financial liabilities
Securities entered into a security    lending agreement	$	600	$	—	$	600	$	(600	)	$	—
Total liabilities	$	600	$	—	$	600	$	(600	)	$	—

⁽¹⁾ The amount represents the cash collateral received and is reported in Other liabilities. At December 31, 2016 and 2015, the securities lent have a fair value of $659 million and $586 million, respectively. Such assets reflect the extent of the Company’s involvement in securities lending, not the Company’s risk of loss.

The following tables provides information about the Company’s obligation regarding cash collateral received under repurchase agreements and securities lending transactions, by class of securities sold to be repurchased and securities sold to counterparties, including the remaining contractual maturity of such transactions at December 31, 2016:

	2016
	Remaining Contractual Maturity of the Agreements
	Open		30 days or less		31 to 60 days		61 to 90 days		Greater than 90 days		Total
Dollar Repurchase Agreements
U.S. government corporations & agencies	$	—	$	—	$	—	$	—	$	—	$	—
Total dollar repurchase agreements	$	—	$	—	$	—	$	—	$	—	$	—
Securities Lending
U.S. Treasury	$	49	$	—	$	—	$	—	$	—	$	49
U.S. government corporations & agencies	18		—		—		—		—		18
U.S. agency mortgage-backed and asset-backed securities	—		—		—		—		—		—
Foreign governments	2		—		—		—		—		2
U.S. corporate	515		—		—		—		—		515
Foreign corporate	91		—		—		—		—		91
Total securities lending transactions	$	675	$	—	$	—	$	—	$	—	$	675

75

NOTE 15 – COMMITMENTS AND CONTINGENCIES, LOANED SECURITIES AND REPURCHASE AGREEMENTS (continued)

	2015
	Remaining Contractual Maturity of the Agreements
	Open		30 days or less		31 to 60 days		61 to 90 days		Greater than 90 days		Total
Dollar Repurchase Agreements
U.S. government corporations & agencies	$	—	$	—	$	—	$	—	$	—	$	—
Total dollar repurchase agreements	$	—	$	—	$	—	$	—	$	—	$	—
Securities Lending
U.S. Treasury	$	109	$	—	$	—	$	—	$	—	$	109
U.S. government corporations & agencies	12		—		—		—		—		12
U.S. agency mortgage-backed and asset-backed securities	—		—		—		—		—		—
Foreign governments	6		—		—		—		—		6
U.S. corporate	363		—		—		—		—		363
Foreign corporate	110		—		—		—		—		110
Total securities lending transactions	$	600	$	—	$	—	$	—	$	—	$	600

At December 31, 2016 and 2015, the Company had no agreements outstanding to sell and repurchase securities.

Liens

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.

NOTE 16 – INCOME TAXES

The components of the total Income tax expense for the years ended December 31, 2016, 2015 and 2014 are as follows (in millions):

	2016			2015			2014
Current
Federal	$	323		$	266		$	252
State and local	5			2			5
Foreign	1			1			1
	329			269			258
Deferred
Federal	(52		)	(45		)	133
Income tax expense	$	277		$	224		$	391

Pursuant to the tax allocation agreement discussed in Note 3 – Significant Accounting Policies, the Company recorded a net income tax (payable to)/receivable from New York Life of $(5) million and $31 million at December 31, 2016 and 2015, respectively, and is included in Other assets or liabilities.

76

NOTE 16 - INCOME TAXES (continued)

The Company’s actual income tax expense for the years ended December 31, 2016, 2015 and 2014 differs from the expected amount computed by applying the U.S. statutory federal income tax rate of 35% for the following reasons (in millions):

	2016					2015					2014
Statutory federal income tax expense	$	345		35.0	%	$	297		35.0	%	$	481		35.0	%
Tax exempt income	(47		)	(4.7	)	(60		)	(7.1	)	(63		)	(4.6	)
Audit liability	(6		)	(0.6	)	13			1.6		(3		)	(0.2	)
Investment credits	(38		)	(3.9	)	(49		)	(5.8	)	(55		)	(4.0	)
Amortization and deductions of investments in qualified affordable housing projects	21			2.1		30			3.6		30			2.2
Non-controlling interest	(1		)	(0.1	)	—			—		—			—
Other	3			0.3		(7		)	(0.9	)	1			0.1
Actual income tax expense	$	277		28.1	%	$	224		26.4	%	$	391		28.5	%

Deferred income taxes are generally recognized, based on enacted tax rates, when assets and liabilities have different values for financial statement and tax purposes. The Company’s management has concluded that the deferred tax assets are more likely than not to be realized. Therefore, no valuation allowance has

been recorded.

The components of the net deferred tax liability reported in Other liabilities at December 31, 2016 and 2015 are as follows (in millions):

			2016		2015
Deferred tax assets
	Future policy benefits		$	899	$	846
	Employee and agents benefits		52		51
		Gross deferred tax assets	951		897
Deferred tax liabilities
	DAC		803		843
	Investments		682		607
	Other		228		218
		Gross deferred tax liabilities	1,713		1,668
Net deferred tax liability			$	762	$	771

The Company does not have net operating or capital loss carry forwards.

The Company’s federal income tax returns are routinely examined by the 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 consolidated financial position and results of operations as a result of these audits. The Company believes that its recorded income tax liabilities for uncertain tax positions are adequate for all open years.

77

NOTE 16 - INCOME TAXES (continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits at December 31, 2016, 2015 and 2014 are as follows (in millions):

	2016			2015			2014
Balance at beginning of year	$	95		$	99		$	71
Additions for tax positions of prior years	—			—			23
Reductions for tax positions of prior years	(15		)	(15		)	—
Additions for tax positions of current year	—			19			5
Settlements with tax authorities	(40		)	(8		)	—
Balance at end of year	$	40		$	95		$	99

At December 31, 2016, 2015 and 2014, the Company had unrecognized tax benefits that, if recognized, would impact the effective tax rate by $6 million, $15 million and $(3) million, respectively. Total interest expense associated with the liability for unrecognized tax benefits was $4 million for the the year ended December 31, 2016, $6 million for the year ended December 31, 2015 and less than $1 million for the year ended December 31, 2014, and is included in Income tax expense. At December 31, 2016, 2015 and 2014, the Company had $7 million, $19 million and $13 million, respectively, of accrued interest associated with the liability for unrecognized tax benefits which are reported in Other liabilities. The $12 million decrease from December 31, 2015 in accrued interest associated with the liability for unrecognized tax benefits is the result of an increase of $4 million of interest expense, and $16 million decrease resulting from settlements with tax authorities. The $6 million increase from December 31, 2014 in accrued interest associated with the liability for unrecognized tax benefits is the result of an increase of $6 million of interest expense and less than $1 million decrease resulting from settlement with tax authorities. The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.

NOTE 17 – DEBT

Recourse Debt

The Company issued a promissory note on November 1, 2006, in the amount of $8 million at a fixed interest rate of 5.5% per annum in connection with the purchase of a membership interest in Aeolus Wind Power II LLC. The note calls for the Company to make quarterly payments of principal and interest, with the first installment paid on January 31, 2007 and the final installment due on July 31, 2016. The note may not be prepaid in whole or in part, and there are no collateral requirements. The note was paid off at December 31, 2016 and the carrying amount was $1 million at December 31, 2015.

Non-Recourse Debt

The Company was required to consolidate one structured investment, in which the Company is considered the primary beneficiary, with an outstanding debt balance of $1 million at December 31, 2016 and 2015. Refer to Note 6 – Investments for a discussion on VIEs.

FHLB Agreement

The Company is a member of the FHLB of Pittsburgh and holds $24 million of common stock at December 31, 2016 and 2015. These investments are recorded as part of equity securities, in Unaffiliated, available for sale, at fair value. No funding agreements were outstanding as of December 31, 2016 and 2015. At December 31, 2016, the fair value of collateral pledged and the company’s borrowing capacity with FHLB of Pittsburgh was $17 million and $16 million, respectively. At December 31, 2015, the fair value of collateral pledged and the Company’s borrowing capacity with FHLB of Pittsburgh was $19 million and $10 million, respectively.

78

NOTE 18 – SUPPLEMENTAL CASH FLOW INFORMATION

Income taxes paid were $262 million, $207 million and $198 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Total interest paid was $16 million, $13 million and $9 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Non-cash transactions

The Company’s non-cash investing transactions were $201 million for the year ended December 31, 2016 related to fixed maturities, equities and limited partnerships.

The Company’s non-cash investing transactions were $27 million for the year ended December 31, 2015 related to fixed maturities, short terms, mortgage loans and limited partnerships.

The Company’s non-cash investing transactions were less than $1 million for the year ended December 31, 2014.

NOTE 19 – STATUTORY FINANCIAL INFORMATION

The 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 state of Delaware has adopted all prescribed accounting practices found in NAIC SAP. At December 31, 2016, the Company does not have any permitted practices. In past years, including 2014, the Company disclosed a permitted practice for the book value treatment of certain guaranteed separate account products. The Company has confirmed with the DSID that this book value treatment is not a permitted practice as it is in accordance with Statements of Statutory Accounting Principles (“SSAP”) No. 56, “Separate Accounts”, paragraph 17. As a result, the permitted practice disclosed in the prior years to report these assets at book value is no longer disclosed.

The Company is restricted as to the amounts it may pay as dividends to New York Life. Under Delaware Insurance Law, dividends on capital stock can be distributed only out of earned surplus. Furthermore, without prior approval of the Delaware Insurance Commissioner, dividends cannot be declared or distributed which exceed the greater of ten percent of the Company’s surplus or one hundred percent of net gain from operations. The Company did not pay or declare a dividend to its sole shareholder, New York Life, at December 31, 2016 or 2015. At December 31, 2016, the amount of available and accumulated funds derived from earned surplus from which the Company can pay dividends is $4,772 million. The maximum amount of dividends that may be paid in 2016 without prior approval is $890 million.

NOTE 20 – SUBSEQUENT EVENTS

As of March 9, 2017, 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 consolidated financial statements that would have a material effect on the financial condition of the Company.

79

Report of Independent Auditors

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

We have audited the accompanying consolidated financial statements of New York Life Insurance and Annuity Corporation and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as of December 31, 2016 and 2015, and the related consolidated statements of operations, of comprehensive income, of stockholder’s equity, and of cash flow for each of the three years in the period ended December 31, 2016.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of New York Life Insurance and Annuity Corporation and its subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three the years in the period ended December 31, 2016 in accordance with accounting principles generally accepted in the United States of America.

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

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

Emphasis of Matter

As disclosed in Note 11 to the consolidated 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.

March 9, 2017

(This page intentionally left blank)

(This page intentionally left blank)

(NYLIAC) NI070

PART C. OTHER INFORMATION

ITEM 24.   FINANCIAL STATEMENTS AND EXHIBITS

a.	Financial Statements.
	All required financial statements are included in Part B of this Registration Statement.
b.	Exhibits.
(1)	Resolution of the Board of Directors of New York Life Insurance and Annuity Corporation (“NYLIAC”) authorizing establishment of the Separate Account - Previously filed as Exhibit (1) to Registrant’s initial Registration Statement on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (1) to Post-Effective Amendment No. 17 to the registration statement on Form N-4 for NYLIAC MFA Separate Account-I (File No. 002-86083), filed 4/25/97 and incorporated herein by reference.
(2)	Not applicable.
(3)(a)	Distribution Agreement between NYLIFE Securities, Inc. and NYLIAC - Previously filed as Exhibit (3)(a) to Registrant’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (3)(a) to Post-Effective Amendment No. 4 to the registration statement on Form S-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 033-64410), filed 4/25/97 and incorporated herein by reference.
(3)(b)	Distribution Agreement between NYLIFE Distributors, Inc. and NYLIAC - Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 3(b) to Post-Effective Amendment No. 5 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-I (File No. 033-53342), filed 4/17/96 and incorporated herein by reference.
(3)(c)	Form of Agreement among New York Life Insurance Company, NYLIFE Securities Inc., NYLIAC and its agent (and referenced Agent’s Contract) - Previously filed as Exhibit (3)(b) to Pre-Effective Amendment No. 1 to Registrant’s Registration Statement on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (3)(c) to Post-Effective Amendment No. 17 to the registration statement on Form N-4 for NYLIAC MFA Separate Account-I (File No. 002-86083), filed 4/25/97 and incorporated herein by reference.
(3)(d)	Form of Substitution Agreement among NYLIAC, MainStay Management LLC, and New York Life Investment Management LLC - Previously filed in accordance with Regulation S-T, 17CFR 232.102 (e) as Exhibit (9)(s) to Pre-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-57210), filed 6/4/01 and incorporated herein by reference.
(3)(e)	Stock Sale Agreement between NYLIAC and MainStay VP Series Fund, Inc. (formerly New York Life MFA Series Fund, Inc.) - Previously filed as Exhibit (8)(a) to Pre-Effective Amendment No. 1 to the registration statement on Form N-1A for New York Life MFA Series Fund, Inc. (File No. 2-86082), re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (9)(a) to Pre-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-07617), filed 1/2/97 and incorporated herein by reference.
(3)(f)	Amendment dated September 27, 2002 to Stock Sale Agreement dated June 4, 1993 between NYLIAC and MainStay VP Series Fund, Inc. - Previously filed in accordance with Regulation S-T, 17CFR 232.102(e) as Exhibit (8)(n) to Post-Effective Amendment No. 18 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-III (File No. 033-87382), filed 4/9/03 and incorporated herein by reference.
(3)(g)	Distribution and Underwriting Agreement, dated April 27, 2006, between New York Life Insurance and Annuity Corporation and NYLIFE Distributors LLC - Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit(c)(3) to Post-Effective Amendment No. 16 on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-48300), filed 8/15/06 and incorporated herein by reference.
(3)(g) (1)	Form of Amendment to Distribution and Underwriting Agreement between New York Life Insurance and Annuity Corporation and NYLIFE Distributors LLC, dated March 6, 2015 - Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (3)(g)(1) to Post-Effective Amendment No. 38 to the registration statement of Form N-4 for NYLIAC MFA Separate Account-I (File No. 002-86083), filed 4/14/2015 and incorporated herein by reference.
(4)(a)	Form of Qualified Flexible Premium Policy - Previously filed as Exhibit (5)(a) to Registrant’s initial Registration Statement on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (4)(a) to Registrant’s Post-Effective Amendment No. 16 on Form N-4, and incorporated herein by reference.
(4)(b)	Form of Qualified Single Premium Policy - Previously filed as Exhibit (5)(b) to Registrant’s initial Registration Statement on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (4)(b) to Registrant’s Post-Effective Amendment No. 16 on Form N-4, and incorporated herein by reference.
(5)	Form of Application for a Policy - Previously filed as Exhibit (10) to Registrant’s Pre-Effective Amendment No. 1 on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (5) to Post-Effective Amendment No. 17 to the registration statement on Form N-4 for NYLIAC MFA Separate Account-I (File No. 002-86083), filed 4/25/97 and incorporated herein by reference.
(6)(a)	Certificate of Incorporation of NYLIAC - Previously filed as Exhibit(6)(a) to Registrant’s initial Registration Statement on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (6)(a) to the initial registration statement on Form S-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-07617), filed 7/3/96 and incorporated herein by reference.
(6)(a) (1)	Amended and Restated Certificate of Incorporation of NYLIAC (executed May 1, 2009) - Previously filed as Exhibit (6)(a)(1) to the registration statement on Form N-4 for the NYLIAC MFA Separate Account-I (File No. 2-86083), filed 4/11/13 and incorporated herein by reference.

C-1

(6)(b) (1)	By-Laws of NYLIAC - Previously filed as Exhibit (6)(b) to the initial registration statement on Form S-6 for NYLIAC MFA Separate Account-I (File No. 2-86083), re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (6)(b) to the initial registration statement on Form S-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-07617), filed 7/3/96 and incorporated herein by reference.
(6)(b) (2)	Amendments to By-Laws of NYLIAC - Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (6)(b) to Pre-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-39157), filed 4/3/98 and incorporated herein by reference.
(6)(b) (3)	Amended and Restated By-Laws of NYLIAC (effective May 1, 2009) - Previously filed as Exhibit (6)(b)(3) to the registration statement on Form N-4 for the NYLIAC MFA Separate Account-I (File No. 2-86083), filed 4/11/13 and incorporated herein by reference.
(7)	Not applicable.
(8)	Service Agreement between New York Life Insurance Company and NYLIAC (including Amendments) - Previously filed as Exhibit (8) to Registrant’s Post-Effective Amendment No. 1 on Form S-6, re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8) to Post-Effective Amendment No. 17 to the registration statement on Form N-4 for NYLIAC MFA Separate Account-I (File No. 002-86083), filed 4/25/97 and incorporated herein by reference.
(8)(a)	Administrative Services Agreement between New York Life Investment Management LLC and NYLIAC dated 1/1/05 - Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(w) to Post-Effective Amendment No. 20 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account - I (File No. 033-53342), filed 4/10/06 and incorporated herein by reference.
(8)(b)	Participation Agreement among New York Life Insurance and Annuity Corporation, MainStay VP Series Fund, Inc., and New York Life Investment Management LLC dated 10/7/04 - Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(y) to Post-Effective Amendment No. 20 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account I (File No. 033-53342), filed 4/10/06 and incorporated herein by reference.
(9)	Opinion and Consent of Thomas F. English, Esq. Filed herewith.
(10)(a)	Consent of PricewaterhouseCoopers LLP. Filed herewith.
(10)(b)	Powers of Attorney. Filed herewith.
(11)	Not applicable.
(12)	Not applicable.
(13)	Schedule of Computations - Previously filed as Exhibit 13 to Post-Effective Amendment No. 7 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-I (File No. 033-53342), filed 4/16/98 and incorporated herein by reference.

C-2

ITEM 25.  DIRECTORS AND OFFICERS OF THE DEPOSITOR

The principal business address of each director and officer of NYLIAC is 51 Madison Avenue, New York, NY 10010.

Name:	Title:
Theodore A. Mathas	Director, Chairman & Chief Executive Officer	Director
Christopher Ashe	Director & Senior Vice President	Director
David G. Bedard	Director & Senior Vice President	Director
Christopher O. Blunt	Director, Executive Vice President & President of the Investments Group	Director
John T. Fleurant	Director, Executive Vice President & Chief Financial Officer	Director
Robert M. Gardner	Director, Vice President & Controller	Director
Matthew M. Grove	Director & Senior Vice President	Director
Frank Harte	Director & Senior Vice President	Director
Thomas A. Hendry	Director, Senior Vice President & Treasurer	Director
Dylan W. Huang	Director & Senior Vice President	Director
John Y. Kim	Director & President	Director
Mark J. Madgett	Director	Director
Amy Miller	Director	Director
Arthur H. Seter	Director, Senior Vice President & Chief Investment Officer	Director
Joel M. Steinberg	Director, Senior Vice President, Chief Risk Officer & Chief Actuary	Director
Matthew D. Wion	Director & Senior Vice President	Director
Pedram Afshar	Senior Vice President	Officer
Sara L. Badler	Senior Vice President	Officer
Scott L. Berlin	Senior Vice President	Officer
David J. Castellani	Senior Vice President	Officer
Thomas Cole	Senior Vice President	Officer
Alexander I. Cook	Senior Vice President	Officer
Craig L. DeSanto	Senior Vice President & Actuary	Officer
Robert A. DiMella	Senior Vice President	Officer
Thomas F. English	Senior Vice President, Chief Legal Officer & Secretary	Officer
Stephen P. Fisher	Senior Vice President	Officer
Thomas J. Girard	Senior Vice President	Officer
Robert J. Hebron	Senior Vice President	Officer
Scott L. Lenz	Senior Vice President & Chief Tax Counsel	Officer
John M. Loffredo	Senior Vice President	Officer
Anthony R. Malloy	Senior Vice President	Officer
Gail A. McDermott	Senior Vice President	Officer
Barbara J. McInerney	Senior Vice President & Chief Compliance Officer	Officer
Francis J. Ok	Senior Vice President	Officer
Jeffrey S. Phlegar	Senior Vice President	Officer
Neal S. Ramasamy	Senior Vice President & Chief Technology Officer	Officer
Dan C. Roberts	Senior Vice President	Officer
Gerard A. Rocchi	Senior Vice President	Officer
Donald A. Salama	Senior Vice President	Officer
Richard C. Schwartz	Senior Vice President	Officer
George S. Shively	Senior Vice President & Legal Officer	Officer
Andrew P. Starr	Senior Vice President	Officer
Matthew T. Swanson	Senior Vice President	Officer
Mark W. Talgo	Senior Vice President	Officer
Jae Yoon	Senior Vice President	Officer
Erik A. Anderson	Vice President & Actuary	Officer
Mitchell P. Ascione	Vice President	Officer
Karen A. Bain	Vice President - Tax	Officer
Lee C. Baker	Vice President	Officer
Judy R. Bartlett	Vice President & Legal Officer	Officer
Jacqueline M. Barton	Vice President	Officer
Jeffrey Beligotti	Vice President & Actuary	Officer
John Bonvouloir	Vice President	Officer
Elizabeth Brill	Vice President	Officer
Philip E. Caminiti	Vice President	Officer
Jeanne M. Carbone	Vice President	Officer
Ramon A. Casanova	Vice President & Actuary	Officer
Roger Chen	Vice President	Officer
George S. Cherpelis	Vice President	Officer
Louis N. Cohen	Vice President	Officer
James J. Cristallo	Vice President & Actuary	Officer
Paul K. Cunningham	Vice President	Officer
Karen J. DeToro	Vice President	Officer
Robert H. Dial	Vice President	Officer
Mayra L. Diaz	Vice President	Officer
John C. DiRago	Vice President	Officer
Kathleen A. Donnelly	Vice President	Officer
Robert Donohue	Vice President & Assistant Treasurer	Officer
Michael G. Dubrow	Vice President	Officer
Jonathan Feinstein	Vice President	Officer
Robert E. Ferguson	Vice President	Officer
Anthony Ferraro	Vice President & Actuary	Officer
Edward J. Fitzgerald	Vice President	Officer
Michael Fong	Vice President & Actuary	Officer
Stephanie A. Frawley	Vice President	Officer
Brian Furlong	Vice President	Officer
Thomas J. Gangemi	Vice President	Officer
Ross M. Goldstein	Vice President	Officer
Mary Hallahan	Vice President & Treasurer	Officer
Jane L. Hamrick	Vice President & Actuary	Officer
Dale A. Hanley	Vice President	Officer
Thomas S. Heller	Vice President	Officer
Eric S. Hoffman	Vice President	Officer
Angela Huang	Vice President & Actuary	Officer
Robert J. Hynes	Vice President	Officer
Robert Karmen	Vice President & Legal Officer	Officer
Jeffrey Killian	Vice President	Officer
Terry Kim	Vice President	Officer
Michael J. Kimble	Vice President	Officer
Joseph D. Koltisko	Vice President	Officer
Linda M. Kraus	Vice President	Officer
Jodi L. Kravitz	Vice President & Actuary	Officer
Melissa Kuan	Vice President	Officer
Natalie Lamarque	Vice President	Officer
Richard B. Leber	Vice President, Legal Officer & Assistant Secretary	Officer
Brian C. Loutrel	Vice President & Chief Privacy Officer	Officer
Eric J. Lynn	Vice President & Actuary	Officer
Ralph S. Marinaccio	Vice President	Officer
Timothy M. McGinnis	Vice President	Officer
Stephen J. McNamara	Vice President & Actuary	Officer
Edward P. Millay	Vice President	Officer
Ryan J. Morris	Vice President & Actuary	Officer
Jaime Mosquera	Vice President & Actuary	Officer
Marijo F. Murphy	Vice President	Officer
Nicholas Pasyanos	Vice President & Actuary	Officer
Paul Pecorino	Vice President	Officer
Valerie L. Perry	Vice President - Underwriting	Officer
William Petty	Vice President	Officer
Paul Quartararo	Vice President & Chief Medical Director	Officer
Jennifer Richards	Vice President	Officer
Ari Roy	Vice President	Officer
Janis C. Rubin	Vice President	Officer
Amaury J. Rzad	Vice President	Officer
Scott R. Seewald	Vice President	Officer
Joseph J. Shannon	Vice President	Officer
Nancy G. Sherman	Vice President	Officer
Irwin Silber	Vice President & Actuary	Officer
Kevin M. Smith	Vice President	Officer
Thomas C. Sorg	Vice President	Officer
Monica Suryapranata	Vice President	Officer
Ka Luk Stanley Tai	Vice President	Officer
William P. Tate	Vice President	Officer
Sandra G. Tillotson	Vice President	Officer
Thomas J. Troeller	Vice President & Actuary	Officer
Victor A. Verastegui	Vice President	Officer
Taylor Wagenseil	Vice President	Officer
Robin M. Wagner	Vice President	Officer
Richard M. Walsh	Vice President	Officer
Simon Walsh	Vice President	Officer
Scott W. Weinstein	Vice President	Officer
Charles A. Whites	Vice President & Legal Officer	Officer
Michellen Wildin	Vice President	Officer
Michael A. Yashnyk	Vice President	Officer
Paul Zeng	Vice President & Actuary	Officer

C-3

ITEM 26.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR REGISTRANT

The Depositor, NYLIAC, is a wholly-owned subsidiary of New York Life Insurance Company (“New York Life”). The Registrant is a segregated asset account of NYLIAC. The following chart indicates persons presumed to be controlled by New York Life(⁺), unless otherwise indicated. Subsidiaries of other subsidiaries are indented accordingly, and ownership is 100% unless otherwise indicated.

Name	Jurisdiction  of Organization		Percent of Voting Securities Owned
The MainStay Funds(*)(†)		Massachusetts
MainStay VP Funds Trust(*)(†)		Delaware
MainStay Funds Trust		Delaware
NYL Investors LLC		(Delaware)
NYL Investors (U.K.) Limited		(United Kingdom)
NYLIM Holdings NCVAD GP, LLC		(Delaware)
McMorgan Northern California Value Add/Development Fund I, L.P.		(Delaware)	(50%)
MNCVAD-IND Greenwood CA LLC		(Delaware)
MNCVAD-IND Norris Canyon CA LLC		(Delaware)
MNCVAD-CP Norris Canyon LLC		(Delaware)	(94%)
MNCVAD-IND Petaluma CA LLC		(Delaware)
MNCVAD-OFC 2665 NORTH FIRST CA LLC		(Delaware)
MNCVAD-SEAGATE 2665 NORTH FIRST LLC		(Delaware)	(90%)
MNCVAD-OFC Bridgepointe CA LLC		(Delaware)
MNCVAD-OFC RIDDER PARK CA LLC		(Delaware)
MNCVAD-GRAYMARK RIDDER		(Delaware)	(97.50%)
MNCVAD-OFC ONE BAY CA LLC		(Delaware)
MNCVAD-HARVEST ONE BAY LLC		(Delaware)	(95%)
MNCVAD-IND RICHMOND CA LLC		(Delaware)
NYL Real Assets LLC		(Delaware)
NYL Emerging Manager LLC		(Delaware)
NYL Wind Investments LLC		(Delaware)
NYLIFE Insurance Company of Arizona		(Arizona)
New York Life Insurance and Annuity Corporation		(Delaware)
Ausbil IT – Ausbil Microcap Fund		(Australia)	(NYLIAC: 9.81%)
Ausbil IT – Candriam Sustainable Global Equity Fund			(NYLIAC: 37.56%)
MacKay Shields Unconstrained Bond Fund			(NYLIAC: 100%)
New York Life Enterprises LLC		(Delaware)
SEAF Sichuan SME Investment Fund LLC		(Delaware)	(39.98%)
New York Life International Holdings Limited		(Mauritius)	(84.38%)1
NYL Cayman Holdings Ltd.		(Cayman Islands)
NYL Worldwide Capital Investments LLC		(Delaware)
Seguros Monterrey New York Life, S.A. de C.V.		(Mexico)	(99.998%)2
Administradora de Conductos SMNYL, S.A. de C.V.		(Mexico)	(99%)
Agencias de Distribucion SMNYL, S.A. de C.V. (“ADIS”)		(Mexico)	(99%)
Inmobiliaria SMNYL, SA de C.V.		(Mexico)	(99% ; ADIS: 1%)
Madison Capital Funding LLC		(Delaware)	(NYLIC: 55%; NYLIAC: 45%)
MCF Co-Investment GP LLC		(Delaware)
MCF Co-Investment GP LP		(Delaware)
Madison Capital Funding Co-Investment Fund LP		(Delaware)
Madison Avenue Loan Fund GP LLC		(Delaware)
Madison Avenue Loan Fund LP		(Delaware)
MCF Fund I LLC		(Delaware)
Warwick McAlester Holdings, LLC		(Delaware)
Meeco Sullivan, LLC		(Delaware)
Electric Avenue, LLC		(Delaware)
Ironshore Investment BL I Ltd.		(Bermuda)8	(0 voting ownership)
LMF WF Portfolio II, LLC		(Delaware)8	(0 voting ownership)
LMF WF Portfolio III, LLC		(Delaware)8	(0 voting ownership)
MCF CLO I LLC		(Delaware)	(2.53%)8
MCF CLO III LLC		(Delaware)	(2.33%)8
MCF CLO II LLC		(Delaware)8	(0 voting ownership)
MCF CLO IV LLC		(Delaware)8	(0 voting ownership)
Montpelier Carry Parent, LLC		(Delaware)
Montpelier Carry, LLC		(Delaware)
Montpelier GP, LLC		(Delaware)
Montpelier Fund, L.P.		(Delaware)
MCF Mezzanine Carry I LLC		(Delaware)8
MCF Mezzanine Fund I LLC		(Delaware)	(NYLIC: 66.66%; NYLIAC: 33.33%) (MCF is the manager)
Young America Holdings, LLC (“YAH”)		(Delaware)	(36.35%)8
YAC.ECOM Incorporated		(Minnesota)
Young America, LLC (“YALLC”)		(Minnesota)
Global Fulfillment Services, Inc.		(Arizona)
SourceOne Worldwide, Inc.		(Minnesota)
YA Canada Corporation		(Nova Scotia, Canada)
Zenith Products Holdings, Inc.		(Delaware)	(16.36%)8
ZPC Holding Corp.		(Delaware)
Zenith Products Corporation		(Delaware)
NYLIM Jacob Ballas India Holdings IV		(Mauritius)
New York Life Investment Management Holdings LLC		(Delaware)
New York Life Investment Management Asia Limited		(Cayman Islands)
Japan Branch
Institutional Capital LLC		(Delaware)
MacKay Shields LLC		(Delaware)
MacKay Shields Core Plus Opportunities Fund GP LLC		(Delaware)
MacKay Shields Core Plus / Opportunities Fund LP		(Delaware)
MacKay Municipal Managers Opportunities GP LLC		(Delaware)
MacKay Municipal Opportunities Master Fund, L.P.		(Delaware)
MacKay Municipal Opportunities Fund, L.P.		(Delaware)
MacKay Municipal Managers Credit Opportunities GP LLC		(Delaware)
MacKay Municipal Credit Opportunities Master Fund, L.P.		(Delaware)
MacKay Municipal Credit Opportunities Fund, L.P.		(Delaware)
MacKay Municipal Short Term Opportunities Fund GP LLC		(Delaware)
MacKay Municipal Short Term Opportunities Fund LP		(Delaware)
Plainview Funds plc		(Ireland)	(50%) (MacKay Shields Employee: 50%)
Plainview Funds plc – MacKay Shields Emerging Markets Credit Portfolio		(Ireland)	(NYLIC: 0.00%; NYLIAC: 99.98%)
Plainview Funds plc – MacKay Shields Flexible Bond Portfolio		(Ireland)	(NYLIAC: 0%; NYLIC: 0%)
Plainview Funds plc – MacKay Shields Unconstrained Bond Portfolio		(Ireland)	(NYLIC: 16.91%; MacKay: 1.51%)
Plainview Funds plc – MacKay Shields Floating Rate High Yield Portfolio		(Ireland)	(NYLIC: 93.01%; MacKay 6.98%)
Plainview Funds plc – MacKay Shields Core Plus Opportunities Portfolio		(Ireland)	(NYL: 0%)
MacKay Shields Statutory Trust – High Yield Bond Series		(Connecticut)8
MacKay Shields High Yield Active Core Fund GP LLC		(Delaware)
MacKay Shields High Yield Active Core Fund LP		(Delaware)
MacKay Shields Credit Strategy Fund Ltd		(Cayman Islands)
MacKay Shields Defensive Bond Arbitrage Fund Ltd.		(Bermuda)	(14.36%)3
MacKay Shields Core Fixed Income Fund GP LLC		(Delaware)
MacKay Shields Core Fixed Income Fund LP		(Delaware)
MacKay Shields (International) Ltd.		(UK)	(“MSIL”)
MacKay Shields (Services) Ltd.		(UK)	(“MSSL”)
MacKay Shields UK LLP		(UK)	(MSIL: 99%; MSSL: 1%)
MacKay Shields Global Derivatives LLC		(Delaware)
MacKay Municipal Managers Puerto Rico Opportunities GP LLC		(Delaware)
MacKay Puerto Rico Opportunities Funds, L.P.		(Delaware)
MacKay Puerto Rico Opportunities Feeder Fund, L.P.		(Cayman Islands)
MacKay Municipal Managers California Opportunities GP LLC		(Delaware)
MacKay Municipal Managers California Opportunities Fund, L.P.		(Delaware)
MacKay Municipal New York Opportunities GP LLC		(Delaware)
MacKay Municipal New York Opportunities Fund, L.P.		(Delaware)
MacKay Municipal Capital Trading GP LLC		(Delaware)
MacKay Municipal Capital Trading Master Fund, L.P.		(Delaware)
MacKay Municipal Capital Trading Fund, L.P.		(Delaware)
Cornerstone Capital Management Holdings LLC		(Delaware)
Cornerstone Capital Management, LLC		(Delaware)	(51%)
Cornerstone US Equity Market Neutral Fund, LLC		(Delaware)
Cornerstone Capital Management Large-Cap Enhanced Index Fund GP, LLC		(Delaware)
Cornerstone Capital Management Large-Cap Enhanced Index Fund, L.P.		(Delaware)
GoldPoint Partners LLC		(Delaware)
New York Life Capital Partners, L.L.C.		(Delaware)
New York Life Capital Partners, L.P.		(Delaware)
New York Life Capital Partners II, L.L.C.		(Delaware)
New York Life Capital Partners II, L.P.		(Delaware)
New York Life Capital Partners III GenPar GP, LLC		(Delaware)
New York Life Capital Partners III GenPar, L.P.		(Delaware)
New York Life Capital Partners III, L.P.		(Delaware)
New York Life Capital Partners III-A, L.P.		(Delaware)
New York Life Capital Partners IV GenPar GP, LLC		(Delaware)
New York Life Capital Partners IV GenPar, L.P.		(Delaware)
New York Life Capital Partners IV, L.P.		(Delaware)
New York Life Capital Partners IV-A, L.P.		(Delaware)
GoldPoint Mezzanine Partners IV GenPar GP, LLC		(Delaware)
GoldPoint Mezzanine Partners IV GenPar, LP		(Delaware)
GoldPoint Mezzanine Partners Co-Investment Fund A, LP		(Delaware)
GoldPoint Mezzanine Partners IV, LP		(Delaware)	(“GPPIVLP”)
GPP Mezzanine Blocker Holdco A, LP		(Delaware)	(“GPPMBHA”)
GPP Mezzanine Blocker Holdco Preferred A, LP		(Delaware)
GPP Mezzanine Blocker A, LP		(Delaware)	(GPPMBHA: 7.5%; GPPIVLP: 92.5%)
GPP Mezzanine Blocker Holdco B, LP		(Delaware)	(“GPPMBHB”)
GPP Mezzanine Blocker B, LP		(Delaware)	(“GPPMBHB: 4.4%; GPPIVLP: 95.6%)
GoldPoint Mezzanine Partners Offshore IV, L.P.		(Cayman Islands)
GoldPoint Partners Co-Investment V GenPar GP LLC		(Delaware)
GoldPoint Partners Co-Investment V GenPar, LP		(Delaware)
GoldPoint Partners Co-Investment Fund A, LP		(Delaware)
GoldPoint Partners Co-Investment V, LP		(Delaware)**
GoldPoint Partners Co-Investment V ECI Blocker Holdco A, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker A, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker Holdco B, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker B, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker Holdco C, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker C, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker Holdco D, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker D, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker Holdco E, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker E, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker Holdco F, LP		(Delaware)
GoldPoint Partners Co-Investment V ECI Blocker F, LP		(Delaware)
GoldPoint Partners Select Manager III GenPar GP, LLC		(Delaware)
GoldPoint Partners Select Manager III GenPar, L.P.		(Cayman Islands)
GoldPoint Partners Select Manager Fund III, L.P.		(Cayman Islands)
GoldPoint Partners Select Manager Fund III AIV, L.P.		(Delaware)
GoldPoint Partners Canada III GenPar Inc.		(Canada)
GoldPoint Partners Select Manager Canada Fund III, L.P.		(Canada)
NYLCAP 2010 Co-Invest GenPar GP, LLC		(Delaware)
NYLCAP 2010 Co-Invest GenPar L.P.		(Delaware)
NYLCAP 2010 Co-Invest L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker Holdco A L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker A L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker Holdco B L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker B L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker Holdco E L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker E L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker Holdco F L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker F L.P.		(Delaware)
NYLCAP 2010 Co-Invest ECI Blocker Holdco G L.P.		(Delaware)
NYLCAP 2010 C0-Invest ECI Blocker G L.P.		(Delaware)
NYLCAP Canada GenPar Inc.		(Canada)
NYLCAP Select Manager Canada Fund, LP		(Canada)
NYLCAP Canada II GenPar Inc.		(Canada)
NYLCAP Select Manager Canada Fund II, L.P.		(Canada)
NYLIM Mezzanine GenPar GP, LLC		(Delaware)
NYLIM Mezzanine GenPar, LP		(Delaware)
New York Life Investment Management Mezzanine Partners, LP		(Delaware)
NYLIM Mezzanine Partners Parallel Fund, LP		(Delaware)
NYLIM Mezzanine Partners II GenPar GP, LLC		(Delaware)
NYLIM Mezzanine Offshore Partners II, LP		(Cayman Islands)
NYLIM Mezzanine Partners II GenPar, LP		(Delaware)
New York Life Investment Management Mezzanine Partners II, LP		(Delaware)
NYLIM Mezzanine II Luxco S.à.r.l.		(Luxembourg)
NYLIM Mezzanine Partners II Parallel Fund, LP		(Delaware)
NYLIM Mezzanine II Parallel Luxco S.à.r.l.		(Luxembourg)
Voice Holdco Ltd.		(Nova Scotia, Canada)	(27%)9
Voice Holdings Ltd.		(Nova Scotia, Canada)
Voice Construction Ltd.		(Alberta, Canada)
Voice Construction Opco ULC		(Alberta, Canada)
NYLCAP Mezzanine Partners III GenPar GP, LLC		(Delaware)
NYLCAP Mezzanine Partners III GenPar, LP		(Delaware)
NYLCAP Mezzanine Partners III-K, LP		(Delaware)**
NYLCAP Mezzanine Partners III, LP		(Delaware)**
NYLCAP Mezzanine Partners III Parallel Fund, LP		(Delaware)**
NYLCAP Mezzanine Partners III 2012 Co-Invest, LP		(Delaware)**
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker Holdco A, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker A, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker Holdco B, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker B, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker Holdco C, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker C, LP		(Delaware)
C.B. Fleet TopCo. LLC		(Delaware)	(17%**collectively)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker Holdco D, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker D, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker Holdco E, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker Holdco F, LP		(Delaware)
NYLCAP Mezzanine Partners III 2012 Co-Invest ECI Blocker F, LP		(Delaware)
NYLCAP Mezzanine Offshore Partners III, L.P.		(Cayman Islands)
NYLCAP Select Manager GenPar GP, LLC		(Delaware)
NYLCAP Select Manager GenPar, LP		(Delaware)
NYLCAP Select Manager Fund, LP		(Delaware)
NYLCAP Select Manager Cayman Fund, LP		(Cayman Islands)
NYLCAP Select Manager II GenPar GP, LLC		(Delaware)
NYLCAP Select Manager II GenPar, L.P.		(Cayman Islands)
NYLCAP Select Manager Fund II, L.P.		(Cayman Islands)**
NYLCAP India Funding LLC		(Delaware)
NYLIM-JB Asset Management Co., LLC		(Mauritius)	(24.66%)4
New York Life Investment Management India Fund II, LLC		(Mauritius)
New York Life Investment Management India Fund (FVCI) II, LLC		(Mauritius)
NYLCAP India Funding III LLC		(Delaware)
NYLIM-Jacob Ballas Asset Management Co. III, LLC		(Mauritius)	(24.66%)5
NYLIM Jacob Ballas India Fund III (Mauritius) LLC
NYLIM Jacob Ballas Capital India (FVCI) III (Mauritius) LLC
NYLIM Jacob Ballas India (FII) III (Mauritius) LLC
Evolvence Asset Management, Ltd.			(Goldpoint: 24.5%)
NYLCAP Holdings		(Mauritius)
Jacob Ballas Capital India PVT. Ltd.		(Mauritius)	(23.30%)
NYLIM Service Company LLC		(Delaware)
NYL Workforce GP LLC		(Delaware)
New York Life Investment Management LLC		(Delaware)
NYLIM-GCR Fund I, LLC		(Delaware)	(50%)
NYLIM Fund II GP, LLC		(Delaware)
NYLIM Real Estate Mezzanine Fund II, LP		(Delaware)
NYLIM-TND, LLC		(Delaware)
NYLIM-DCM, LLC		(Delaware)
NYLIM-MM, LLC		(Delaware)
DCM-N, LLC		(Delaware)	(80%)
DCM Warehouse Series A, LLC		(Delaware)
DCM Warehouse Series One, LLC		(Delaware)
Sixteen West Savannah, LLC		(Indiana)
NYLIM RE Mezzanine Fund II Investment Corporation		(Delaware)
WFHG GP, LLC		(Delaware)	(50%)
Workforce Housing Fund I-2007 LP		(Delaware)	(50%)
IndexIQ Holdings Inc.		(Delaware)	(“IQ Holdings”)
Financial Development LLC		(Delaware)	(“FD LLC”) (74.37%; IQ Holdings: 25.63%)
IndexIQ Inc.		(Delaware)
IndexIQ LLC		(Delaware)
IndexIQ Advisors LLC		(Delaware)
New York Life Investment Management Holdings International S.a.r.l.		(Luxembourg)
New York Life Investment Management Holdings II International S.a.r.l.		(Luxembourg)
New York Life Investment Management Global Holdings S.a.r.l.		(Luxembourg)	(“NYLIMGH”)
Candriam Luxco S.a.r.l.		(Luxembourg)	(“CANLUXS”)
Candriam Luxembourg		(Luxembourg)	(“CANLUX”) (NYLIMGH: 96%; 1 share held by CANLUXS)
Candriam Luxembourg Italy Branch
Candriam Luxembourg UK Establishment
Candriam Luxembourg Germany Branch
Candriam Luxembourg US Branch
Candriam Luxembourg Spain Branch
Candriam Luxembourg Netherlands Branch
Candriam Luxembourg MENA Branch (Dubai, UAE)
Candriam Belgium		(Belgium)	(“CANBEL”) (99.99%; NYLIMGH: 0.01%)
Candriam France		(France)	(“CANFR”)
Candriam Monétaire			(CANBEL: 16.4%; CANFR: 5.48%)
Candriam Switzerland LLC		(Switzerland)
BIL Prime Advanced Cash + 100		(Lux)	(CANLUX: 36.14%; CANBEL: 32.23%) (“BILPAC”)
Cordius CIG		(Lux)	(CANLUX: 68.04%; CANBEL: 15.98%; CANFR: 15.98%)
Candriam Bonds Convertible Opportunities		(Lux)	(CANLUX: 29.54%)
Candriam Alternative Return Equity Market Neutral		(Lux)	(21.39%)
Ausbil Investment Management Limited		(Australia)	(78.35%)
Ausbil Australia Pty. Ltd.		(Australia)
Ausbil Asset Management Pty. Ltd.		(Australia)
Ausbil Investment Management Limited Employee Share Trust		(Australia)	(Ausbil: 100%)
NYLIFE Distributors LLC		(Delaware)
Private Advisors L.L.C.		(Delaware)	(65.85%)
PACIF Carry Parent, LLC		(Delaware)
PACIF Carry, LLC		(Delaware)
PACIF GP, LLC		(Delaware)
Private Advisors Coinvestment Fund, LP		(Delaware)
PACIF II GP, LLC		(Delaware)
Private Advisors Coinvestment Fund II LP		(Delaware)
PACIF II Carry Parent, LLC		(Delaware)
PACIF II Carry, LLC		(Delaware)
PACIF III GP, LLC		(Delaware)
Private Advisors Coinvestment Fund III, LP		(Delaware)
PACIF III Carry Parent, LLC		(Delaware)
PACIF III Carry, LLC		(Delaware)
PACIF IV GP, LLC		(Delaware)
Private Advisors Coinvestment Fund IV, LP		(Delaware)
PACIF IV Carry Parent, LLC		(Delaware)
PACIF IV Carry, LLC		(Delaware)
PA Hedged Equity Fund, L.P.		(Delaware)
Private Advisors Hedged Equity Fund (QP), L.P.		(Delaware)
Private Advisors Hedged Equity Master Fund		(Delaware)6
Private Advisors Small Company Buyout Fund II, L.P.		(Delaware)
PASCBF III GP, LLC		(Delaware)
Private Advisors Small Company Buyout Fund III, LP		(Delaware)
PASCBF IV GP, LLC		(Delaware)
Private Advisors Small Company Buyout Fund IV, LP		(Delaware)
PASCBF IV Carry Parent, LLC		(Delaware)
PASCBF IV Carry, LLC		(Delaware)
PASCBF V GP, LLC		(Delaware)
Private Advisors Small Company Buyout Fund V, LP		(Delaware)
Private Advisors Small Company Buyout Fund V–ERISA Fund, LP		(Delaware)
PASCBF V Carry Parent, LLC		(Delaware)
PASCBF Carry, LLC		(Delaware)
PASCPEF VI Carry Parent, LLC		(Delaware)
PASCPEF VI Carry, LLC		(Delaware)
PASCPEF VI GP, LLC		(Delaware)
Private Advisors Small Company Private Equity Fund VI, LP		(Delaware)
Private Advisors Small Company Private Equity Fund VI (Cayman), LP		(Cayman Islands)
PASCPEF VII GP, LLC		(Delaware)
Private Advisors Small Company Private Equity Fund VII, LP		(Delaware)
PASCPEF VII Carry Parent, LLC		(Delaware)
PASCPEF VII Carry, LLC		(Delaware)
Cuyahoga Capital Partners I Management Group, LLC		(Delaware)
Cuyahoga Capital Partners I, L.P.		(Delaware)
Cuyahoga Capital Partners II Management Group LLC		(Delaware)
Cuyahoga Capital Partners II LP		(Delaware)
Cuyahoga Capital Partners III Management Group LLC		(Delaware)
Cuyahoga Capital Partners III LP		(Delaware)
Cuyahoga Capital Partners IV Management Group LLC		(Delaware)
Cuyahoga Capital Partners IV LP		(Delaware)
Cuyahoga Capital Emerging Buyout Partners Management Group LLC		(Delaware)
Cuyahoga Capital Emerging Buyout Partners LP		(Delaware)
PA Real Assets Carry Parent, LLC		(Delaware)
PA Real Assets Carry, LLC		(Delaware)
PA Emerging Manager Carry Parent, LLC		(Delaware)
PA Emerging Manager Carry, LLC		(Delaware)
RIC I GP, LLC		(Delaware)
Richmond Coinvestment Partners I, LP		(Delaware)
RIC I Carry Parent, LLC		(Delaware)
RIC I Carry, LLC		(Delaware)
PASF V GP, LLC		(Delaware)
Private Advisors Secondary Fund V, LP		(Delaware)
PASF V Carry Parent, LLC		(Delaware)
PASF Carry, LLC		(Delaware)
PARAF GP, LLC		(Delaware)
Private Advisors Real Assets Fund, LP		(Delaware)
PARAF Carry Parent, LLC		(Delaware)
PARAF Carry, LLC		(Delaware)
PASCCIF GP, LLC		(Delaware)
Private Advisors Small Company Coinvestment Fund, LP		(Delaware)
PASCCIF Carry Parent, LLC		(Delaware)
PASCCIF Carry, LLC		(Delaware)
Private Advisors Hedged Equity Fund, Ltd.		(Cayman Islands)	(0%)
Private Advisors Hedged Equity Fund (QP), Ltd.		(Cayman Islands)	(0%)
Private Advisors Hedged Equity Master Fund, Ltd.		(Cayman Islands)	(owned by two funds above)
Private Advisors Stable Value ERISA Fund, Ltd.		(Cayman Islands)	(0%)
Private Advisors Stable Value Master Fund, Ltd.		(Cayman Islands)	(owned by two funds above)
UVF GP, LLC		(Delaware)
Undiscovered Value Fund, LP		(Delaware)
Undiscovered Value Fund, Ltd.		(Cayman Islands)8
Undiscovered Value Master Fund SPC		(Cayman Islands)
Madison Core Property Fund LLC		(Delaware)	(NYL Investors is Non Member Manager)8
MIREF 1500 Quail, LLC		(Delaware)
MIREF Mill Creek, LLC		(Delaware)
MIREF Gateway, LLC		(Delaware)
MIREF Delta Court, LLC		(Delaware)
MIREF Fremont Distribution Center, LLC		(Delaware)
1101 Taylor Road LLC		(Delaware)
MIREF Century, LLC		(Delaware)
MIREF York Road, LLC		(Delaware)
York Road EW LLC		(Delaware)	(64.8%)
York Road Retail West, LLC		(Delaware)	(64.8%)
2001 EW LLC		(Delaware)
2122 EW LLC		(Delaware)
MIREF Saddle River LLC		(Delaware)
Via Verde San Dimas, LLC		(Delaware)
MIREF DC Corp.		(Delaware)
MIREF L Street, LLC		(Delaware)
1901 L Street Corp.		(Delaware)
1901 L Street LLC		(District of Columbia)
MIREF Newpoint Commons, LLC		(Delaware)
MIREF Northsight, LLC		(Delaware)
MIREF Riverside, LLC		(Delaware)
MIREF Corporate Woods, LLC		(Delaware)
MIREF Bedminster, LLC		(Delaware)
MIREF Barton’s Creek, LLC		(Delaware)
Barton’s Lodge Apartments, LLC		(Delaware)	(90%)
MIREF Marketpointe, LLC		(Delaware)
MIREF 101 East Crossroads, LLC		(Delaware)
101 East Crossroads, LLC		(Delaware)
MIREF Waterview, LLC		(Delaware)
MIREF Chain Bridge, LLC		(Delaware)
1991 Chain Bridge Road, LLC		(Delaware)
MIREF Aptakisic, LLC		(Delaware)
Aptakisic Creek Corporate Park, LLC		(Delaware)
MIREF Hawthorne, LLC		(Delaware)
MIREF Auburn 277, LLC		(Delaware)
MIREF Sumner North, LLC		(Delaware)
MIREF Wellington, LLC		(Delaware)
MIREF Warner Center, LLC		(Delaware)
MADISON-IND Valley Business Park CA LLC		(Delaware)
MADISON-MF Duluth GA LLC		(Delaware)
MADISON-MF Casa Santa Fe AZ LLC		(Delaware)
MADISON-MF Cabrillo AZ LLC		(Delaware)
MADISON-OFC Centerstone I CA LLC		(Delaware)
MADISON-OFC Centerstone III CA LLC		(Delaware)
MADISON-MOB Centerstone IV CA LLC		(Delaware)
MADISON-OFC Canyon Commons CA LLC		(Delaware)
MADISON-OFC Centerpoint Plaza CA LLC		(Delaware)
MADISON-IND Logistics NC LLC		(Delaware)
MCPF-LRC Logistics LLC		(Delaware)	(90%)
MADISON-MF Desert Mirage AZ LLC		(Delaware)
MADISON-OFC One Main Place OR LLC		(Delaware)
MADISON-IND Fenton MO LLC		(Delaware)
MADISON-IND Hitzert Roadway MO LLC		(Delaware)
MADISON-MF Hoyt OR LLC		(Delaware)
MADISON-RTL Clifton Heights PA LLC		(Delaware)
MADISON-IND Locust CA LLC		(Delaware)
MADISON-OFC Weston Pointe FL LLC		(Delaware)
MADISON-MF Henderson NV LLC		(Delaware)
MCPF-SP Henderson LLC		(Delaware)	(90%)
MADISON-SP Henderson LLC		(Delaware)	(90%)
MADISON-IND VISTA LOGISTICS OR LLC		(Delaware)
MADISON-SPECHT VISTA LOGISTICS LLC		(Delaware)	(95%)
MADISON-MF MCCADDEN CA LLC		(Delaware)
NYLM Alternatives LLC		(Delaware)
CVP Holdings, LLC		(Delaware)
CVP CLO Manager, LLC		(Delaware)
Credit Value Partners, LLC		(Delaware)
CHIPC Evergreen General, LLC		(Delaware)
CHIPC Evergreen Intermediate Fund, LP		(Cayman Islands)
CVP High Income Private Credit Master Fund, LP		(Cayman Islands)
CVP High Income Private Credit Evergreen Fund (Cayman), LP		(Cayman Islands)
CVP High Income Private Credit Evergreen Fund, LP		(Delaware)
CVP Loan Servicing LLC		(Delaware)
CHIPC PE General, LLC		(Delaware)
CHIPC PE Intermediate Fund, LP		(Cayman Islands)
CVP High Income Private Equity PE Fund (Cayman), LP		(Cayman Islands)
CVP High Income Private Credit PE Fund, LP		(Delaware)
CVP Distressed Fund, LLC		(Delaware)
CVF IV General, LLC		(Delaware)
Credit Value Fund IV, LP		(Delaware)
Credit Value Fund (Cayman) IV, LP		(Cayman Islands)
Credit Value Intermediate Fund IV, LP		(Cayman Islands)
Credit Value Master Fund IV-A, LP		(Cayman Islands)
Credit Value Master Fund IV-B, LP		(Cayman Islands)
CVP SPV LLC		(Delaware)
NYLIM Flatiron CLO 2004-1 Ltd.		(Cayman Islands)7
NYLIM Flatiron CLO 2004-1 Equity Holdings LLC, Series A		(Delaware)
NYLIM Flatiron CLO 2006-1 Ltd.		(Cayman Islands)
NYLIM Flatiron CLO 2006-1 Equity Holdings LLC, Series A		(Delaware)
Flatiron CLO 2007-1 Ltd.		(Cayman Islands)
NYLIM Flatiron CLO 2007-1 Equity Holdings LLC, Series A		(Cayman Islands)
Flatiron CLO 2011-1 Ltd.		(Cayman Islands)
Flatiron CLO 2012-1 Ltd.		(Cayman Islands)
Flatiron CLO 2013-1-Ltd.		(Cayman Islands)
Flatiron CLO 2014-1-Ltd.		(Cayman Islands)
Flatiron CLO 2015-1 Ltd.		(Cayman Islands)
Flatiron CLO 17 Ltd.		(Cayman Islands)	(NYL Investors 100% Equity)
Stratford CDO 2001-1 Ltd.		(Cayman Islands)
Silverado CLO 2006-II Limited		(Cayman Islands)
Silverado 2006-II Equity Holdings LLC, Series A		(Cayman Islands)
NYLIFE LLC		(Delaware)
Eagle Strategies LLC		(Delaware)
New York Life Capital Corporation		(Delaware)
New York Life Trust Company		(New York)
NYL Executive Benefits LLC		(Delaware)
NYLIFE Securities LLC		(Delaware)
NYLINK Insurance Agency Incorporated		(Delaware)
NYLUK I Company		(United Kingdom)
NYLUK II Company		(United Kingdom)
Gresham Mortgage		(United Kingdom)
W Construction Company		(United Kingdom)
WUT		(United Kingdom)
WIM (AIM)		(United Kingdom)
Silver Spring, LLC		(Delaware)
Silver Spring Associates, L.P.		(Pennsylvania)
SCP 2005-C21-002 LLC		(Delaware)
SCP 2005-C21-003 LLC		(Delaware)
SCP 2005-C21-006 LLC		(Delaware)
SCP 2005-C21-007 LLC		(Delaware)
SCP 2005-C21-008 LLC		(Delaware)
SCP 2005-C21-009 LLC		(Delaware)
SCP 2005-C21-017 LLC		(Delaware)
SCP 2005-C21-018 LLC		(Delaware)
SCP 2005-C21-021 LLC		(Delaware)
SCP 2005-C21-025 LLC		(Delaware)
SCP 2005-C21-031 LLC		(Delaware)
SCP 2005-C21-036 LLC		(Delaware)
SCP 2005-C21-041 LLC		(Delaware)
SCP 2005-C21-043 LLC		(Delaware)
SCP 2005-C21-044 LLC		(Delaware)
SCP 2005-C21-048 LLC		(Delaware)
SCP 2005-C21-061 LLC		(Delaware)
SCP 2005-C21-063 LLC		(Delaware)
SCP 2005-C21-067 LLC		(Delaware)
SCP 2005-C21-069 LLC		(Delaware)
SCP 2005-C21-070 LLC		(Delaware)
NYMH-Ennis GP, LLC		(Delaware)
NYMH-Ennis, L.P.		(Texas)
NYMH-Freeport GP, LLC		(Delaware)
NYMH-Freeport, L.P.		(Texas)
NYMH-Houston GP, LLC		(Delaware)
NYMH-Houston, L.P.		(Texas)
NYMH-Plano GP, LLC		(Delaware)
NYMH-Plano, L.P.		(Texas)
NYMH-San Antonio GP, LLC		(Delaware)
NYMH-San Antonio, L.P.		(Texas)
NYMH-Stephenville GP, LLC		(Delaware)
NYMH-Stephenville, L.P.		(Texas)
NYMH-Taylor GP, LLC		(Delaware)
NYMH-Taylor, L.P.		(Texas)
NYMH-Attleboro MA, LLC		(Delaware)
NYMH-Farmingdale, NY LLC		(Delaware)
NYLMDC-King of Prussia GP, LLC		(Delaware)
NYLMDC-King of Prussia Realty, LP		(Delaware)
NYLife Real Estate Holdings LLC		(Delaware)
Huntsville NYL LLC		(Delaware)
CC Acquisitions, LP		(Delaware)
REEP-IND Continental NC LLC		(Delaware)
LRC-Patriot, LLC		(Delaware)	(93%)
REEP-LRC Industrial LLC		(Delaware)
REEP-IND Forest Park NJ LLC		(Delaware)
FP Building 4 LLC		(Delaware)
FP Building 1-2-3 LLC		(Delaware)
FP Building 17, LLC		(Delaware)
FP Building 18, LLC		(Delaware)
FP Building 19, LLC		(Delaware)
FP Building 20, LLC		(Delaware)
FP Mantua Grove LLC		(Delaware)
FP Lot 1.01 LLC		(Delaware)
REEP-IND NJ LLC		(Delaware)
NJIND JV LLC		(Delaware)
NJIND Hook Road LLC		(Delaware)
NJIND Raritan Center LLC		(Delaware)
NJIND Talmadge Road LLC		(Delaware)
NJIND Bay Avenue LLC		(Delaware)
NJIND Melrich Road LLC		(Delaware)
NJIND Carter Drive LLC		(Delaware)
NJIND Corbin Street LLC		(Delaware)
REEP-IND Valwood TX LLC		(Delaware)
REEP-MF Cumberland TN LLC		(Delaware)
Cumberland Apartments, LLC		(Tennessee)
REEP-MF Enclave TX LLC		(Delaware)
Enclave CAF LLC		(Delaware)
REEP-MF Marina Landing WA LLC		(Delaware)
REEP-SP Marina Landing LLC		(Delaware)	(98%)
REEP-MF Mira Loma II TX LLC		(Delaware)
Mira Loma II, LLC		(Delaware)	(50%)
REEP-MF Summitt Ridge CO LLC		(Delaware)
Summitt Ridge Apartments, LLC		(Delaware)
REEP-MF Woodridge IL LLC		(Delaware)
REEP-OF Centerpointe VA LLC		(Delaware)
Centerpointe (Fairfax) Holdings LLC		(Delaware)	(50%)
REEP-OFC 525 N Tryon NC LLC		(Delaware)
525 Charlotte Office LLC		(Delaware)	(95%)
REEP-OFC 575 Lex NY LLC		(Delaware)
REEP-OFC 575 Lex NY GP LLC		(Delaware)
Maple REEP-OFC 575 Lex Holdings LP		(Delaware)	(50%)
Maple REEP-OFC 575 Lex Owner LLC		(Delaware)	(50%)
REEP OFC Westory DC LLC		(Delaware)
REEP-RTL SASI GA LLC		(Delaware)
REEP-RTL Bradford PA LLC		(Delaware)
REEP-OFC Royal Centre GA LLC		(Delaware)
Royal Centre, LLC		(Delaware)	(90%)
REEP-RTL CTC NY LLC		(Delaware)
REEP-OFC 5005 LBJ Freeway TX LLC		(Delaware)	(97%)
5005 LBJ Tower LLC		(Delaware)	(97%)
REEP-MF SPENCER NV LLC		(Delaware)
REEP-HZ SPENCER JV LLC		(Delaware)	(92.7%)
REEP-HZ SPENCER LLC		(Delaware)	(92.7%)
REEP-OFC/RTL MARKET ROSS TX LLC		(Delaware)
MARKET ROSS TX JV LLC		(Delaware)
MARKET ROSS TX GARAGE OWNER LLC		(Delaware)
MARKET ROSS TX OFFICE OWNER LLC		(Delaware)
MARKET ROSS TX RETAIL OWNER LLC		(Delaware)
REEP-OFC Mallory TN LLC		(Delaware)
3665 Mallory JV LLC		(Delaware)	(90.9%)
REEP-OFC WATER RIDGE NC LLC		(Delaware)
2015 DIL PORTFOLIO HOLDINGS LLC		(Delaware)	(NYLIC: 62.307692%; NYLIAC: 37.692308%)
CT 611 W. JOHNSON AVE LLC		(Delaware)
CT 550 RESEARCH PKWY LLC		(Delaware)
CT 160 CORPORATE COURT LLC		(Delaware)
NJ 663 E. CRESCENT AVE LLC		(Delaware)
NJ 1881 ROUTE 46 LLC		(Delaware)
PA 180 KOST RD LLC		(Delaware)
Cortlandt Town Center LLC		(Delaware)
REEP-IND 10 WEST AZ LLC		(Delaware)
REEP-IND Aegean MA LLC		(Delaware)
REEP-IND CHINO CA LLC		(Delaware)
REEP-IND FREEDOM MA LLC		(Delaware)
REEP-IND Fridley MN LLC		(Minnesota)
REEP-IND Green Oaks IL LLC		(Delaware)
REEP-IND Kent LLC		(Delaware)
REEP-IND LYMAN MA LLC		(Delaware)
REEP-IND RTG NC LLC		(Delaware)
REEP-MF Chandler AZ LLC		(Delaware)
REEP-MF FOUNTAIN PLACE MN LLC		(Delaware)
REEP-MF Issaquah WA LLC		(Delaware)
REEP-MF Mount Vernon GA LLC		(Delaware)
REEP-MF Verde NC LLC		(Delaware)
REEP-MF Wallingford WA LLC		(Delaware)
REEP-OFC Bellevue WA LLC		(Delaware)
REEP-OFC DRAKES LANDING CA LLC		(Delaware)
REEP-OFC CORPORATE POINTE CA LLC		(Delaware)
REEP-OFC VON KARMAN CA LLC		(Delaware)
REEP-OFC WATER RIDGE NC HOLDCO LLC		(Delaware)
REEP-OFC ONE WATER RIDGE NC LLC		(Delaware)
REEP-OFC TWO WATER RIDGE NC LLC		(Delaware)
REEP-OFC FOUR WATER RIDGE NC LLC		(Delaware)
REEP-OFC FIVE WATER RIDGE NC LLC		(Delaware)
REEP-OFC SIX WATER RIDGE NC LLC		(Delaware)
REEP-OFC SEVEN WATER RIDGE NC LLC		(Delaware)
REEP-OFC EIGHT WATER RIDGE NC LLC		(Delaware)
REEP-OFC NINE WATER RIDGE NC LLC		(Delaware)
REEP-OFC TEN WATER RIDGE NC LLC		(Delaware)
REEP-OFC ELEVEN WATER RIDGE NC LLC		(Delaware)
REEP-MF FOUNTAIN PLACE MN LLC		(Delaware)
REEP-MF FOUNTAIN PLACE LLC		(Delaware)
REEP-OFC ONE BOWDOIN SQUARE MA LLC		(Delaware)
PTC Acquisitions, LLC		(Delaware)
Martingale Road LLC		(Delaware)
New York Life Funding		(Cayman Islands)8
New York Life Global Funding		(Delaware)8
NYL Equipment Issuance Trust		(Delaware)9
NYL Equipment Issuance Trust 2014-2		(Delaware)9
Government Energy Savings Trust 2003-A (GEST)		(New York)9
UFI-NOR Federal Receivables Trust, Series 2009B		(New York)9
NYLARC Holding Company Inc.		(Arizona)8
New York Life Agents Reinsurance Company		(Arizona)8

⁽⁺⁾ By including the indicated corporations in this list, New York Life is not stating or admitting that said corporations are under its actual control; rather, these corporations are listed here to ensure full compliance with the requirements of this Form N-4.

^(*)  Registered investment company as to which New York Life and/or its subsidiaries perform one or more of the following services: investment management, administrative, distribution, transfer agency and underwriting services. It is not a subsidiary of New York Life and is included for informational purposes only.

^(†)  New York Life Investment Management LLC serves as investment adviser to this entity, the shares of which are held of record by separate accounts of NYLIAC. New York Life disclaims any beneficial ownership and control of this entity. New York Life and NYLIAC as depositors of said separate accounts have agreed to vote their shares as to matters covered in the proxy statement in accordance with voting instructions received from holders of variable annuity and variable life insurance policies at the shareholders meeting of this entity. It is not a subsidiary of New York Life, but is included here for informational purposes only.

1 NYL Cayman Holdings Ltd. owns 15.62%.

2 NYL Worldwide Capital Investment LLC owns 0.002%.

3 NYLIC owns 13.64%, NYLIAC owns 0.00%, and MacKay owns 0.72% for a total ownership of 14.36%.

4 NYLCAP Manager LLC owns 24.66% of the voting management shares. NYLCAP India Funding LLC owns 36% of non-voting carry shares.

5 NYLCAP Manager LLC owns 24.66% of the voting management shares. NYLCAP India Funding III LLC owns 31.36% of non-voting carry shares.

6 Private Advisors Hedged Equity Fund (QP), L.P. owns 33.61% and PA Hedged Equity Fund, L.P. owns 66.39% of the Master Fund.

7 Control of each CLO/CDO and other entities is pursuant to an investment management contract with NYLIM or affiliate, not through ownership of voting interests unless, otherwise, ownership noted.

8 Control is through a reliance relationship between NYLIC and this entity, not ownership of voting interests.

9 Control is through financial interest, not ownership of voting interests.

C-4

ITEM 27.  NUMBER OF CONTRACT OWNERS

As of January 31, 2017, there were approximately 2,091 owners of Non-Qualified Policies offered under this Registration Statement.

ITEM 28.  INDEMNIFICATION

Article IX of the Amended and Restated By-Laws of New York Life Insurance and Annuity Corporation (“NYLIAC”) provides that NYLIAC shall indemnify and hold harmless (including the provision of a defense) certain persons to the fullest extent permitted by the Delaware General Corporation Law against all expenses, costs, judgments, penalties, fines, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amount paid in settlement) that any such person reasonably incurs or suffers if he/she is made party (or threatened to be made party) or is otherwise involved in a claim, action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he/she is (or was) a Director or officer of NYLIAC or was serving at NYLIAC’s request as a Director, officer, or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan. Such persons also have the right to have NYLIAC pay the reasonable expenses (including reasonable attorneys’ fees) incurred in the defense of any proceedings in advance of their final disposition, subject to certain conditions. NYLIAC may also, to the extent authorized by its Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of NYLIAC.

Please refer to Article IX of the Amended and Restated By-Laws of NYLIAC (Exhibit No. (6)(b)(3) hereto) for the full text of the indemnification provisions.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Directors, officers and controlling persons of the Registrant pursuant to the provisions described above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

C-5

ITEM 29.  PRINCIPAL UNDERWRITERS

(a) Investment companies (other than the Registrant) for which NYLIFE Distributors LLC is currently acting as underwriter:

NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I

NYLIAC Variable Universal Life Separate Account-I

NYLIAC MFA Separate Account-I

NYLIAC MFA Separate Account-II

NYLIAC Variable Annuity Separate Account-I

NYLIAC Variable Annuity Separate Account-II

NYLIAC Variable Annuity Separate Account-IV

NYLIAC VLI Separate Account

Mainstay Funds Trust

The MainStay Funds

MainStay VP Funds Trust

(b) Directors and Officers.

The principal business address of each director and officer of NYLIFE Distributors LLC is 30 Hudson Street, Jersey City, NJ 07302.

Names of Directors and Officers	Positions and Offices with Underwriter
Stephen P. Fisher	Chairman of the Board and Chief Executive Officer
Robert M. Gardner	Manager
Frank Harte	Manager, Senior Vice President & Chief Financial Officer
John W. Akkerman	Senior Managing Director, MacKay Shields Institutional Sales
Christopher O. Blunt	Senior Managing Director & President, Investment Group
Robert J. Hebron	Senior Managing Director, Advanced Markets Network
Dylan W. Huang	Senior Managing Director, Individual Annuities
Yie-Hsin Hung	Senior Vice President Investment Management
Barbara J. McInerney	Senior Managing Director, Compliance
Robert M. Barrack	Managing Director, GoldPoint Partners Institutional Sales
James J. Cristallo	Managing Director, Advanced Markets Network
David Fogel	Managing Director, Index IQ
Mark A. Gomez	Managing Director and General Counsel
John J. O’Gara	Managing Director, US Life and Agency Product Consulting
Amanda S. Parness	Managing Director, GoldPoint Partners Institutional Sales
Christopher R. Stringer	Managing Director
Robin M. Wagner	Managing Director and Chief Compliance Officer
Brian D. Wickwire	Managing Director, NYLIM Service Company, Controller and Chief Operating Officer
Karen A. Bain	Vice President - Tax
Marta Hansen	Director, Financial Operations Principal and Treasurer
Rafaela M. Herrera	Director, Compliance and Sales Material Review
Linda M. Howard	Director, Compliance, Anti-Money Laundering Officer, and Office of Foreign Assets Control Officer
George S. Shively	Secretary
Colleen A. Meade	Assistant Secretary
Elizabeth A. Sharrier	Assistant Secretary

C-6

(c) Commissions and Other Compensation

Name of Principal Underwriter	New Underwriting Discounts and Commissions	Compensation on Redemption or Annuitization	Brokerage Commission	Compensation
NYLIFE Distributors Inc.	-0-	-0-	-0-	-0-

ITEM 30.  LOCATION OF ACCOUNTS AND RECORDS

All accounts and records required to be maintained by Section 31(a) of the 1940 Act and the rules under it are maintained by NYLIAC at its home office, 51 Madison Avenue, Room 0150, New York, New York 10010; New York Life—Records Division, 110 Cokesbury Road, Lebanon, New Jersey 08833 and with Iron Mountain Records Management, Inc. at both 8 Neptune Drive, Poughkeepsie, New York 12601 and Route 9W South, Port Ewen, New York 12466-0477.

ITEM 31.  MANAGEMENT SERVICES – Not applicable.

ITEM 32.  UNDERTAKINGS – 

Registrant hereby undertakes:

(a) to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted;

(b) to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information;

(c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request.

REPRESENTATION AS TO THE REASONABLENESS OF AGGREGATE FEES AND CHARGES

New York Life Insurance and Annuity Corporation (“NYLIAC”), the sponsoring insurance company of the NYLIAC MFA Separate Account-II, hereby represents that the fees and charges deducted under the annuities described in this Registration Statement are reasonable in relation to the services rendered, the expenses expected to be incurred and the risks assumed by NYLIAC.

SECTION 403(b) REPRESENTATIONS

Registrant represents that it is relying on a no-action letter dated November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in connection with redeemability restrictions on Section 403(b) Policies, and that paragraphs numbered (1) through (4) of that letter will be complied with.

C-7

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this Amendment to the Registration Statement to be signed on its behalf in New York, New York on April 11, 2017.

NYLIAC MULTI-FUNDED ANNUITY
SEPARATE ACCOUNT – II
(Registrant)
By:	/s/    Matthew Williams
	Name: Matthew Williams
	Title: Vice President
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(Depositor)
By:	/s/    Matthew Williams
	Name: Matthew Williams
	Title: Vice President

As required by the Securities Act of 1933, this Amendment to the Registration Statement has been signed by the following persons in the capacities and on the date indicated.

Christopher Ashe *	Director
David G. Bedard*	Director
Christopher O. Blunt*	Director
John T. Fleurant*	Director and (Chief Financial Officer)
Robert M. Gardner*	Director and (Principal Accounting Officer)
Matthew M. Grove*	Director
Frank Harte*	Director
Thomas A. Hendry*	Director
Dylan W. Huang*	Director
John Y. Kim*	Director and President
Mark J. Madgett*	Director
Theodore A. Mathas*	Chairman and (Principal Executive Officer)
Amy Miller*	Director
Arthur H. Seter*	Director
Joel M. Steinberg*	Director
Matthew D. Wion*	Director

By:	/s/    Matthew Williams
	Matthew Williams
	Attorney-in-Fact
	April 11, 2017

*  Pursuant to Powers of Attorney filed herewith.

EXHIBIT INDEX

EXHIBIT NUMBER	DESCRIPTION
(9)	Opinion and Consent of Thomas F. English, Esq.
(10)(a)	Consent of PricewaterhouseCoopers LLP.
(10)(b)	Powers of Attorney.