485BPOS 1 d862839d485bpos.htm NEW YORK LIFE INS & ANNUITY CORP VAR UNIV LIFE SEP ACC I NEW YORK LIFE INS & ANNUITY CORP VAR UNIV LIFE SEP ACC I

As filed with the Securities and Exchange Commission on April 14, 2015

Registration No. 333-102674

811-07798

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

 

 

Form N-6

REGISTRATION STATEMENT

UNDER

  THE SECURITIES ACT OF 1933    þ
  Post-Effective Amendment No. 17    þ

and

REGISTRATION STATEMENT

UNDER

    THE INVESTMENT COMPANY ACT OF 1940    þ
    Amendment No. 126    þ

 

 

NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT-I

(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

Charles A. Whites, Jr., Esq.

New York Life Insurance and Annuity Corporation

51 Madison Avenue

New York, NY 10010

(Name and Address of Agent for Service)

 

 

Copy to:

Stephen E. Roth, Esq.

Sutherland Asbill & Brennan LLP

1275 Pennsylvania Avenue, NW

Washington, DC 20004-2415

 

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.
  þ on May 1, 2015 pursuant to paragraph (b) of Rule 485.
  ¨ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
  ¨ on              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.

 

 

 


New York Life Insurance and Annuity Corporation

Variable Universal Life Provider

Prospectus—May 1, 2015

A flexible premium life insurance contract offered to individuals under

NYLIAC Variable Universal Life Separate Account-I

Please use one of the following addresses for service requests:

 

Regular Mail

  

NYLIAC

Variable Products Service Center

Madison Square Station

P.O. Box 922

New York, NY 10159

   Express Mail   

NYLIAC

Variable Products Service Center

51 Madison Avenue

Room 251

New York, NY 10010

or call our toll-free number: 1-800-598-2019

For submitting death claim forms only, you may also use:

 

Regular Mail   New York Life     
  P.O. Box 130539     
  Dallas, TX 75313-0539     

You must send subsequent premium payments and loan repayments to us at:

 

Regular Mail

   NYLIAC 75 Remittance Drive, Suite 3021 Chicago, IL 60675-3021    Express Mail   

NYLIAC, Suite 3021

c/o The Northern Trust Bank 350 North Orleans Street Receipt & Dispatch, 8th Floor

Chicago, IL 60654

This prospectus describes individual flexible premium variable universal life insurance policies formerly issued by New York Life Insurance and Annuity Corporation (“NYLIAC”). In this prospectus, the words “we,” “our” or “us” refer to NYLIAC and the words “you” or “your” refer to the policyowner. We have discontinued sales of this policy. However, we will still accept additional premiums under existing policies.

If you already own a life insurance policy, it may not be to your advantage to replace your policy with the policy described in this prospectus. And, it may not be to your advantage to borrow money to purchase this policy or to take withdrawals from another policy you own to make premium payments under this policy.

The Securities and Exchange Commission has not approved or disapproved of this security or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Policies have risks including risk of loss of the amount invested. Policies are not deposits of, or guaranteed or endorsed by, any bank and are not federally insured by the FDIC, Federal Reserve Board, or any other agency.

This life insurance policy is not considered an offering in any jurisdiction where such offering may not be lawfully made. We do not authorize any information or representations regarding the offering described in this prospectus and the Statement of Additional Information (“SAI”) other than as contained in these materials or any attached supplements to them, or in any supplemental sales material we authorize.


Table of Contents

 

     Page  

Summary of Benefits and Risks

     4   

Benefits

     4   

Risks

     6   

Table of Fees and Expenses

     9   

Transaction Fees

     9   

Periodic Charges Other than Funds’ Operating Expenses

     11   

Funds’ Annual Operating Expenses

     13   

Annual Portfolio Company Operating Expenses

     13   

Definitions

     16   

Management and Organization

     19   

Insurer

     19   

Your Policy

     19   

State Variations

     19   

About the Separate Account

     19   

Our Rights

     20   

The Fixed Account and the DCA Plus Account

     20   

How to Reach Us for Policy Services

     20   

Virtual Service Center and Interactive Voice Response System

     21   

VSC

     21   

IVR

     22   

Registered Representative Actions

     22   

Funds and Eligible Portfolios

     23   

Investment Return

     27   

Voting

     27   

Charges Associated with the Policy

     27   

Deductions from Premium Payments

     28   

Sales Expense Charge

     28   

State Premium Tax Charge

     29   

Federal Tax Charge

     29   

Deductions from Cash Value

     29   

Monthly Contract Charge

     30   

Charge for Cost of Insurance Protection

     30   

Monthly Per Thousand Face Amount Charge

     30   

Rider Charges

     30   

Expense Allocation

     31   

Separate Account Charges

     31   

Mortality and Expense Risk Charge

     31   

Charges for Federal Income Taxes

     31   

Fund Charges

     31   

Transaction Charges

     31   

Surrender Charges

     31   

First-Year Lapse/Reinstatement Charge

     32   

Partial Withdrawal

     33   

Transfer Charge

     33   
     Page  

Loan Charges

     33   

Description of the Policy

     33   

The Parties

     33   

Policyowner

     33   

Primary Insured

     34   

Beneficiary

     34   

The Policy

     34   

How the Policy is Available

     34   

Policy Premiums

     34   

Cash Value

     35   

Investment Divisions, the Fixed Account, and DCA Plus Account

     35   

Amount in the Separate Account

     35   

Amount in the Fixed Account and DCA Plus Account

     35   

Transfers Among Investment Divisions, the Fixed Account and DCA Plus Account

     36   

Limits on Transfers

     37   

Additional Benefits through Riders

     39   

Options Available at No Additional Charge

     39   

Dollar Cost Averaging

     39   

Dollar Cost Averaging Plus Account

     40   

Automatic Asset Rebalancing

     40   

Interest Sweep

     40   

Maturity Date

     40   

Tax-Free ‘‘Section 1035’’ Insurance Policy Exchanges

     41   

24-Month Exchange Privilege

     41   

Premiums

     42   

Planned Premium

     42   

Unplanned Premium

     42   

Risk of Minimally Funded Policies

     42   

Timing and Valuation

     43   

Free Look

     43   

Premium Payments

     43   

Check-O-Matic

     44   

Premium Payments Returned for Insufficient Funds

     44   

Policy Payment Information

     44   

When Life Insurance Coverage Begins

     44   

Changing the Face Amount of Your Policy

     45   

Policy Proceeds

     45   

Payees

     46   
 

 

2


     Page  

How Policy Proceeds Will Be Paid

     46   

Lump Sum Payment

     46   

Payment Options

     47   

Electing or Changing a Payment Option

     47   

When We Pay Policy Proceeds

     48   

Life Insurance Benefit Options

     48   

Changing Your Life Insurance Benefit Option

     50   

Additional Policy Provisions

     51   

Limits on Our Rights to Challenge Your Policy

     51   

Suicide

     51   

Misstatement of Age or Gender

     51   

Assignment

     51   

Partial Withdrawals and Surrenders

     51   

Partial Withdrawals

     51   

Amount Available for a Partial Withdrawal

     51   

Requesting a Partial Withdrawal

     52   

Surrender Charge Due to Partial Withdrawal

     52   

Periodic Partial Withdrawals

     52   

The Effect of a Partial Withdrawal

     53   

Surrenders

     54   

Cash Surrender Value

     54   

Alternative Cash Surrender Value

     54   

Requesting a Surrender

     55   

When the Surrender is Effective

     55   

Surrender Charges

     55   

Loans

     55   

Your Policy as Collateral for a Loan

     56   

Loan Interest

     56   

Interest on the Cash Value Held as Collateral

     56   

When Loan Interest is Due

     57   

Loan Repayment

     57   

Excess Loan Condition

     57   

The Effect of a Policy Loan

     57   
     Page  

Termination and Reinstatement

     58   

Late Period

     58   

No-Lapse Guarantee

     58   

Reinstatement Option

     58   

Distribution and Compensation Arrangements

     60   

Federal Income Tax Considerations

     61   

Our Intent

     61   

Tax Status of NYLIAC and the Separate Account

     61   

Charges for Taxes

     61   

Diversification Standards and Control Issues

     61   

Life Insurance Status of Policy

     62   

IRC Section 101(j)—Impact of Employer- Owned Policies

     63   

Modified Endowment Contract Status

     63   

Status of the Policy After the Insured is Age 100

     64   

Policy Surrenders and Partial Withdrawals

     64   

3.8 Percent Medicare Tax on Certain Investment Income

     65   

Policy Loans and Interest Deductions

     65   

Corporate Owners

     65   

Exchanges or Assignments of Policies

     66   

Reasonableness Requirement for Charges

     66   

Living Benefits Rider

     66   

Other Tax Issues

     66   

Withholding

     66   

Legal Proceedings

     67   

Records and Reports

     67   

Financial Statements

     67   

Appendix A—Illustrations

     A-1   

Appendix B—State Variations

     B-1   

Obtaining Additional Information

     69   
 

 

The NYLIAC Variable Universal Life Provider Prospectus and Statement of Additional Information are posted on our corporate website, www.newyorklife.com.

 

3


SUMMARY OF BENEFITS AND RISKS

The following is a brief summary of certain features of NYLIAC Variable Universal Life Provider (“VUL Provider”). Many benefits of VUL Provider have a corresponding risk, and both benefits and risks should be considered before you purchase a policy. More complete and detailed information about these features is provided later in this prospectus and in the SAI.

Benefits

Protection

The policy provides permanent life insurance coverage with the potential for tax-deferred Cash Value accumulation that can supplement your retirement income. Your premium payments, less any applicable charges, are allocated to the Investment Divisions, the Fixed Account and the DCA Plus Account according to your instructions. The Cash Value of the policy is based on:

 

   

the amount in and performance of each Investment Division of the Separate Account;

 

   

the amount in and rate of interest credited to the Fixed Account and/or the DCA Plus Account; and

 

   

the charges we deduct.

With the policy, you have the potential for higher rates of return and Cash Value accumulation than with a fixed rate life insurance policy. Even though the policy offers the protection of permanent life insurance, it can lapse even if all planned premiums are paid on time. See “Summary of Benefits and Risks—Risks—Risk of Lapse (especially on minimally funded policies)” and “Termination and Reinstatement—No-Lapse Guarantee” for further information.

Flexible Premiums

Policy premium payments are flexible; you can select the time and amount of premium you pay, within limits. Other than the required initial minimum premium payment, premium payments can vary depending on individual policy specifics (age, gender, coverage amount, underwriting classification). Since the potential Cash Value growth can be used to supplement retirement income, this policy is designed to offer the best potential benefit when funded for at least ten years at or near the guideline annual premium. As long as the Net Cash Value is sufficient to cover the policy’s Monthly Deduction Charges, you can increase, decrease, or stop making payments to meet your changing needs. See “Definitions” for an explanation of Cash Surrender Value.

Three-Year No-Lapse Guarantee

The policy offers a no-lapse guarantee. (This benefit is not available in New Jersey or Texas.) This benefit ensures that your policy will remain in effect during the first three Policy Years (the “guarantee period”) regardless of your account performance, provided that your policy premium payments satisfy the minimum premium test. (See “No-Lapse Guarantee” for information on premiums required to pass the test.) In the thirty-seventh month, if there is insufficient Net Cash Value to cover the current and any deferred monthly charges, you will be sent a notice of payment due. If that notice is not paid, the policy will lapse. The guarantee period will end before the third policy anniversary if: (1) your premium payments do not pass the minimum premium test, (2) you change the Face Amount of the policy or the Life Insurance Benefit option resulting in a change in Face Amount, (3) you add or delete any riders to the policy, (4) you increase or decrease rider coverage amounts, or (5) there is a change in underwriting class of the insured.

Liquidity Through Loans

The Policy allows you to access your policy’s Cash Surrender Value through loans. Your policy value will be used as collateral to secure a policy loan. You can borrow any amount up to the loan value of the policy.

 

4


Liquidity through Withdrawals

You can also withdraw an amount up to the Cash Surrender Value of your policy. Partial withdrawals will reduce the policy’s Cash Value, Net Cash Value and can reduce your Life Insurance Benefit. We will not allow a partial withdrawal for an amount that would cause the policy to fall below its minimum Face Amount. Partial withdrawals can result in a taxable event. Also note that certain partial withdrawal requests must be made in writing and sent to NYLIAC’s Variable Products Service Center (“VPSC”) at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). (See “Partial Withdrawals and Surrenders—Partial Withdrawals”.) Certain charges apply if you surrender your policy during the first Policy Year, and an amount equal to any additional first year contract charges due us will also be deducted from the Cash Surrender Value.

Alternative Cash Surrender Value (Not available in Indiana, Maryland and New Jersey.)

An Alternative Cash Surrender Value (ACSV) (see “Definitions” for an explanation of this term) may be made available to a Corporation, Irrevocable Trust, or other defined policyowner class if we agree. If your policy has ACSV, the policy can be surrendered within the first ten years for the ACSV. The ACSV equals the Cash Surrender Value plus the unamortized ACSV benefit. Policies with an ACSV will have higher Mortality and Expense Risk charges.

Investment Division Options

This policy offers you a choice of 60 Investment Divisions, the Fixed Account and the DCA Plus Account. You can choose a maximum of 21 Investment Options for the allocation of Net Premium payments or for the transfer of Cash Value among the available Investment Divisions, the Fixed Account, and/or the DCA Plus Account. Transfers among the Investment Divisions can be made tax-free, within the limits described in this prospectus. You can change the Investment Divisions in which you invest throughout the life of the policy.

Change the Amount of Coverage

With the policy, you are able to increase or decrease the policy’s Face Amount. In order to request a decrease of the policy’s Face Amount, you must send a written request, in a form acceptable to us, to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). (See “Policy Payment Information—Changing the Face Amount of Your Policy”.) You may request an increase of the policy’s Face Amount by contacting your registered representative or by submitting a written request, in a form acceptable to us, to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). Increases are subject to underwriting and our approval. Contestability and suicide provisions on any increased portion of coverage begin on the effective date of the increase. Increases in the Face Amount will also result in a new surrender charge period, additional cost of insurance charges, per Thousand Face Amount charges, and a new seven-year testing period for modified endowment contract status. We can limit any increase in the Face Amount of your policy. Under certain circumstances, it may be advantageous to purchase additional insurance through our term insurance rider rather than increasing the Face Amount of your policy. Decreases in Face Amount can incur surrender charges.

Three Life Insurance Benefit Options

The policy offers different Life Insurance Benefit options:

 

   

Option 1—a level benefit equal to your policy’s Face Amount.

 

   

Option 2—a benefit that varies and equals the sum of your policy’s Face Amount and Cash Value.

 

   

Option 3—a benefit that varies and equals the sum of your policy’s Face Amount and the Adjusted Total Premium.

Tax law provisions relating to “employer-owned life insurance contracts” may impact whether and to what extent the Life Insurance Benefit may be received on a tax-free basis. You may be required to take certain actions before acquiring the Policy in order to ensure that such Benefit may be received on a tax-free basis.

 

5


See the discussion under “Federal Income Tax Considerations—IRC Section 101(j)—Impact on Employer-Owned Policies” for more information.

Automated Investment Features

The following administrative features are available to help you manage the policy’s Cash Value and to adjust the investment allocation to suit changing needs. These features are: Automatic Asset Rebalancing, Dollar Cost Averaging, Dollar Cost Averaging Plus, Expense Allocation, and Interest Sweep.

Dollar Cost Averaging Plus

At policy issue, you may elect Dollar Cost Averaging Plus (“DCA Plus Account”) which allows you to set up dollar cost averaging using the DCA Plus Account when a premium payment is made during the first policy year.

Optional Riders

The policy offers additional insurance coverage and other benefits through several optional riders. Certain riders have costs associated with them.

Policyowner Support

As a policyowner, you have access to a password-protected Internet website, an automated 24-hour call-in service, toll-free telephone support, and your registered representative if you have questions about your VUL Provider policy. Certain service requests must be in writing. Specific requirements applicable to any service request are described later in this prospectus.

A Highly-Rated Company

New York Life Insurance and Annuity Corporation (“NYLIAC”) is a subsidiary of New York Life Insurance Company (“NYLIC”). NYLIC has more than 165 years of experience in the offering of insurance products. NYLIAC is a highly-rated insurer. Ratings reflect only NYLIAC’s General Account, which are applicable to the Fixed Account and DCA Plus Account, and are not applicable to the Investment Divisions, which are not guaranteed. NYLIAC’s obligations under the policy are subject to its claims-paying ability, and are not backed or guaranteed by NYLIC.

Risks

Investment Risk

While a variable policy has the potential for a higher rate of return than a fixed rate policy, investment returns on the assets in the Separate Account may decline in value, and you can lose principal. Each Investment Division has its own investment objectives and investment strategy. The performance of each will vary, and some Investment Divisions are riskier than others. We do not guarantee the investment performance of the Investment Divisions. Your premium and Cash Value allocation choices should be consistent with your personal investment objective and your risk tolerance.

Risk of Lapse (especially on minimally-funded policies)

Your policy can lapse even if you pay all of the planned premiums on time. When a policy lapses, it has no value, and no benefits are paid upon the death of the insured. Your policy involves risks, including the potential risk of loss of the principal invested. Note that termination and lapse have the same meaning and effect throughout this prospectus.

A VUL Provider policy that has a Net Cash Value just sufficient to cover Monthly Deduction Charges and charges, or that is otherwise minimally funded, is more likely to be unable to maintain its Cash Surrender Value due to market fluctuation and other performance related risks. To continue to keep your policy in force when the no-lapse guarantee period ends, premium payments significantly higher than the premium necessary to maintain the no-lapse guarantee benefit may be required. In addition, by paying only the minimum required

 

6


monthly premium for the no lapse guarantee, you may forego the opportunity to build up significant Cash Value in the policy. When initially determining the amount of your planned premium payments, you should consider funding your policy at a level that has the potential to maximize the investment opportunities within your policy and to minimize the risks associated with market fluctuations.

Potential for Increased Charges

The actual charges deducted are current charges on your policy. However, we have the right to increase those charges at any time up to the amount shown in your policy as the guaranteed maximum charges. Actual charges will never exceed the stated guaranteed charges. In addition, we may increase the amount we deduct as a federal or state premium tax charge to reflect changes in tax law. (See “Table of Fees and Expenses” for more information.)

Risk of Lapse from Policy Loans

The larger the loan becomes relative to the policy’s Net Cash Value, the greater the risk that the policy’s remaining Net Cash Value will not be sufficient to support the policy’s charges and expenses, including any loan interest due, and the greater the risk of the policy lapsing. Any loan interest due on a policy anniversary that you do not pay will be charged against the policy as an additional loan. (See “Federal Income Tax Considerations—Modified Endowment Contract Status.”)

A loan, repaid or not, has a permanent effect on your Cash Value. The effect could be favorable, if the Investment Divisions earn less than the interest rate credited on the loan amount in the Fixed Account, or unfavorable, if the Investment Divisions earn more. The longer a loan is outstanding, the greater the effect on your Cash Value. If it is not repaid, the aggregate amount of the outstanding loan principal and any accrued interest will reduce the Policy Proceeds that might otherwise be paid.

Unless your policy qualifies as a modified endowment contract, policy loans are not taxable. However, if loans taken, including unpaid loan interest, exceed the premiums paid, a policy surrender or lapse will result in a taxable event for you. If a policy is a modified endowment contract, a loan may result in taxable income and penalty taxes to you.

Tax Risks

The section of this prospectus entitled “Federal Income Tax Considerations” describes a number of tax issues that may arise in connection with the policy. These risks include: (1) the possibility that the IRS may interpret the rules that apply to variable life insurance contracts in a manner that could result in you being treated as the owner of your policy’s pro rata portion of the assets of the Separate Account; (2) the possibility that the IRS may take the position that the policy does not qualify as life insurance for tax purposes; (3) the possibility that, as a result of policy transactions, including the payment of premiums or increases or decreases in policy benefits, the policy may be treated as a modified endowment contract for federal income tax purposes, with special rules that apply to policy distributions, including loans; (4) in general, the possibility that the policy may not qualify as life insurance under the federal tax law after the insured becomes age 100 and that the owner may be subject to adverse tax consequences at that time; (5) whether and to what extent the Life Insurance Benefit may be received on a tax-free basis in the case of employer-owned life insurance contracts; (6) the possibility that the IRS may treat a loan as a taxable distribution, if there is no spread, or a very small spread between the interest rate charged on the loan and the interest rate credited on the loaned amount; and (7) the potential that corporate ownership of a policy may affect the owner’s exposure to the corporate alternative minimum tax.

Portfolio Risks

A discussion of the risks of allocating Cash Value to each of the Investment Divisions can be found in the corresponding Fund’s prospectus.

 

7


Charges for Policy Surrender/Decreases in Coverage

During the first ten years of the policy, or within ten years after you increase the Face Amount, surrender charges apply to deter policy surrender. The policy is designed to be long-term life insurance coverage. It is not suitable as a short-term investment vehicle.

Potentially Harmful Transfer Activity

This policy is not designed as a vehicle for market timing. Accordingly, your ability to make transfers under the policy is subject to limitation if we determine, in our sole opinion, that the exercise of that privilege may disadvantage or potentially hurt the rights or interests of other policyowners. We have limitations and restrictions on transfer activity (see “Description of the Policy—Limits on Transfers” for more information). We cannot guarantee that these limitations and restrictions will be effective in detecting and preventing all transfer activity that could disadvantage or potentially hurt the rights or interests of other policyowners. Potentially harmful transfer activity could result in reduced performance results for one or more Investment Divisions, due to among other things:

 

   

portfolio management decisions driven by the need to maintain higher than normal liquidity or the inability to sustain an investment objective

 

   

increased administrative and Fund brokerage expenses

 

   

dilution of the interests of long-term investors.

An underlying Fund portfolio may reject any order from us if it suspects potentially harmful transfer activity, thereby preventing us from implementing your request for a transfer. (See “Description of the Policy—Limits on Transfers” for more information on the risks of frequent trading.)

Credit Risk

NYLIAC’s obligations under the policy are subject to its claims-paying ability, and are not backed or guaranteed by NYLIC.

 

8


TABLE OF FEES AND EXPENSES

The following tables describe the fees and expenses that you will pay when buying, owning and surrendering the policy. The first table describes the fees and expenses that you will pay when you make a premium payment, surrender the policy, transfer Cash Value between Investment Options, or exercise certain rider options.

TRANSACTION FEES

 

Charge

  

When Charge Is Deducted

  

Amount Deducted

Sales Expense Charge Imposed on Premium Payments

   when premium payment is applied up to age 100   

Guaranteed Maximum:

All payments – 6.75% of premium payments

Current:1

Payments up to Target Premium – 6.75% of premium payments

Payments in excess of Target Premium – 4.25% of premium payments

Tax Charges:

State Premium Tax Charges

Federal Tax Charges

   when premium payment is applied up to age 100   

All taxes may vary over time.

Charged as a percentage of premium payments

Guaranteed Maximum: subject to tax law changes

Current: 2%

Current: 1.25%

Deferred Sales Charge

•    Surrender2

  

surrender or lapse

in first 10 years or

Face Amount decrease

within 10 years after an increase

  

The lesser of: 50% of total premiums paid under the policy or 100% of the Surrender Charge Premium3 applicable to the Policy Year

Charge per $1000 of Face Amount:

Guaranteed Maximum: $47.60

Minimum Guaranteed: $14.18

Charge for a representative insured: (Male, age 40, Preferred rating) $27.31

Surrender Charges:

•    Contract Surrender Charge During First Policy Year2

  

surrender or lapse

in first year

   Guaranteed Maximum: $2204

•    Surrender Charge After Face Amount Increase2

  

surrender or lapse

in first 10 years after

the increase

   The calculation for the additional Face Amount begins on the effective date of the increase. See “Deferred Sales Charge” above

•    Partial Withdrawal Charge

   partial withdrawal   

Guaranteed Maximum: The lesser of $25 or 2% of the amount withdrawn. (In addition, if the Face Amount is decreased due to the partial withdrawal, a surrender charge may apply. See “Deferred Sales Charge,” above.)

Current: no charge

Transfer Charge

   transfer   

Guaranteed Maximum: $30 per transfer in excess of 12 transfers within a Policy Year

Current: $0

Living Benefits Rider

   When you exercise the benefit    $150 (one-time)

Insurance Exchange Rider

  

when you exercise

the benefit

   A one-time payment may be required upon exercise, depending upon the Cash Surrender Value of the existing and new policies at the time of the exchange.

 

1 

Current sales expense charges in Policy Years 6 and beyond are reduced to 2.75% for payments up to Target Premium and 0.75% for payments in excess of the Target Premium.

2 

Exceptions to surrender charge:

We will not deduct a surrender charge if:

 

   

we cancel the policy;

 

   

we pay proceeds upon the death of the insured;

 

   

we pay a required Internal Revenue Service minimum distribution;

 

   

the policy is out of the surrender charge period; or

 

   

if your policy contains the ACSV Benefit and you surrender all of the NYLIAC policies you own which include an ACSV Benefit in the first ten years.

 

9


3 

Since the percentage applicable to the Surrender Charge Period is lower in later Policy Years, the maximum surrender charge will be reduced over time. The Surrender Charge Premium varies based on individual characteristics, and the charge shown may not be representative of what you will pay To obtain more information about particular charges as they apply to your policy, please contact your registered representative. For a Face Amount decrease, the surrender charge is equal to the difference between (1) and (2), where (1) is the surrender charge calculated on the original Face Amount, and (2) is the surrender charge calculated on the new decreased Face Amount.

 

4 

The formula for calculating this charge is as follows: [monthly contract charge for Policy Year 1 – monthly contract charge for subsequent Policy Years] X [Monthly Deduction Days between date of surrender/lapse and the earlier of the reinstatement date and the first anniversary of the Policy Date].

 

10


The table below describes the fees and expenses that you will pay periodically during the time that you own the policy, excluding the Fund’s fees and expenses.

PERIODIC CHARGES OTHER THAN FUNDS’ OPERATING EXPENSES

 

Charge

  

When Charge Is Deducted

  

Amount Deducted

Cost of Insurance Charge1    Monthly to Age 100   

Charge per month per $1000 of Net Amount at Risk2

Guaranteed Maximum: $83.33

Minimum Guaranteed: $0.08

Guaranteed Charge for Representative Insured (Male, age 40, Preferred rating: $250,000 policy Face Amount): $0.25 for the first Policy Year.

Monthly Contract Fees   

Policy Year 1

Policy Year 2+

  

Guaranteed Maximum: $35

Current: $30

Guaranteed Maximum: $15

Current: $10

Mortality & Expense Risk Fee    Monthly    Guaranteed Maximum: 1.00% (annualized) of the Separate Account Value Current:

 

Separate Account Value

   Years
1-5
    Years
6-10
    Years
11-20
    Years
21+
 
< $25,000      0.70     0.70     0.45     0.30
$25,000–$49,999      0.70     0.65     0.40     0.25
$50,000–$74,999      0.70     0.60     0.35     0.20
$75,000–$99,999      0.70     0.55     0.30     0.15
$100,000–$149,999      0.70     0.50     0.25     0.10
$150,000 or greater      0.70     0.45     0.20     0.05

If your policy contains ACSV:

        

< $25,000

     1.00     1.00     0.45     0.30

$25,000–$49,999

     1.00     1.00     0.40     0.25

$50,000–$74,999

     1.00     1.00     0.35     0.20

$75,000–$99,999

     1.00     1.00     0.30     0.15

$100,000–$149,999

     1.00     1.00     0.25     0.10

$150,000 or greater

     1.00     1.00     0.20     0.05

 

Per Thousand of Face Amount Charge    Monthly   

Charge per $1000 of Face Amount plus the face amount of the Term Insurance Rider

Guaranteed: $0.07 (charged for all months)

Current: $0.07 (charged only for the first 60 months)

Riders :

•    Guaranteed Insurability Rider (GIR)3

  

 

All monthly until rider expires

  

 

Charge per $1000 of GIR Face Amount

Maximum: $0.46

Minimum: $0.08

Representative insured: (Male, age 40, Preferred rating) $0.23 for the first Policy Year

•    Life Extension Benefit Rider3

   Monthly beginning at age 90   

Charge per $1000 of Face Amount

Maximum: $0.1158

Minimum: $0.0001

Representative insured: (Male, age 40, Preferred rating) $0.007

 

11


Charge

  

When Charge Is Deducted

  

Amount Deducted

•    Monthly Deduction Waiver Rider3

   Monthly until rider expires   

Charged as a percentage of Monthly Deductions

Maximum: 231% (for policies applied for on or after May 1, 2014); 77% (for policies applied for before May 1, 2014)

Minimum: 8%

Representative insured: (Male, age 40, Preferred rating) 11% for the first Policy Year.

•    Spouses Paid-up Insurance Purchase Option

   N/A    No charge

•    Term Insurance Benefit Rider (TIR)3

   Monthly   

Charge per $1000 of TIR Face Amount

Maximum: $83.33

Minimum: $0.08

Representative insured: (Male, age 40, Preferred rating) $0.25 for the first Policy Year

Loan Interest    Monthly   

Guaranteed Maximum: 6% annually

Current: 4% for the first 10 years and 3% for years 11 and subsequent

 

1 

This cost varies based on individual characteristics, and the charge shown may not be representative of the charge you will pay. To obtain more information about particular costs of insurance and other charges as they apply to your policy, please contact your Registered Representative.

2 

Net amount at risk is equal to the difference between the Life Insurance Benefit divided by 1.00327 and the policy’s Cash Value. See “Life Insurance Benefit Options” for more information.

3 

This charge varies based on individual characteristics, and the charge shown may not be representative of the charge you will pay. The “Representative insured” charge is for a male, aged 40, preferred rating, with a $250,000 policy Face Amount. To obtain more information about particular rider charges as they apply to your policy, please contact your registered representative.

 

12


The next table shows the minimum and maximum total operating expenses deducted from Fund assets (before any fee waiver or expense reimbursement) during the year ended December 31, 2014. Fund expenses may be higher or lower in the future. More information concerning each underlying Fund’s fees and expenses is contained in the prospectus for each Fund.

Funds’ Annual Operating Expenses (expenses that are deducted from Fund assets)1

 

     Minimum     Maximum  

Total Annual Fund Companies’ Operating Expenses2

     0.28     4.33

 

(1) Expressed as a percentage of average net assets for the fiscal year ended December 31, 2014. This information is provided by the Funds and their agents. The information is based on 2014 expenses. We have not verified the accuracy of this information.
(2) Expenses that are deducted from Fund Company assets, including management fees, distribution (12b-1) fees, service fees, and other expenses.

Annual Portfolio Company Operating Expenses(#)

 

Fund

   Management
Fees
    Distribution
(12b-1)
Fees(§)
    Other
Expenses
    Underlying
Portfolio Fees
and
Expenses
    Total Fund
Annual
Expense
 

MainStay VP Conservative Allocation — Initial Class

     0.00     0.00     0.03     0.81     0.84

MainStay VP Growth Allocation — Initial Class

     0.00     0.00     0.03     1.16     1.19

MainStay VP Moderate Allocation — Initial Class

     0.00     0.00     0.03     0.93     0.96

MainStay VP Moderate Growth Allocation — Initial Class

     0.00     0.00     0.03     1.06     1.09

BlackRock® Global Allocation V.I. Fund — Class III

     0.62     0.25     0.24     0.00     1.11 %(a) 

Fidelity® VIP Freedom 2020 Portfolio — Initial Class

     0.00     0.00     0.00     0.60     0.60 %(b) 

Fidelity® VIP Freedom 2030 Portfolio — Initial Class

     0.00     0.00     0.00     0.68     0.68 %(b) 

Fidelity® VIP Freedom 2040 Portfolio — Initial Class

     0.00     0.00     0.00     0.69     0.69 %(b) 

Van Eck VIP Multi-Manager Alternatives Fund — Initial Class(c)

     1.46     0.00     2.77     0.10     4.33 %(d) 

Please refer to the applicable fund prospectus for additional information.

# Shown as a percentage of average net assets for the fiscal year ended December 31, 2014, unless otherwise indicated. The Fund or its agents provided the fees and charges, which are based on 2014 expenses. We have not verified the accuracy of the information provided by the Fund or its agents.
§ Because the distribution (12b-1) fee charge is an ongoing fee, the fee will increase the cost of your investment and may cost you more than paying other types of sales charges. The fees designated as “12b-1 fees” may reflect “Service Fees.”

 

Fund

   Management
Fees(¶)
    Distribution
(12b-1)
Fees(§)
    Other
Expenses
    Total  Fund
Annual
Expense(#)
 

MainStay VP Balanced — Initial Class

     0.70     0.00     0.09     0.79

MainStay VP Bond — Initial Class

     0.49     0.00     0.04     0.53

MainStay VP Cash Management — Initial Class

     0.44     0.00     0.03     0.47

MainStay VP Common Stock — Initial Class

     0.54     0.00     0.04     0.58

MainStay VP Convertible — Initial Class

     0.59     0.00     0.04     0.63

MainStay VP Cornerstone Growth — Initial Class

     0.70     0.00     0.03     0.73

MainStay VP Eagle Small Cap Growth — Initial Class

     0.81     0.00     0.04     0.85

MainStay VP Emerging Markets Equity — Initial Class (formerly MainStay VP DFA / DuPont Capital Emerging Markets Equity — Initial Class)

     1.10     0.00     0.20     1.30

MainStay VP Floating Rate — Initial Class

     0.60     0.00     0.05     0.65

MainStay VP Government — Initial Class

     0.50     0.00     0.05     0.55

MainStay VP High Yield Corporate Bond — Initial Class

     0.56     0.00     0.03     0.59

MainStay VP ICAP Select Equity — Initial Class

     0.76     0.00     0.03     0.79

MainStay VP Income Builder — Initial Class

     0.57     0.00     0.06     0.63

MainStay VP International Equity — Initial Class

     0.89     0.00     0.06     0.95

MainStay VP Janus Balanced — Initial Class

     0.55 %(e)      0.00     0.04     0.59

MainStay VP Large Cap Growth — Initial Class

     0.74     0.00     0.03     0.77

 

13


Fund

   Management
Fees(¶)
    Distribution
(12b-1)
Fees(§)
    Other
Expenses
    Total  Fund
Annual
Expense(#)
 

MainStay VP Marketfield — Initial Class

     1.40     0.00     0.88     2.28 %(f) 

MainStay VP MFS® Utilities — Initial Class

     0.72     0.00     0.06     0.78

MainStay VP Mid Cap Core — Initial Class

     0.85     0.00     0.04     0.89 %(g) 

MainStay VP PIMCO Real Return — Initial Class

     0.50     0.00     0.14     0.64

MainStay VP S&P 500 Index — Initial Class

     0.24     0.00     0.04     0.28

MainStay VP T. Rowe Price Equity Income — Initial Class

     0.74     0.00     0.03     0. 77% 

MainStay VP Unconstrained Bond — Initial Class

     0.59     0.00     0.05     0.64

MainStay VP U.S. Small Cap — Initial Class

     0.78     0.00     0.05     0.83

MainStay VP Van Eck Global Hard Assets — Initial Class

     0.89     0.00     0.04     0.93

AB VPS Small/Mid Cap Value Portfolio — Class A

     0.75     0.00     0.07     0.82

American Funds® IS Global Small Capitalization FundSM — Class 2

     0.70     0.25     0.04     0.99

American Funds® IS New World Fund® — Class 2

     0.72     0.25     0.06     1.03

BlackRock® High Yield V.I. Fund — Class I

     0.54     0.00 %     0.33     0. 87%(h) 

Columbia Variable Portfolio — Commodity Strategy Fund — Class 1

     0.55     0.00     0.22     0.77

Columbia Variable Portfolio — Emerging Markets Bond Fund — Class 1

     0.53     0.00     0.18     0.71

Delaware VIP® Emerging Markets Series — Standard Class

     1.24     0.00     0.14     1.38

Delaware VIP® Small Cap Value Series — Standard Class

     0.72     0.00     0.08     0.80

Deutsche Small Mid Cap Value VIP — Class A (formerly DWS Small Mid Cap Value VIP — Class A)

     0.65     0.00     0.17     0.82 %(i) 

Dreyfus IP Technology Growth Portfolio — Initial Shares

     0.75     0.00     0.08     0.83

Fidelity® VIP Contrafund® Portfolio — Initial Class

     0.55     0.00     0.08     0.63

Fidelity® VIP Equity-Income Portfolio — Initial Class

     0.45     0.00     0.15     0.60

Fidelity® VIP Growth Opportunities Portfolio — Initial Class

     0.55     0.00     0.13     0.68

Fidelity® VIP Mid Cap Portfolio — Initial Class

     0.55     0.00     0.09     0.64

Invesco V.I. American Value Fund — Series I

     0.72     0.00     0. 32%(j)      1.04

Invesco V.I. International Growth Fund — Series I

     0.71     0.00     0.32 %(j)      1.03

Janus Aspen Global Research Portfolio — Institutional Shares

     0.56     0.00     0.05     0.61

MFS® International Value Portfolio — Initial Class

     0.89     0.00     0.06     0.95

MFS® Investors Trust Series — Initial Class

     0.75     0.00     0.06     0.81

MFS® New Discovery Series — Initial Class

     0.90     0.00     0.06     0.96 %(k) 

MFS® Research Series — Initial Class

     0.75     0.00     0.05     0.80

Neuberger Berman AMT Mid Cap Growth Portfolio — Class I

     0.85     0.00     0.15     1.00

PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) — Institutional Class

     0.75     0.00     0.01     0.76

PIMCO VIT Total Return Portfolio — Institutional Class

     0.50     0.00     0.00     0.50

Royce Micro-Cap Portfolio — Investment Class

     1.25     0.00     0.05     1.30

UIF U.S. Real Estate Portfolio — Class I

     0.80     0.00     0.31     1.11 %(l) 

Please refer to the applicable fund prospectus for additional information.

Management Fees may include Advisor and/or Administration Fees.
# Shown as a percentage of average net assets for the fiscal year ended December 31, 2014, unless otherwise indicated. The Fund or its agents provided the fees and charges, which are based on 2014 expenses. We have not verified the accuracy of the information provided by the Fund or its agents.
§ Because the distribution (12b-1) fee charge is an ongoing fee, the fee will increase the cost of your investment and may cost you more than paying other types of sales charges. The fees designated as “12b-1 fees” reflect “Service Fees.”
(a) As described in the “Management of the Funds” section of the Fund’s prospectus, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.50% of average daily net assets until May 1, 2016. BlackRock has also contractually agreed to reimburse fees in order to limit certain operational and recordkeeping fees to 0.07% of average daily net assets until May 1, 2016. Each of these contractual agreements may be terminated upon 90 days’ notice by a majority of the non-interested directors of the Fund or by a vote of a majority of the outstanding voting securities of the Fund.
(b) Differs from the ratios of expenses to average net assets in the Financial Highlights section of the prospectus because of acquired fund fees and expenses.
(c) Closed to new investments as of March 27, 2015. The Van Eck VIP Multi-Manager Alternatives Fund — Initial Class (“Van Eck Portfolio”) will be liquidated on or about June 3, 2015. On the Liquidation Date, if any policyholders have not transferred their cash value out of the Van Eck Portfolio as of such date, we will transfer an amount equal to the cash value held in the Van Eck Portfolio, into the MainStay VP Cash Management portfolio.

 

14


(d) The Adviser has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent the operating expenses of the Fund (excluding acquired fund fees and expenses, interest expense, trading expenses, dividends and interest payments on securities sold short, taxes and extraordinary expenses) from exceeding 1.50% of the Fund’s average daily net assets per year until May 1, 2016. During such time, the expense limitation is expected to continue until the Board of Trustees acts to discontinue all or a portion of such expense limitation.
(e) The management fee is 0.55% on all assets. New York Life Investments has contractually agreed to waive a portion of its management fee so that the management fee does not exceed: 0.55% on assets up to $1 billion; and 0.525% on assets over $1 billion. This agreement will remain in effect until May 1, 2016, and shall renew automatically for one-year terms unless New York Life Investments provides written notice of termination prior to the start of the next term or upon approval of the Board of Trustees of the Fund.
(f) New York Life Investments has contractually agreed to waive fees and/or reimburse expenses so that Total Annual Portfolio Operating Expenses (excluding taxes, interest, litigation, extraordinary expenses, brokerage and other transaction expenses relating to the purchase or sale of portfolio investments, and acquired (underlying) fund fees and expenses) do not exceed 1.60% of the average daily net assets of Initial Class shares. This agreement expires on May 1, 2016, and may only be amended or terminated prior to that date by action of the Board.
(g) New York Life Investments has contractually agreed to waive fees and/or reimburse expenses so that Total Annual Portfolio Operating Expenses (excluding taxes, interest, litigation, extraordinary expenses, brokerage and other transaction expenses relating to the purchase or sale of portfolio investments, and acquired (underlying) fund fees and expenses) do not exceed 0.86% of the average daily net assets of Initial Class shares. This agreement will remain in effect until May 1, 2016, and shall renew automatically for one-year terms unless New York Life Investments provides written notice of termination prior to the start of the next term or upon approval of the Board of Trustees of the Portfolio.
(h) As described in the “Management of the Funds” section of the Fund’s prospectus, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.25% of average daily net assets until May 1, 2016. BlackRock has also contractually agreed to reimburse fees in order to limit certain operational and recordkeeping fees to 0.06%]% of average daily net assets until May 1, 2016. Each of these contractual agreements may be terminated upon 90 days’ notice by a majority of the non-interested directors of the Fund or by a vote of a majority of the outstanding voting securities of the Fund.
(i) Through September 30, 2015, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the portfolio to the extent necessary to maintain the portfolio’s total annual operating expenses at 0.84% for Class A, excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest. The agreement may only be terminated with the consent of the fund’s Board.
(j) Invesco Advisers, Inc. (“Invesco” or the “Adviser”) has contractually agreed to waive a portion of the Fund’s management fee in an amount equal to the net management fee that Invesco earns on the Fund’s investments in certain affiliated funds. This waiver will have the effect of reducing Acquired Fund Fees and Expenses that are indirectly borne by the Fund. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. The fee waiver agreement cannot be terminated during its term.
(k) Massachusetts Financial Services Company has agreed in writing to bear the fund’s expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs, and investment-related expenses (such as interest and borrowing expenses incurred in connection with the fund’s investment activity), such that ‘‘Total Annual Fund Operating Expenses” do not exceed 0.94% of the fund’s average daily net assets annually for Initial Class shares. This written agreement will continue until modified by the fund’s Board of Trustees, but such agreement will continue until at least July 31, 2016.
(l) The Portfolio’s “Adviser,” Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Portfolio so that Total Annual Portfolio Operating Expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00%. The fee waivers and/or expense reimbursements will continue for at least one year or until such time as the Board of Directors of The Universal Institutional Funds, Inc. (the “Fund”) acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate.

 

15


DEFINITIONS

1933 Act: The Securities Act of 1933, as amended.

1940 Act: The Investment Company Act of 1940, as amended.

AAR: Automatic Asset Rebalancing.

Adjusted Total Premium: The total premiums paid minus any partial surrenders and any associated processing fees. This amount will never be less than zero. This is used in the calculation of Life Insurance Benefit Option 3.

Alternative Cash Surrender Value (“ACSV”): For eligible policies, an amount equal to the Cash Surrender Value plus the sum of all sales expense charges and monthly per thousand Face Amount charges amortized over the first ten Policy Years. No surrender charges are assessed in calculating the ACSV. If your policy has ACSV, then for a period of ten years from the Issue Date, while the Insured is still living, you may surrender the policy for the Alternative Cash Surrender Value benefit.

Business Day: Any day on which the New York Stock Exchange is open for regular trading. Our Business Day ends at 4:00 p.m. Eastern Time or the closing of regular trading on the New York Stock Exchange, if earlier. (Each Business Day is a Valuation Day).

Cash Surrender Value: The Cash Value less, any surrender charges that may apply, and less any unpaid loans and accrued interest. This is the amount we will pay you if you surrender your policy. See “Surrenders” for more information.

Cash Value: The total value of your policy’s accumulation units in the Separate Account Value, plus any amount in the Fixed Account and DCA Plus Account.

Cash Value Accumulation Test (“CVAT”): An IRS test to determine whether a policy can be considered life insurance. See “Policy Payment Information-Life Insurance Benefit Options” for more information.

Cost of Insurance Charge: A charge that is deducted from your policy’s Cash Value on each Monthly Deduction Day for the cost of providing a Life Insurance Benefit to you. The initial rate of the monthly Cost of Insurance Charge is based upon our underwriting of your policy. Your Cost of Insurance Charge may vary from month to month depending on cost of insurance rates and the Net Amount at Risk. For more information, please see “Charges Associated with the Policy—Cost of Insurance Charge”.

Dollar Cost Averaging Plus (“DCA Plus”) Account: The 12-month Dollar Cost Averaging account used specifically for the DCA Plus feature.

Eligible Portfolios (“Portfolios”): The mutual fund portfolios of the Funds that are available for investment through the Investment Divisions of the Separate Account.

Face Amount: The base face amount, plus the face amount of any term insurance rider (TIR), if in effect, plus or minus any changes made to the face amount of the TIR. The base face amount is the initial face amount shown on your Policy Data Page, plus or minus any changes made to the initial face amount.

FINRA: The Financial Industry Regulatory Authority, Inc.

Fixed Account: The Fixed Account is supported by assets in NYLIAC’s General Account. The amount in the Fixed Account earns interest on a daily basis. Interest is credited on each Monthly Deduction Day.

Fund: An open-end management investment company.

General Account: An account representing all of NYLIAC’s assets, liabilities, capital and surplus, income, gains, or losses that are not included in the Separate Account or any other separate account. We allocate any Net Premium payments you make during the free look period to this account.

Guideline Premium Test (“GPT”): An IRS test to determine whether a policy can be considered life insurance. See “Policy Payment Information—Life Insurance Benefit Options” for more information.

 

16


Investment Division: A division of the Separate Account. Each Investment Division invests exclusively in shares of a specified Eligible Portfolio.

Investment Options: Policy investment options that consist of the Investment Divisions, the Fixed Account, and the DCA Plus Account.

IRC: Internal Revenue Code of 1986, as amended.

IRS: The Internal Revenue Service.

Issue Date: The date we issue the policy as specified on the Policy Data Page.

IVR: Interactive Voice Response system.

Life Insurance Benefit: The benefit calculated under the Life Insurance Benefit Option you have chosen.

Monthly Deduction Charges: The monthly contract charge, per Thousand Face Amount charge, cost of insurance charge, any rider charges deducted from your policy’s Cash Value, and the Mortality and Expense Risk charge.

Monthly Deduction Day: The date that we deduct your monthly contract charge, monthly per thousand Face Amount charge, cost of insurance charge, the Mortality and Expense Risk charge, and any rider charges. The first Monthly Deduction Day will be the monthly anniversary of the Policy Date on or following the Issue Date. However, if we have not received your initial premium payment as of the Issue Date, the first Monthly Deduction Day will be the monthly anniversary of the Policy Date on or following the date we receive the initial premium payment.

Mortality and Expense Risk: The risk that the group of lives we have insured under our policies will not live as long as we expect (mortality risk); and the risk that the cost of issuing and administering the policies will be greater than we have estimated (expense risk).

Net Amount at Risk: The difference between the Life Insurance Benefit divided by 1.00327 and the policy’s Cash Value. See “Policy Payment Information—Life Insurance Benefit Options” for more information.

Net Cash Value: The Cash Value, less any unpaid loans and accrued interest, and less the smaller of (a) any surrender charges that may apply at time of lapse or (b) the sum of any partial withdrawals, unpaid loans and accrued interest.

Net Premium: The balance of a premium payment after applicable sales expense, state premium tax, and federal tax charges have been deducted.

Non-Qualified Policy: A policy issued to a person or an entity (other than an employee benefit plan that qualifies for special federal income tax treatment).

NYLIAC: New York Life Insurance and Annuity Corporation.

NYLIC: New York Life Insurance Company.

NYLIFE Distributors: NYLIFE Distributors, LLC.

NYLIFE Securities: NYLIFE Securities, LLC.

PIN: A Personal Identification Number.

Policy Data Page: Page 2 of your policy. The Policy Data Page contains your policy’s specifications.

Policy Date: The date we use as the starting point for determining Policy Years and Monthly Deduction Days. Your Policy Date will be the same as your Issue Date, unless you request otherwise. You can find your Policy Date on the Policy Data Page.

Policy Proceeds: The benefit we will pay to your beneficiary when we receive proof that the insured died while the policy is in effect. It is equal to the Life Insurance Benefit, plus any additional death benefits under any riders you have chosen, minus any outstanding loans (including any accrued loan interest).

 

17


Policy Year: The twelve-month period starting on the Policy Date, and each twelve-month period thereafter.

Primary Insured: The person who is insured under the base policy.

SEC: The Securities and Exchange Commission.

Separate Account: NYLIAC Variable Universal Life Separate Account-I, a segregated asset account NYLIAC established to receive and invest Net Premiums that are allocated to the Investment Divisions.

Separate Account Value: An amount equal to the Cash Value allocated to the Separate Account.

Surrender Charge Premium: The amount we use to calculate surrender charges, as set forth on the Policy Data Page.

Target Premium: A factor that is used in determining the sales expense charge to be deducted from your premium payments. The Target Premium is found on the Policy Data Page.

VPSC: Variable Products Service Center.

VSC: Virtual Service Center. The VSC provides up-to-date policy information through the Internet. See “Management and Organization—How to Reach Us for Policy Services” for more information.

 

18


MANAGEMENT AND ORGANIZATION

INSURER

New York Life Insurance and Annuity Corporation (“NYLIAC”)

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

51 Madison Avenue

New York, NY 10010

YOUR POLICY

The policy was offered by NYLIAC. It is no longer offered for sale, however, we still accept additional premiums under existing policies. Policy assets allocated to the Investment Divisions are invested in NYLIAC Variable Universal Life Separate Account-I (the “Separate Account”), which has been in existence since June 4, 1993. The policy offers life insurance protection, a choice of Life Insurance Benefit options, flexible premium payments, changes to the Face Amount of the policy, loans, withdrawals and Face Amount decreases (which may be subject to a surrender charge), and the ability to invest in up to 21 Investment Options, including the Investment Divisions, the Fixed Account and/or the DCA Plus Account.

The policies are variable. This means that the Cash Value will fluctuate based on the investment experience of the Investment Divisions you select. The interest credited on the money allocated to the Fixed Account and the DCA Plus Account may also vary. NYLIAC does not guarantee the investment performance of the Separate Account or of the Eligible Portfolios. You bear the entire investment risk with respect to amounts allocated to the Investment Divisions of the Separate Account. Each Investment Division has its own investment objective and investment strategy. As a consequence, some Investment Divisions are riskier than others. We offer no assurance that the investment objectives of the Investment Divisions will be achieved. Accordingly, amounts allocated to the Investment Divisions of the Separate Account are subject to the risks inherent in the securities markets and, specifically, to price fluctuations in the Eligible Portfolios’ investments.

State Variations

Certain provisions of the policies may differ from 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. Also, see Appendix B for a summary of state variations.

ABOUT THE SEPARATE ACCOUNT

NYLIAC Variable Universal Life Separate Account-I is a segregated asset account that NYLIAC has established to receive and invest your Net Premiums. NYLIAC established the Separate Account on June 4, 1993 under the laws of the State of Delaware, in accordance with resolutions set forth by the NYLIAC Board of Directors. The Separate Account is registered as a unit investment trust with the SEC under the 1940 Act. This registration does not mean that the SEC supervises the management, investment practices, or policies of the Separate Account.

Although the assets of the Separate Account belong to NYLIAC, these assets are held separately from the other assets of NYLIAC, and under applicable insurance law cannot be charged for liabilities incurred in any other business operations of NYLIAC (except to the extent that assets in the Separate Account exceed the reserves and other liabilities of the Separate Account). These assets are not subject to the claims of our general creditors. The income, capital gains, and capital losses incurred on the assets of the Separate Account are credited to or are charged against the assets of the Separate Account without regard to income, capital gains, and capital losses arising out of any other business NYLIAC may conduct. Therefore, the investment performance of the Separate Account is entirely independent of the investment performance of NYLIAC’s Fixed Account or DCA Plus Account, or any other separate account of NYLIAC.

 

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The Separate Account currently includes the 60 Investment Divisions available under the policy. After the end of the Free Look period, Net Premium payments allocated to the Investment Divisions are invested exclusively in the corresponding Eligible Portfolios of the Funds.

OUR RIGHTS

We may take certain actions relating to our operations and the operations of the Separate Account. We will take these actions in accordance with applicable laws, including obtaining any required approval of the SEC and any other required regulatory approvals. If necessary, we will seek approval of our policyowners.

Specifically, we reserve the right to:

 

   

add or remove any Investment Division;

 

   

create new separate accounts;

 

   

combine the Separate Account with one or more other separate accounts;

 

   

operate the Separate Account as a management investment company under the 1940 Act or in any other form permitted by law;

 

   

deregister the Separate Account under the 1940 Act;

 

   

manage the Separate Account under the direction of a committee or discharge such committee at any time;

 

   

transfer the assets of the Separate Account to one or more other separate accounts;

 

   

restrict or eliminate any of the voting rights of policyowners or other persons who have voting rights as to the Separate Account, in accordance with applicable law; and

 

   

change the name of the Separate Account.

(See the SAI for more information.)

THE FIXED ACCOUNT AND THE DCA PLUS ACCOUNT

The Fixed Account and DCA Plus Account are supported by the assets in our General Account, which includes all of our assets except those assets specifically allocated to separate accounts. These assets are subject to the claims of our general creditors. We can invest the assets of the Fixed Account and DCA Plus Account however we choose, within limits. Your interest in the Fixed Account and DCA Plus Account is not registered under the Securities Act of 1933, and the Fixed Account and DCA Plus Account are not registered as investment companies under the 1940 Act. Therefore, generally you do not have the benefits and protections of these statutes for amounts allocated to the Fixed Account or the DCA Plus Account.

HOW TO REACH US FOR POLICY SERVICES

You can reach us in several ways. Please send service requests to us at one of the Variable Product Service Center (“VPSC”) addresses listed on the first page of this prospectus (or any other address we indicate to you in writing).

In addition, as described below, you can contact us through the Internet at our VSC and through an automated telephone service known as the IVR.

All NYLIAC requirements must be met in order for us to process your service requests. Please review all service request forms carefully and provide all required information as applicable to the transaction. If all requirements are not met, we will not be able to process your service request. We will make every reasonable attempt to notify you in writing of this situation. It is important that you inform NYLIAC of an address change so that you can receive important statements.

Faxed requests are not acceptable and will not be honored at any time. In addition, we will not accept e-mails of imaged, signed service requests.

 

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• Virtual Service Center and Interactive Voice Response System

Through the VSC and the IVR, you can get up-to-date information about your policy and request transfers, allocation changes and loans. We may remove VSC and IVR privileges for certain policyowners (See “Description of the Policy—Limits on Transfers”).

To enable you to access the VSC and IVR, you will automatically receive a PIN. Along with your Social Security number, the PIN will give you access to the IVR using the toll-free number, 1-800-598-2019. You should protect your PIN and your Social Security Number because our self-service options will be available to anyone who provides your Social Security Number and your PIN. We will not be able to verify that the person providing electronic service instructions via the VSC or IVR is you or is authorized by you.

In order to obtain policy information online via the VSC, you are required to register for access. Visit www.newyorklife.com/vsc and click the “Register Now” button to enroll. You will be required to register a unique User Name and Password to gain access. In a safe and secure environment, you can, among other things, access policy values, change your address, download service forms, view policy statements, and submit policy transactions.

We will use reasonable procedures to make sure that the instructions we receive through the VSC and IVR are genuine. We are not responsible for any loss, cost, or expense for any actions we take based on instructions received through the IVR or the VSC that we believe are genuine. We will confirm all transactions in writing.

Service requests are binding on all policyowners if a policy is jointly owned. Transfers, allocation changes, and loan requests received after 4:00 p.m. (Eastern Time) on a Business Day, or on a non-Business Day, will be priced as of the next Business Day.

We make the VSC and IVR available at our discretion. In addition, availability of the VSC or IVR may be interrupted temporarily at certain times. We do not assume responsibility for any loss if service should become unavailable. If you are experiencing problems, you can send service requests to us at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing).

• VSC

The VSC is available Monday through Friday, from 7 a.m. until 4 a.m., Saturdays from 7 a.m. to 10 p.m., and Sundays from 7 a.m. until 8 p.m. (Eastern Time).

The VSC enables you to:

 

   

e-mail your registered representative or VPSC;

 

   

view and download statements;

 

   

obtain current policy values;

 

   

transfer assets between Investment Options;

 

   

change the allocation of future premium payments;

 

   

change your address;

 

   

obtain service forms;

 

   

reset your password;

 

   

change your phone number or email address;

 

   

view and update beneficiary information;

 

   

change bank account information for existing Check-O-Matic arrangements;

 

   

set up a new Automatic Asset Rebalancing arrangement or modify an existing arrangement;

 

   

update your Investor Profile; and

 

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sign up to receive future prospectuses, policyowner annual and semi-annual reports, quarterly policy summaries and federal tax forms for your policy online at www.newyorklife.com/vsc. Electronic delivery is not available for policies that are owned by corporations, trusts, or organizations at this time.

• IVR

The IVR is available 24 hours a day, seven days a week. We record all calls.

The IVR enables you to:

 

   

obtain current policy values;

 

   

transfer assets between Investment Options;

 

   

change the allocation of future premium payments;

 

   

request a loan on your policy; and

 

   

speak with one or our Customer Service Representatives on any Business Day, Monday through Friday from 9:00 a.m. to 6:00 p.m. (Eastern Time).

By sending a Telephone Request Form to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing), you can authorize a third party to access your policy information and to make fund transfers, allocation changes, and other permitted transactions through a Customer Service Representative. The Customer Service Representative will require certain identifying information (e.g., Social Security Number, address of record, date of birth) before taking any requests or providing any information to ensure that the individual giving instructions is authorized.

NYLIAC does not permit current or former Registered Representatives to obtain authorization to effect policy transactions through the Telephone Request Form. Authorization to these Registered Representatives will be limited to accessing policy information only.

Registered Representative Actions

You may authorize us to accept electronic instructions from your registered representative or the registered service assistant assigned to your policy to make premium allocations, transfers among Investment Options, Automatic Asset Rebalancing (“AAR”) updates (if applicable) and changes to your investment objective and/or risk tolerance. Your AAR will be cancelled if a premium allocation change or fund transfer is submitted on your behalf and the AAR is not also modified at the time to be consistent with your fund transfer and premium allocation changes.

To authorize a registered representative or registered service assistant assigned to your policy to make premium allocations and transfers, you must send a completed Trading Authorization Form to VPSC at one of the addresses noted on the first page of this prospectus (or any other address we indicate to you in writing). We may revoke or deny Trading Authorization privileges for certain policyowners (See “Description of the Policy—Limits on Transfers”). Trading Authorization may be elected, changed or cancelled at any time. We will confirm all transactions in writing. Not all transactions are available on the Internet.

NYLIAC is not liable for any loss, cost or expense for acting on instructions which are believed to be genuine in accordance with the procedures. As these parties act on your behalf, you are responsible for and bear the consequences of their instructions and actions, including limits on transfers.

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. Transfer and partial withdrawal requests are not accepted under this process. For information on how to initiate a transfer between Investment Divisions, or request a partial withdrawal, please refer to the sections titled “Transfers Among Investment Divisions, the Fixed Account and DCA Plus Account” or the “Partial Withdrawals” in this prospectus. We will not accept Email or Fax requests for transactions affecting your investments under the policy.

 

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FUNDS AND ELIGIBLE PORTFOLIOS

The Portfolios of each Fund eligible for investment, along with their advisors and investment objectives, are listed in the following table. For more information about each of these Portfolios, please read the prospectuses, which are in the accompanying book of underlying fund prospectuses.

The Fund’s prospectus should be read carefully before any decision is made concerning the allocation of Net Premium payments to an Investment Division corresponding to a particular Eligible Portfolio.

The Funds and Eligible Portfolios offered though 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—New York Life Investment Management LLC—manages the MainStay VP Funds Trust and that was a factor in its selection.

We also receive payments or compensation from the Funds or their investment advisors, or from other service providers of the Funds (who may be affiliates of NYLIAC) in connection with administration, distribution and other services that 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 up to 0.35% 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.

 

Funds and Eligible Portfolios

  

Investment Adviser

  

Investment Objectives

MainStay VP Funds Trust:

 

MainStay VP Balanced—Initial Class

  

New York Life Investment Management LLC (or “New York Life Investments”)

Subadvisers: Cornerstone Capital Management Holdings LLC (“CCM”) and

NYL Investors LLC (fixed income investments only)

  

•    Seeks total return.

MainStay VP Bond—Initial Class

  

New York Life Investments

Subadviser: NYL Investors LLC

  

•    Seeks total return.

MainStay VP Cash Management—Initial Class

  

New York Life Investments

Subadviser: NYL Investors LLC

  

•    Seeks a high level of current income while preserving capital and maintaining liquidity.

MainStay VP Common Stock—Initial Class

   Subadviser: CCM   

•    Seeks long-term growth of capital.

MainStay VP Conservative Allocation—Initial Class

   New York Life Investments   

•    Seeks current income and, secondarily, long-term growth of capital.

MainStay VP Convertible—Initial Class

   Subadviser: MacKay Shields LLC*   

•    Seeks capital appreciation together with current income.

MainStay VP Cornerstone Growth—Initial Class

   Subadviser: CCM   

•    Seeks long-term growth of capital.

MainStay VP Eagle Small Cap Growth—Initial Class

   Subadviser: Eagle Asset Management, Inc.   

•    Seeks long-term capital appreciation.

MainStay VP Emerging Markets Equity—Initial Class (formerly MainStay VP DFA / DuPont Capital Emerging Markets Equity—Initial Class)

   Subadviser: Candriam Belgium and Cornerstone   

•    Seeks long-term capital appreciation.

 

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Funds and Eligible Portfolios

  

Investment Adviser

  

Investment Objectives

MainStay VP Floating Rate—Initial Class

  

New York Life Investments

Subadvisor: NYL Investors LLC

  

•    Seeks high current income.

MainStay VP Government—Initial Class

  

New York Life Investments

Subadviser: MacKay Shields LLC*

  

•    Seeks current income.

MainStay VP Growth Allocation—Initial Class

   New York Life Investments   

•    Seeks long-term growth of capital.

MainStay VP High Yield Corporate Bond—Initial Class

  

New York Life Investments

Subadviser: MacKay Shields LLC*

  

•    Seeks maximum current income through investment in a diversified portfolio of high-yield debt securities. Capital appreciation is a secondary objective.

MainStay VP ICAP Select Equity—Initial Class

  

New York Life Investments

Subadviser: Institutional Capital LLC (“ICAP”)

  

•    Seeks total return.

MainStay VP Income Builder—Initial Class

  

New York Life Investments

Subadviser: Epoch Investment Partners, Inc. (“Epoch”) and MacKay Shields LLC*

  

•    Seeks current income consistent with reasonable opportunity for future growth of capital and income.

MainStay VP International Equity—Initial Class

  

New York Life Investments

Subadviser: CCM

  

•    Seeks long-term growth of capital.

MainStay VP Janus Balanced—Initial Class

  

New York Life Investments

Subadviser: Janus Capital Management LLC

  

•    Seeks long-term capital growth, consistent with preservation of capital and balanced current income.

MainStay VP Large Cap Growth—Initial Class

   Subadviser: Winslow Capital Management, Inc.   

•    Seeks long-term growth of capital.

MainStay VP Marketfield Portfolio—Initial Class

   Subadviser: Marketfield Asset Management   

•    Seeks capital appreciation.

MainStay VP MFS® Utilities—Initial Class

   Subadviser: Massachusetts Financial Services Company (“MFS”)   

•    Seeks total return.

MainStay VP Mid Cap Core—Initial Class

   Subadviser: CCM   

•    Seeks long-term growth of capital.

MainStay VP Moderate Allocation—Initial Class

   New York Life Investments   

•    Seeks long-term growth of capital, and secondarily, current income.

MainStay VP Moderate Growth Allocation—Initial Class

   New York Life Investments   

•    Seeks long-term growth of capital, and secondarily, current income.

MainStay VP PIMCO Real Return—Initial Class

   Subadviser: Pacific Investment Management Company LLC   

•    Seeks maximum real return, consistent with preservation of real capital and prudent investment management.

MainStay VP S&P 500 Index—Initial Class

  

New York Life Investments

Subadviser: CCM

  

•    Seeks investment results that correspond to the total return performance (reflecting reinvestment of dividends) of common stocks in the aggregate as represented by the S&P 500® Index.

MainStay VP T. Rowe Price Equity Income—Initial Class

  

New York Life Investments

Subadviser: T. Rowe Price Associates, Inc.

  

•    Seeks a high level of dividend income and long-term capital growth primarily through investments in stocks.

MainStay VP Unconstrained Bond—Initial Class

   Subadviser: MacKay Shields LLC*   

•    Seeks total return by investing primarily in domestic and foreign debt securities.

MainStay VP U.S. Small Cap—Initial Class

   Subadviser: Epoch   

•    Seeks long-term capital appreciation by investing primarily in securities of small-cap companies.

MainStay VP Van Eck Global Hard Assets—Initial Class

   Subadviser: Van Eck Associates Corporation   

•    Seeks long-term capital appreciation by investing primarily in hard asset securities. Income is a secondary consideration.

AIM Variable Insurance Funds

 

(Invesco Variable Insurance Funds):

 

Invesco V.I. American Value Fund—Series I

   Invesco Advisers, Inc.   

•    Seeks above-average total return over a market cycle of three to five years by investing in common stocks and other equity securities.

Invesco V.I. International Growth Fund—Series I

   Invesco Advisers, Inc.   

•    Seeks long-term growth of capital.

 

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Funds and Eligible Portfolios

  

Investment Adviser

  

Investment Objectives

AB® Variable Products Series Fund, Inc.:

 

AB VPS Small/Mid Cap Value Portfolio– Class A

   AllianceBernstein L.P.   

•    Seeks long-term growth of capital.

American Funds Insurance Series®:

 

American Funds® IS Global Small Capitalization FundSM– Class 2

   Capital Research and Management Company   

•    Seeks long-term growth of capital.

American Funds® IS New World Fund®– Class 2

   Capital Research and Management Company   

•    Seeks long-term capital appreciation.

BlackRock® Variable Series, Inc.:

 

BlackRock® Global Allocation V.I. Fund—Class III

  

BlackRock Advisors, LLC

  

•    Seeks high total investment return.

BlackRock® High Yield V.I. Fund—Class I

   BlackRock Advisors, LLC   

•    Seeks to maximize total return, consistent with income generation and prudent investment management.

Columbia Variable Portfolios:

 

Columbia Variable Portfolio-Commodity Strategy FundClass 1

  

Columbia Management Investment Advisers, LLC

Subadviser: Threadneedle International Limited

  

•    Seeks to provide shareholders with total return.

Columbia Variable Portfolio-Emerging Markets Bond Fund—Class 1

   Columbia Management Investment Advisers, LLC   

•    Seeks to provide shareholders with high total return through current income, and secondarily, through capital appreciation.

Delaware VIP® Trust:

 

Delaware VIP® Emerging Markets Series—Standard Class

   Delaware Management Company   

•    Seeks long-term capital appreciation.

Delaware VIP® Small Cap Value Series—Standard Class

   Delaware Management Company   

•    Seeks capital appreciation.

Deutsche Variable Series II:

Deutsche Small Mid Cap Value VIP—Class A (formerly DWS Small Mid Cap Value VIP—Class A)

   Deutsche Investment Management Americas Inc.   

•    The fund seeks long-term capital appreciation.

Dreyfus Investment Portfolios:

 

Dreyfus IP Technology Growth PortfolioInitial Shares

  

The Dreyfus Corporation

  

•    The portfolio seeks capital appreciation.

Fidelity® Variable Insurance Products Fund:

 

Fidelity® VIP Contrafund® Portfolio—Initial Class

  

Fidelity Management & Research Company (FMR)

Subadvisers: FMR Co., Inc. (“FMRC”) and other investment advisers

  

•    Seeks long-term capital appreciation.

Fidelity® VIP Equity-Income Portfolio—Initial Class

  

Fidelity Management & Research Company (FMR)

Subadvisers: FMR Co., Inc. (“FMRC”) and other investment advisers

  

•    Seeks reasonable income. The fund will also consider the potential for capital appreciation. The fund’s goal is to achieve a yield which exceeds the composite yield on the securities comprising the S&P 500® Index.

Fidelity® VIP Freedom 2020 Portfolio—Initial Class

  

Strategic Advisers, an affiliate of FMR is the fund’s manager

(“Strategic Advisers”)

  

•    Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond.

Fidelity® VIP Freedom 2030 Portfolio—Initial Class

   Strategic Advisers   

•    Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond.

Fidelity® VIP Freedom 2040 Portfolio—Initial Class

   Strategic Advisers   

•    Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond.

Fidelity® VIP Growth Opportunities Portfolio—Initial Class

  

Fidelity Management & Research Company

Subadvisers: FMR Co., Inc. (“FMRC”) and other investment advisers

  

•    The fund seeks to provide capital growth.

Fidelity® VIP Mid Cap Portfolio—Initial Class

   Subadvisers: FMR Co., Inc. (“FMRC”) and other investment advisers   

•    Seeks long-term growth of capital.

 

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Funds and Eligible Portfolios

  

Investment Adviser

  

Investment Objectives

Janus Aspen Series:

 

Janus Aspen Global Research Portfolio—Institutional Shares

   Janus Capital Management LLC   

•    Seeks long-term growth of capital.

MFS® Variable Insurance Trust:

 

MFS® Investors Trust Series—Initial Class

   Massachusetts Financial Services Company (“MFS”)   

•    Seeks capital appreciation.

MFS® New Discovery Series—Initial Class

   MFS   

•    Seeks capital appreciation.

MFS® Research Series—Initial Class

   MFS   

•    Seeks capital appreciation.

MFS® Variable Insurance Trust II:

 

MFS® International Value Portfolio—Initial Class

   MFS   

•    Seeks capital appreciation.

Neuberger Berman Advisers Management Trust:

 

Neuberger Berman AMT Mid Cap Growth Portfolio—Class I

  

Neuberger Berman Management LLC

Subadviser: Neuberger Berman LLC

  

•    Seeks growth of capital.

PIMCO Variable Insurance Trust:

 

PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged)—Institutional Shares

   Pacific Investment Management Company LLC (“PIMCO”)   

•    The Portfolio seeks maximum total return, consistent with preservation of capital and prudent investment management.

PIMCO VIT Total Return Portfolio—Institutional Shares

   PIMCO   

•    The Portfolio seeks maximum total return, consistent with preservation of capital and prudent investment management.

Royce Capital Fund:

 

Royce Micro-Cap Portfolio—Investment Class

   Royce & Associates, LLC   

•    Seeks long-term growth of capital.

The Universal Institutional Funds, Inc.:

 

UIF U.S. Real Estate Portfolio—Class I

   Morgan Stanley Investment Management Inc.   

•    Seeks to provide above-average current income and long-term capital appreciation by investing primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts.

Van Eck VIP Trust:

 

Van Eck VIP Multi-Manager Alternatives Fund — Initial Class

  

Van Eck Associates Corporation

  

•    Seeks to achieve consistent absolute (positive) returns in various market cycles.

 

* MacKay Shields LLC is an affiliate of NYLIAC.

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 is 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 initial premium, you should monitor and periodically re-evaluate your allocations to determine if they are still appropriate.

The Investment Divisions invest in the corresponding Eligible Portfolios. You can choose a maximum of 21 Investment Options for Net Premium payments from the 60 Investment Divisions, the Fixed Account, and/or the DCA Plus Account. You can transfer all or part of the Cash Value of your policy among the Investment Options tax-free and within the limits described in this prospectus.

The Investment Divisions offered through the VUL Provider policy and described in this prospectus and the SAI are different and may have different investment performance from mutual funds that may have similar

 

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names, the same adviser, the same investment objective and policies, and substantially similar portfolio securities.

INVESTMENT RETURN

The investment return of your policy is based on the accumulation units you have in each Investment Division of the Separate Account, the amount you have in the Fixed Account and DCA Plus Account, the investment experience of each Investment Division as measured by its actual net rate of return, and the interest rate we credit on the amount you have in the Fixed Account and/or DCA Plus Account.

The investment experience of an Investment Division of the Separate Account reflects increases or decreases in the net asset value of the shares of the corresponding Eligible Portfolio, any dividend or capital gains distributions, and any charges against the assets of the Investment Division. We determine this investment experience from the end of one Valuation day to the end of the next Valuation day.

We will credit any amounts in the Fixed Account and DCA Plus Account with a fixed interest rate that we declare periodically, in advance, and at our sole discretion. This rate will never be less than an annual rate of 3%. We may credit different interest rates to loaned and unloaned amounts in the Fixed Account and DCA Plus Account. All Net Premiums applied to the Fixed Account and DCA Plus Account, and amounts transferred to the Fixed Account, receive the applicable loaned amount rate or the unloaned amount rate in effect on the Business Day we receive the premium payment or process the transfer. Interest rates for subsequent premium payments into the Fixed Account and DCA Plus Account may be different from the rate applied to prior premium payments made into the Fixed Account or DCA Plus Account. Interest accrues daily and is credited on each calendar day.

VOTING

We will vote the shares that the Investment Divisions of the Separate Account holds in the Eligible Portfolios at any regular and special shareholder meetings of the Funds. We will vote these shares according to the instructions we receive from our policyowners who have invested their premiums in Investment Divisions that invest in the Fund holding the meeting. However, if the law changes to allow us to vote the shares in our own right, we may decide to do so.

While your policy is in effect, you can provide voting instructions to us for each Investment Division in which you have assets. The number of votes you are entitled to will be determined by dividing the units you have invested in an Investment Division by the net asset value per unit for the Eligible Portfolio underlying that Investment Division.

We will determine the number of votes you are entitled to on the date established by the underlying Fund for determining shareholders that are eligible to vote at the meeting of the relevant Fund. We will send you voting instructions prior to the meeting according to the procedures established by the Fund. We will send proxy material, reports, and other materials relating to the Fund to each person having a voting interest.

We will vote the Fund shares for which we do not receive timely instructions in the same proportion as the shares for which we receive timely voting instructions. As a result, because of proportional voting, a small number of policyowners may control the outcome of the vote. We will use voting instructions to abstain from voting on an item to reduce the number of votes eligible to be cast.

CHARGES ASSOCIATED WITH THE POLICY

As with all life insurance policies, certain charges apply under the policy. The following is a summary explanation of these charges. (See ”Additional Information About Charges” in the SAI for more information.)

Current Interest Rates1

 

     1-10 Years     Years 11 &
Subsequent
 

Loan Interest Rates

     4     3

 

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Crediting Rate

             3             3

 

1 

Loans will reduce the policy’s cash value and death benefit. Loan interest rates and interest crediting rates are not guaranteed and are subject to change without notice. The maximum loan interest rate is 6%.

DEDUCTIONS FROM PREMIUM PAYMENTS

When we receive a premium payment from you, whether planned or unplanned, we will deduct a sales expense charge, a state premium tax charge and for Non-Qualified Policies, we will deduct a federal tax charge.

SALES EXPENSE CHARGE

Target Premium—We deduct from any premium payment a sales expense charge based on your policy’s Target Premium. Your initial Target Premium is set at the time your policy is issued. You can find this initial Target Premium on the Policy Data Page of your policy. Your Target Premium will be adjusted only if you change the Face Amount of your policy.

 

   

Premiums Up to the Target Premium—In each of Policy Years 1-5, we currently deduct an annual sales expense charge of 6.75% of the premium payments up to the Target Premium. In each of Policy Years 6 and subsequent, we currently deduct 2.75% of premium payments up to the Target Premium.

 

   

Premiums Over the Target Premium—Once premiums equal to the Target Premium for a given Policy Year have been paid (the “Annual Target Premium Threshold”), we deduct a reduced sales expense charge of 4.25% from any additional premiums paid in Policy Years 1-5 and 0.75% from any additional premiums paid in Policy Years 6 and subsequent.

 

   

Guaranteed Maximum—We can change the amount of the sales expense charge at any time, but we guarantee that the charge we deduct will never exceed 6.75% of any premiums paid.

 

   

Timing of Premium Payments—Because the amount of sales expense charge deducted is based on the Target Premium, the timing of premium payments may affect the amount of such charges actually deducted from your premium payments, both over time and in any given Policy Year. The examples below describe how current sales expense charges may vary for premium payments received during one policy year versus another.

The amount of compensation received by your registered representative will vary depending on the amount of the sales expense charge deducted from your policy. Generally, higher amounts of sales expense charges will result in additional compensation to the registered representative.

 

   

Payments in Excess of Target Premium

As noted above, in any given Policy Year, once the premiums you paid exceed the Annual Target Premium Threshold, we deduct a reduced sales expense charge (4.25% vs. 6.75% for Policy Years 1-5 and 0.75% vs. 2.75% for Policy Years 6 and subsequent) from additional premium payments made in that Policy Year. However, if those same premium payments are made in the following Policy Year, they would be counted as Target Premium and would once again be subject to the current sales expense charge of 6.75% (for Policy Years 1-5) or 2.75% (for Policy Years 6 and subsequent) up to the Target Premium for that Policy Year.

For example, for policy with an anniversary of January 1 and a Target Premium of $1,000:

 

   

If, on December 1 of Policy Year 1, you make a $500 premium payment in excess of the Target Premium, we would deduct a reduced sales expense charge on that payment of $500 x .0425 or $21.25.

 

   

If instead you make the same $500 premium payment on February 1 of Policy Year 2, we would deduct a current sales expense charge on that payment of $500 x 0.0675 or $33.75. This premium payment would be ineligible for a reduced sales expense charge, as the Annual Target Premium Threshold for Policy Year 2 had not yet been met.

 

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The difference in current sales expense charges deducted on this payment—$21.25 versus $33.75—is due to the interaction between payment timing and the Target Premium. If the payment is made in the same Policy Year in which the Annual Target Premium Threshold has already been satisfied, it will be subject to lower sales expense charges than if made in a Policy Year in which the Annual Target Premium Threshold has not yet been met.

 

   

Effect of Step-Down in Sales Expense Charges at Policy Year 6

As noted above, because current sales expense charges step down from Policy Years 5 to 6, the timing of a premium payment during this period will affect the sales expense charges assessed for a given premium amount. For example, for a policy with a Target Premium of $1,000:

 

   

If you made an annual premium payment of $1,500 in Policy Year 5, the sales expense charge would be:

 

  a) 6.75% of the premiums paid up to your Target Premium— $1,000 x 0.0675 or $67.50; plus

 

  b) 4.25% of the premium paid in excess of your Target Premium— $500 x 0.0425 or $21.25.

The total annual sales expense charge deducted in Policy Year 5 would be $88.75.

 

   

If instead you made the same annual premium payment of $1,500 in Policy Year 6, however, the sales expense charge would be:

 

  a) 2.75% of the premiums paid up to your Target Premium— $1,000 x 0.0275 or $27.50; plus

 

  b) 0.75% of the premium paid in excess of your Target Premium— $500 x 0.0075 or $3.75.

The total annual sales expense charge deducted in Policy Year 6 would be $31.25.

The difference in total annual sales expense charges deducted — $88.75 versus $31.25 — is due to the reduced sales expense charge applicable to premiums paid in Policy Year 6 versus those paid in Policy Year 5.

As these two examples demonstrate, the timing of your premium payment may affect the amount of current sales expense charges that we will deduct from such payments. Consequently, you should carefully consider these issues when deciding in which Policy Year to make your premium payments.

STATE PREMIUM TAX CHARGE

 

   

Some jurisdictions impose a tax on the premiums insurance companies receive from their policyowners currently ranging from 0% to 3.5% of premium payments. (This premium tax may be higher in certain U.S. territories.) We currently deduct 2% of each premium payment you make, or $20 per $1,000 of premium, as a state premium tax charge. We may increase this charge to reflect changes in applicable law. This charge may not reflect the actual premium tax charged in your state. Our right to increase this charge is limited in some jurisdictions by law.

FEDERAL TAX CHARGE

 

   

We currently deduct 1.25% of each premium payment you make, or $12.50 per $1,000 of premium, as a federal tax charge. We may increase this charge to reflect changes in applicable law.

DEDUCTIONS FROM CASH VALUE

Each month, we will deduct a monthly contract charge, a cost of insurance charge, a Mortality and Expense Risk charge, a per thousand Face Amount charge, and a rider charge for the cost of any additional riders from your policy’s Cash Value. If you have elected the Expense Allocation feature, the policy charges will be deducted according to those instructions.

We will deduct these charges on the Monthly Deduction Day. The first Monthly Deduction Day will be the monthly anniversary of your Policy Date on or following the date we receive the initial premium payment. If the

 

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Policy Date is prior to the Issue Date, the deductions made on the first Monthly Deduction Day will cover the period from the Policy Date until the first Monthly Deduction Day.

MONTHLY CONTRACT CHARGE

On each Monthly Deduction Day, we will deduct a monthly contract charge to cover our costs for providing certain administrative services, including premium collection, record-keeping, processing claims, and communicating with policyowners.

Currently, we deduct a monthly contract charge of $30 per month from policies in their first Policy Year, and we expect to deduct $10 per month from policies in the second and subsequent years. While we can change the monthly contract charge at any time, we guarantee that we will never charge more than $35 per month as the monthly contract charge during the first Policy Year, and $15 per month thereafter.

CHARGE FOR COST OF INSURANCE PROTECTION

Each Monthly Deduction Day we deduct a charge from the Cash Value for the cost of providing a Life Insurance Benefit to you. This charge is calculated by multiplying the Net Amount at Risk by the monthly cost of insurance rate and adding any applicable flat extra charge, which might apply to certain insureds based on our underwriting. The Net Amount of Risk is equal to the difference between the policy’s Life Insurance Benefit divided by 1.00327 and its Cash Value. The Life Insurance Benefit varies based on the Life Insurance Benefit option chosen. The Cash Value varies based on the performance of the Investment Divisions selected, interest credited to the Fixed Account and DCA Plus Account, outstanding loans (including loan interest), charges and premium payments.

We determine the initial rate of the monthly cost of insurance based upon our underwriting of your policy. This determination is based on the insured’s issue age, gender, underwriting class, Policy Year and Face Amount. In addition, we may change these rates from time to time, based on changes in future expectations of such factors as mortality, investment income, expenses, and persistency.

The monthly cost of insurance charge also depends on the Face Amount of the policy plus the amount of any term insurance in effect on the Primary Insured. We calculate the cost of insurance separately for the initial face amount and for any increase in Face Amount. If you request and we approve an increase in your policy’s Face Amount, then a different rate class (therefore cost of insurance charge) may apply to the increase, based on the insured’s age and circumstances at the time of increase.

The cost of insurance rates will never exceed the maximum cost of insurance rates for your policy. We base the guaranteed maximum cost of insurance rates for policies that provide coverage for insureds in substandard underwriting classes on higher rates than for standard or better underwriting classes. If the insured is in a standard or better underwriting class, we base the guaranteed rates on the 1980 Commissioner’s Standard Ordinary Mortality tables. Your cost of insurance charge may vary from month to month depending on changes in the cost of insurance rate and the Net Amount at Risk. We expect to profit from this charge. Profits derived from this charge can be used for any corporate purpose.

MONTHLY PER THOUSAND FACE AMOUNT CHARGE

For each of the first 60 Monthly Deduction Days, a per thousand Face Amount charge will be deducted. This charge is equal to $0.07 per $1,000 of the policy’s Face Amount plus any term insurance benefit. We do not currently deduct a per thousand Face Amount charge after the first 60 Monthly Deduction Days, but we may deduct this charge in the future. The per thousand face amount charge will never exceed $0.07 per $1,000 for any month. We separately calculate the monthly per Thousand Face Amount charge (including its duration) for the Initial Face Amount and any increase in the Face Amount.

RIDER CHARGES

A monthly charge will be deducted if any of the following riders are in effect: the Guaranteed Insurability Rider, the Insurance Exchange Rider, the Life Extension Benefit Rider, the Monthly Deduction Waiver Rider, and the Term Insurance Benefit Rider. See “Table of Fees and Expenses” for more information.

 

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A one-time charge will apply if you exercise the Living Benefits Rider and may be required if you exercise the Insurance Exchange Rider. See “Table of Fees and Expenses” for more information.

EXPENSE ALLOCATION

With the Expense Allocation feature, you choose how to allocate policy expenses. These include the monthly cost of insurance, the monthly cost of any riders on the policy, the monthly contract charge, the per thousand Face Amount charge, and the Mortality and Expense Risk charge. You can instruct us at the time of the application, and any time thereafter, to have expenses deducted from the MainStay VP Cash Management Investment Division, the unloaned portion of the Fixed Account, the DCA Plus Account, or a combination of the three.

If the values in the MainStay VP Cash Management Investment Division, the unloaned portion of the Fixed Account, and/or the DCA Plus Account are insufficient to pay these charges, we will deduct as much of the charges as possible. The remainder of the charges will be deducted proportionately from each of the Investment Divisions. If you do not instruct us as to how you would like the expenses allocated, these charges will be deducted proportionately from each of the Investment Divisions, including any unloaned portion of the Fixed Account and/or DCA Plus Account.

SEPARATE ACCOUNT CHARGES

MORTALITY AND EXPENSE RISK CHARGE

 

   

Current—We currently deduct a monthly Mortality and Expense Risk charge based on Separate Account Value and policy duration that ranges from 0.05% to 0.70% per year for policies that do not contain the ACSV benefit. If your policy contains the ACSV benefit, the monthly Mortality and Expense Risk charge will be 1.00% per year in the first ten Policy Years. If the charge is 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 funds for any corporate purpose, including expenses relating to the sale of the policies.

 

   

Guaranteed Maximum—We guarantee that the Mortality and Expense Risk charge will never exceed an annual rate of 1.00%, or $10 per $1,000, of the Separate Account Value.

CHARGES FOR FEDERAL INCOME TAXES

We do not currently deduct a charge for federal income taxes from the Investment Divisions, although we may do so in the future to reflect possible changes in the law.

FUND CHARGES

Each Investment Division of the Separate Account purchases shares of the corresponding Portfolio at the net asset value. The net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of the Portfolio by that Fund. The advisory fees and other expenses are not fixed or specified under the terms of the policy and may vary from year to year. These fees and expenses are described in the Funds’ prospectuses. (See “Table of Fees and Expenses—Annual Portfolio Company Operating Expenses” for more information.)

TRANSACTION CHARGES

SURRENDER CHARGES

The Surrender Charge is in addition to the Sales Expense Charge. If you surrender your policy, or if you decrease the Face Amount of your policy (including a decrease in the Face Amount that results from changing the Life Insurance Benefit Option or from a partial withdrawal) during the first ten Policy Years, or within ten years after you increase the Face Amount, we will deduct a Surrender Charge. The maximum charge will be the lesser of (a) or (b), where (a) equals 50% of the total premiums paid under the policy and (b) equals 100% of the Surrender Charge Premium. Since the percentage used to calculate (b) is lower in later Policy Years, the maximum Surrender Charge is reduced over time.

 

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Policy Year   

Percentage

Applied

 

1

     100

2

     95

3

     89

4

     84

5

     78

6

     73

7

     67

8

     60

9

     54

10

     47

For example, a Male insured age 40, Preferred class, with a planned annual premium of $10,000 and a Surrender Charge Premium of $10,924 for a Face Amount of $400,000, who has elected Life Insurance Benefit option 1, would pay a Surrender Charge of $5,000 if he surrenders his policy at the end of the first Policy Year. The Surrender Charge in this example is calculated as the lesser of (a) or (b) as follows:

(a) = 50% of 10,000 = $5,000; and

(b) = 100% of Surrender Charge Premium = $10,924.

Since (a) is less than (b), the Surrender Charge would be $5,000.

If the policy remains in force, no Surrender Charge is assessed. See the SAI for an additional example of how the Surrender Charge is calculated. For policies issued with ACSV a Surrender Charge will not be assessed on a full surrender of all NYLIAC policies that include an ACSV.

FIRST-YEAR LAPSE/REINSTATEMENT CHARGE

In addition to the Surrender Charge described above, if you surrender your policy during the first Policy Year, we will deduct an additional charge from Cash Surrender Value. This charge will also apply if the policy lapses during the first Policy Year and is subsequently reinstated. This charge will equal the difference between the monthly contract charge for the first Policy Year and the monthly contract charge for subsequent Policy Years (currently, $20), multiplied by the number of Monthly Deduction Days that would have occurred had the policy stayed in effect between the date of surrender/lapse and what would have been the first Policy Anniversary (or the date of reinstatement).

 

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PARTIAL WITHDRAWAL

In addition to any applicable surrender charges, a partial withdrawal charge, not to exceed the lesser of 2% of the withdrawal amount or $25, may apply upon any partial withdrawal.

TRANSFER CHARGE

We currently do not charge for transfers made between Investment Divisions. However, we have a right to charge $30 per transfer for any transfer in excess of 12 in a Policy Year.

LOAN CHARGES

We currently charge an effective annual loan interest rate of 4% during the first 10 Policy Years and 3% beginning in Policy Year 11. We may increase or decrease this rate but we guarantee that the rate will never exceed 6%. When you request a loan, a transfer of funds will be made from the Separate Account (or DCA Plus Account, if so requested) to the Fixed Account so that the Cash Value in the Fixed Account is at least 100% of the requested loan plus any outstanding loans, including accrued loan interest.

When you take a loan against your policy, the loaned amount that we hold in the Fixed Account may earn interest at a different rate from the rate we charge you for loan interest. For the first 10 Policy Years, the rate we currently credit on loaned amounts is 1% less than the rate we charge for loan interest, and we guarantee that the rate we credit on loan amounts will never be less than the rate we charge for policy loans less 2% (for example, if the rate we charge for policy loans is 6%, then the rate we credit on loaned amounts will never be lower than 4%. Beginning in the Policy Year 11, the rate we currently credit on loaned amounts equals the rate we charge for loan interest, and we guarantee that the rate we credit on loaned amounts will never be less than the rate we charge for policy loans less 0.25% (for example, if the rate we charge for policy loans is 6%, then the rate we credit on loaned amounts will never be lower than 5.75%). We guarantee that the interest rate we credit on loaned amounts will always be at least 3%. (See “Loans” for more information.)

DESCRIPTION OF THE POLICY

THE PARTIES

There are three important parties to the Policy: the policyowner (or contract owner), the Primary Insured, and the beneficiary. One individual can have one or more of these roles. Each party plays an important role in a Policy.

POLICYOWNER: This person or entity can purchase and surrender a policy, and can make changes to it, such as:

 

   

increase/decrease the Face Amount

 

   

choose a different Life Insurance Benefit (except that a change cannot be made to Option 3)

 

   

choose/add/delete riders

 

   

change a beneficiary

 

   

choose/change underlying Investment Options

 

   

take a loan against or take a partial withdrawal from the Cash Surrender Value of the policy.

The current policyowner (on Non-Qualified plans) has the right to transfer ownership to another party/entity. The person having the right to transfer the ownership of the policy must do so by using the Company’s approved “Transfer of Ownership” form in effect at the time of the request. Please note that the completed Transfer of Ownership form must be in a form acceptable to us and be sent to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). When the Company records the change, it will take effect as of the date the form was signed, subject to any payment made or other action taken by the Company before recording. Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who becomes the owner of an existing policy.

 

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This means the new policyowner will be required to provide their name, address, date of birth, and other identifying information. A transfer of ownership request also requires that the new policyowner(s) submit financial and suitability information as well.

PRIMARY INSURED: This individual’s personal information determines the cost of the life insurance coverage. The policyowner also may be the Primary Insured.

BENEFICIARY: The beneficiary is the person(s) or entity(ies) the policyowner specifies on our records to receive the proceeds from the policy. The policyowner may name his or her estate as the beneficiary.

Who is named as Policyowner and Beneficiary may impact whether and to what extent the Life Insurance Benefit may be received on a tax-free basis. See the discussion under “Federal Income Tax Considerations—IRC Section 101(j)—Impact on Employer-Owned Policies” for more information.

THE POLICY

The policy provides life insurance protection on the named Primary Insured, and pays Policy Proceeds when the insured dies while the policy is in effect. The policy offers: (1) flexible premium payments where you decide the timing and amount of the payment; (2) a choice of three Life Insurance Benefit Options; (3) access to the policy’s Cash Surrender Value through loans and partial withdrawal privileges (within limits); (4) the ability to increase or decrease the policy’s Face Amount of insurance (on policies issued with an ACSV, face increases will not be permitted in the first ten Policy Years); (5) a guarantee that the policy will not lapse during the first three Policy Years if the specified minimum premiums have been paid (this feature is not available in New Jersey and Texas); (6) additional benefits through the use of optional riders; (7) a selection of premium and expense allocation options, consisting of 60 Investment Divisions, a Fixed Account with a guaranteed minimum interest rate, and a DCA Plus Account with a guaranteed minimum interest rate.

We will pay the designated beneficiary the Policy Proceeds if the policy is still in effect when the Primary Insured dies. Your policy will stay in effect as long as the Net Cash Value of your policy is sufficient to pay your policy’s Monthly Deductions. Except in New Jersey and Texas, we guarantee that the policy will not lapse during the first three Policy Years so long as the total amount of premiums paid (less any loans and partial withdrawals) is at least equal to the minimum monthly premium, shown on the Policy Data Page, multiplied by the number of months the policy has been in force.

VUL Provider offers you a choice of: (1) a level Life Insurance Benefit equal to the Face Amount of your policy, (2) a Life Insurance Benefit which varies and is equal to the sum of your policy’s Face Amount and Cash Value, or (3) a Life Insurance Benefit that varies and equals the sum of your policy’s Face Amount and the Adjusted Total Premiums. If you choose Option 2, the Life Insurance Benefit will increase or decrease depending on the performance of the Investment Options you select. However, your policy’s Life Insurance Benefit will never be less than the Face Amount of your policy. The death benefit proceeds will be reduced by any outstanding loans and accrued loan interest.

HOW THE POLICY IS AVAILABLE

The policy is available as a Non-Qualified Policy for issue ages 18-65 with a minimum policy Face Amount of $100,000.

POLICY PREMIUMS

Once you have purchased your policy, you can make premium payments as often as you like and for any amount you choose, within limits. Other than the initial premium, there are no required premium payments. However, you may be required to make additional premium payments to keep your policy from lapsing. The currently available methods of payments are: direct payment to NYLIAC, pre-authorized Monthly Deductions from your bank, credit union or similar accounts and any other method agreed to by us. (See “Premiums” for more information.)

 

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CASH VALUE

The Cash Value of this policy at any time is equal to the Separate Account Value and any amount in the Fixed Account and/or DCA Plus Account. This amount is allocated based on the instructions you give us. A number of factors affect your policy’s Cash Value, including, but not limited to:

 

   

the amount and frequency of the premium payments;

 

   

the investment experience of the Investment Divisions you choose;

 

   

the interest credited on the amount in the Fixed Account and DCA Plus Account;

 

   

the amount of any partial withdrawal you make (including any charges you incur as a result of withdrawal); and

 

   

the amount of charges we deduct.

The Cash Value is not necessarily the amount you receive when you surrender your policy. (See “Partial Withdrawals and Surrenders” for details about surrendering your policy.)

INVESTMENT DIVISIONS, THE FIXED ACCOUNT AND DCA PLUS ACCOUNT

We allocate your Net Premium among your selected Investment Divisions available under the policy (See “Management and Organization—Funds and Eligible Portfolios” for our list of available Investment Divisions), the Fixed Account, and within limits, the DCA Plus Account, based on your instructions. You can choose a maximum of 21 Investment Options for Net Premium payments from among the 60 Investment Divisions, the Fixed Account and/or DCA Plus Account.

AMOUNT IN THE SEPARATE ACCOUNT

We use the amount allocated to an Investment Division to purchase accumulation units within that Investment Division. We redeem accumulation units from an Investment Division when amounts are loaned, withdrawn, transferred, surrendered, or deducted for charges or loan interest. We calculate the number of accumulation units purchased or redeemed in an Investment Division by dividing the dollar amount of the transaction by the Investment Division’s accumulation unit value. On any given day, the amount you have in the Separate Account is the value of the accumulation units you have in all of the Investment Divisions of the Separate Account. The value of the accumulation units you have in a given Investment Division equals the current accumulation unit value for the Investment Division multiplied by the number of accumulation units you hold in that Investment Division.

We determine accumulation unit values for the Investment Divisions as of the end of each Valuation Day.

AMOUNT IN THE FIXED ACCOUNT AND DCA PLUS ACCOUNT

You can choose to allocate all or part of your Net Premium payments to the Fixed Account and, within limits, to the DCA Plus Account.

The amount you have in the Fixed Account and/or DCA Plus Account equals:

 

      (1) the sum of the Net Premium payments you have allocated to the Fixed Account and/or DCA Plus Account;
    plus    (2) any transfers you have made from the Separate Account to the Fixed Account (no transfers can be made into the DCA Plus Account);
    plus    (3) any interest credited to the Fixed Account and/or DCA Plus Account;
    less    (4) any amounts you have withdrawn from the Fixed Account and/or DCA Plus Account;
    less    (5) any charges we have deducted from the Fixed Account and/or DCA Plus Account;
    less    (6) any transfers you have made from the Fixed Account and/or DCA Plus Account to the Separate

 

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      Account.

TRANSFERS AMONG INVESTMENT DIVISIONS, THE FIXED ACCOUNT AND DCA PLUS ACCOUNT

You can transfer all or part of the Cash Value of your policy (1) from the Fixed Account to the Investment Divisions of the Separate Account, (2) from the DCA Plus Account to the Investment Divisions of the Separate Account, (3) from the DCA Plus Account to the Fixed Account, (4) from the Investment Divisions of the Separate Account to the Fixed Account, or (5) between the Investment Divisions in the Separate Account. You cannot transfer any portion of the Cash Value of your policy from either the Investment Divisions of the Separate Account or from the Fixed Account to the DCA Plus Account. You may choose to allocate Cash Value to a maximum of 21 investment options, which include the 60 Investment Divisions, the Fixed Account and/or the DCA Plus Account.

You can request a transfer under the following conditions:

 

   

Maximum Transfer—The maximum amount you can transfer from the Fixed Account to the Investment Divisions during any Policy Year is the greater of (i) 20% of the amount in the Fixed Account at the beginning of the Policy Year or (ii) $5,000. This means, for example, if you have $50,000 in the Fixed Account, it will take you 8 years to transfer out the entire amount.

During any period when the interest rate credited on the unloaned amount in the Fixed Account is equal to 3%, the maximum amount you can transfer to the Fixed Account during any Policy Year is the greater of (1) 20% of the total amount in the Investment Divisions at the beginning of the Policy Year or (2) $5,000. This limit, however, will not apply if the Primary Insured was age 65 or older on the most recent policy anniversary. If you have exceeded the transfer limit in any Policy Year during which the limit becomes effective, you cannot make any additional transfers to the Fixed Account during that Policy Year while the limit remains in effect. We will count transfers made in connection with the Dollar Cost Averaging, Automatic Asset Rebalancing, and Interest Sweep options as a transfer toward these maximum limits. Transfers made in connection with DCA Plus will not count toward these maximum transfer limits.

 

   

Minimum Transfer—The minimum amount you can transfer from the Investment Divisions or from the Fixed Account is the lesser of (i) $500 or (ii) the total amount in the Investment Divisions or the Fixed Account.

Minimum transfer limitations do not apply on transfers made from the DCA Plus Account to the Investment Divisions or the Fixed Account.

 

   

Minimum Remaining Value—If a transfer will cause the amount you have in the Investment Divisions or the Fixed Account to be less than $500, we will transfer the entire amount in the Investment Divisions and/or Fixed Account you have chosen.

 

   

Transfer Charge—We may impose a charge of up to $30 per transfer for each transfer after the first twelve in any Policy Year. We will deduct this charge from amounts in the Investment Divisions and amounts not held as collateral for a loan in the Fixed Account in proportion to amounts in these Investment Options. We will not count any transfer made in connection with the Dollar Cost Averaging, Automatic Asset Rebalancing, DCA Plus and Interest Sweep options as a transfer toward the twelve transfer limit.

 

   

How to request a transfer:

 

  (1) submit your request in writing on a form we approve to the VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing);

 

  (2) use the Interactive Voice Response system at 800-598-2019;

 

  (3) speak to a customer service representative at 800-598-2019 on Business Days between the hours of 9:00 a.m. and 6:00 p.m. Eastern Time; or

 

  (4) make your request through the VSC.

 

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Faxed requests are not acceptable and will not be honored at any time. In addition, we will not accept e-mailed requests or e-mails of imaged, signed requests.

Transfer requests received after 4:00 p.m. Eastern Time on a Business Day, or on a non-Business Day, will be priced as of the next Business Day. (See “Management and Organization—How to Reach Us for Policy Services” for more information.)

LIMITS ON TRANSFERS

Procedures Designed to Limit Potentially Harmful Transfers—This policy is not intended as a vehicle for market timing. Accordingly, your ability to make transfers under the policy is subject to limitation if we determine, in our sole opinion, that the exercise of that privilege may disadvantage or potentially hurt the rights or interests of other policyowners.

Any modification of the transfer privilege could be applied to transfers to or from some or all of the Investment Divisions. If not expressly prohibited by the policy, we may, for example:

 

   

reject a transfer request from you or from any person acting on your behalf

 

   

restrict the method of making a transfer

 

   

charge you for any redemption fee imposed by an underlying Fund

 

   

limit the dollar amount, frequency or number of transfers.

Currently, if you or someone acting on your behalf requests either by telephone or electronically transfers into or out of one or more Investment Divisions on three or more days within any 60-day period, we will send you a letter notifying you that a transfer limitation has been exceeded. If we receive an additional transfer request that would result in transfers into or out of one or more Investment Divisions on three or more days within any 60-day period, we will process the transfer request. Thereafter, we will immediately suspend your ability to make transfers electronically and by telephone, regardless of whether you have received the warning letter. All subsequent transfer requests for your policy must then be made through the U.S. mail or an overnight courier and received by VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). We will provide you with written notice when we take this action.

We currently do not include the following transfers in these limitations, although we reserve the right to include them in the future: transfers to and from the Fixed Account, the first transfer into the Investment Divisions at the expiration of the free look period, the first transfer out of the MainStay VP Cash Management Investment Division within six months of the issuance of a policy immediately after funds have been transferred to the MainStay VP Cash Management Investment Division from the General Account and transfers made pursuant to the Dollar Cost Averaging, Automatic Asset Rebalancing, and Interest Sweep options.

We may change these limitations or restrictions 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 the 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 prospectuses for more details regarding their 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.

 

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Risks Associated with Potentially Harmful Transfers—Our procedures are designed to limit potentially harmful transfers. However, we cannot guarantee that our 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 number or size of transfers in a given period. Redemption fees, transfer 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 prospectuses for the underlying Fund Portfolios, in effect at the time of any trade, describe 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 policyowners 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.

 

   

Other insurance companies, which invest in the Fund Portfolios underlying this policy, may have adopted their own policies and procedures to detect and prevent potentially harmful transfer activity. The policies and procedures of other insurance companies may vary from ours and be more or less effective at preventing harm. If their policies and procedures fail to successfully discourage potentially harmful transfer activity, there could be a negative effect on the owners of all of the variable policies, including ours, whose variable Investment Options correspond to the affected underlying Fund Portfolios.

 

   

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 otherwise 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”).

 

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ADDITIONAL BENEFITS THROUGH RIDERS

You can apply for additional benefits by selecting one or more optional riders. With the exception of the Insurance Exchange Rider (not available on policies that contain the ACSV Benefit), Living Benefits Rider, and the Spouse’s Paid-Up Insurance Purchase Option Rider, which are available without any additional charge, any Riders you choose will have their own charges. In addition a one-time charge is assessed if the Living Benefits Rider is exercised and a payment may be required if the Insurance Exchange Rider is exercised (See “Table of Fees and Expenses” for more information). All riders can be elected at any time, subject to age restrictions, provided they are available in your state of issue.

 

   

Guaranteed Insurability Rider: This rider allows you to purchase additional insurance coverage on the Primary Insured, on a scheduled option date or alternative option date, without providing any evidence of insurability. The additional insurance coverage can be either a new policy on the life of the insured or an increase to the existing policy’s Face Amount.

 

   

Insurance Exchange Rider (Not available on policies that contain the ACSV Benefit): This rider allows you to exchange the policy for a new NYLIAC VUL Provider policy issued on a new insured using values from your original policy. This rider is included in the policy at no additional cost. (See “Federal Income Tax Considerations” for more information about the tax implications of exercising this rider.) This rider may only be exercised once under the policy. To exercise this rider, you must send a completed Insurance Exchange Rider form to VPSC at one of the addresses listed on the first page of this prospectus.

 

   

Life Extension Benefit Rider: This rider becomes effective on the policy anniversary on which the insured is age 100. Under this rider, the Life Insurance Benefit will continue equal to the Life Insurance Benefit of the policy. Without this rider, on the policy anniversary on which the Primary insured reaches age 100, the Life Insurance Benefit would equal the policy’s Cash Value.

 

   

Living Benefits Rider (also known as Accelerated Benefits Rider in most jurisdictions): Under this rider, if the Primary Insured has a life expectancy of 12 months or less, you can request a portion or all of the Policy Proceeds as an accelerated death benefit.

 

   

Monthly Deduction Waiver Rider: This rider provides for the waiver of Monthly Deduction if the Primary Insured becomes totally disabled. This rider will end on the policy anniversary on which the insured is age 65. When disability begins on or before age 60 and continues to age 65, deductions will be waived for the remainder of the time the policy is in effect. If disability begins after age 60 and before age 65, deductions will be waived to age 65. Deductions will not be waived for a disability beginning on or after age 65.

 

   

Spouse’s Paid-Up Insurance Purchase Option Rider: This rider allows a spouse who is the beneficiary under the policy to purchase a new paid-up whole life insurance policy on his or her own life without evidence of insurability when the insured dies.

 

   

Term Insurance Benefit Rider: This rider provides term insurance only on the Primary Insured. You can convert the term insurance provided by this rider or drop the rider without incurring surrender charges. Evidence of insurability is not needed in order to convert this rider to the base policy. You can make a conversion on any Monthly Deduction Day prior to the policy anniversary on which the Primary Insured is age 65, provided the policy is in effect. A conversion would result in an increase in base policy face amount.

See the SAI for more information about riders including information about the tax implications of certain riders.

OPTIONS AVAILABLE AT NO ADDITIONAL CHARGE

DOLLAR COST AVERAGING

Dollar Cost Averaging is a systematic method of investing that allows you to purchase shares of any Investment Division(s) at regular intervals in fixed dollar amounts so that the cost of your shares is averaged

 

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over time and over various market cycles. You can elect this option as long as the Cash Value is $2,500 or more. To set up Dollar Cost Averaging, you must send a completed Dollar Cost Averaging form to VPSC at one of the addresses listed on the first page of this prospectus or by any other method we make available. (See the SAI for more information.)

DOLLAR COST AVERAGING PLUS ACCOUNT (May Be Discontinued At Any Time)

The Dollar Cost Averaging Plus program permits you to set up automatic dollar cost averaging using the DCA Plus Account when an initial premium payment (minimum net premium of $1,000) is made. The DCA Plus Account must be elected at the time your policy is issued. (See the SAI for more information.)

AUTOMATIC ASSET REBALANCING (AAR)

If you choose this feature, we will rebalance your assets automatically on a schedule you select among the Investment Divisions in order to maintain a predetermined percentage invested in the Investment Division(s) you have selected. You can elect this option as long as the Separate Account Value is $2,500 or more. To set up AAR, you must send a completed AAR form to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). You may modify an existing AAR by contacting Us at the phone number provided on page 1 of this prospectus or by any other method we make available. Your AAR will be cancelled if a premium allocation change or fund transfer is submitted on your behalf and the AAR is not also modified at the time to be consistent with your fund transfer and premium allocation changes. (See the SAI for more information.)

INTEREST SWEEP

You can instruct us to periodically transfer the interest credited to the Fixed Account into the Investment Division(s) you specify. You can elect this option as long as the amount in the Fixed Account is $2,500 or more. To set up Interest Sweep, you must send a completed form to VPSC at one of the addresses listed on the first page of the prospectus or by any other method we make available. (See the SAI for more information.)

MATURITY DATE

Unless the Life Extension Benefit Rider is in effect, your policy matures on the policy anniversary on which the insured is age 100. Beginning on this maturity date, the Face Amount of your policy, as shown on the Policy Data Page, will no longer apply. Instead, your Life Insurance Benefit will equal the Cash Value of your policy less any loans and any interest due on loans.

One year before your policy’s maturity date, we will notify you that on your maturity date you may elect either:

(1) to receive the Cash Surrender Value of your policy; or

(2) to continue the policy without having to pay any more cost of insurance charges or monthly contract fees.

If you choose to continue the policy, we will continue to assess the Mortality and Expense risk charge on the Cash Value remaining in the Investment Divisions and Fund charges. The federal income tax treatment of a life insurance policy is uncertain after the insured is age 100. See “Federal Income Tax Considerations” for more information. If you do not elect an option, the policy will automatically continue. If you choose to surrender your policy, you must submit a written notification, in a form acceptable to us, to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing).

Please consult your tax advisor regarding the tax implications of these options.

If your policy is still in effect when the insured dies, we will pay the Policy Proceeds to the beneficiary.

 

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TAX-FREE “SECTION 1035” INSURANCE POLICY EXCHANGES

Generally, you can exchange one life insurance policy for another in a “tax-free exchange” under Section 1035 of the IRC. However, because we have discontinued sales of this policy, you may not exchange another policy for the one described in this prospectus.

As a general matter, you should compare both policies carefully before making any exchange. You should also remember that if you exchange one policy for another, you might have to pay a surrender charge on your old policy. The new policy may also have a new surrender charge period, charges that may be higher (or lower), and benefits that may be different. If the exchange does not qualify for Section 1035 treatment, you may have to pay federal income and penalty taxes on the exchange. You should not exchange another policy for this one unless you determine, after knowing all of the facts, that the exchange is in your best interest. New York Life may accept standard electronic instructions from another insurance carrier for the purposes of effecting a Section 1035 exchange.

In addition, because the final surrender value of your old policy will be determined after the new life insurance policy has been issued, this surrender value will be subject to any increases or decreases in policy values due to market fluctuations during the period between submission of the exchange request and issuance of the new policy. The final surrender value may be determined several Business Days after your exchange request is received. Before any exchange, you should consult your current insurer about how to mitigate market exposure during this period.

24-MONTH EXCHANGE PRIVILEGE

Within the first 24 months after the Issue Date of your policy, if you decide that you do not want to own a variable policy, you can either: (1) transfer the entire Separate Account Value to the Fixed Account of your policy, or (2) exchange your policy for a new permanent plan of life insurance that we (or one of our affiliates) offer for this purpose. The new policy will have the same Policy Date, issue age, gender, risk classification, and initial Face Amount as your original policy, but will not offer variable Investment Options such as the Investment Divisions.

In order to exchange your policy:

 

   

your policy must be in effect on the date of the exchange;

 

   

you must repay any unpaid loan (including any accrued loan interest); and

 

   

you must submit a written request in a form acceptable to us to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing).

We will process your request for an exchange on the later of: (1) the Business Day on which we receive your written request along with your policy, or (2) the Business Day on which we receive the necessary loan payment for your exchange at VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). The policy exchange will be effective on the later of these two dates. The amount applied to your new policy will be the policy’s Cash Value plus a refund of all cost of insurance charges taken as of the date of the exchange. Because policy values may increase or decrease due to market fluctuations during the period between submission of the exchange request and actual processing, the Cash Value applied to your new policy may be impacted. Please consult your registered representative for options to potentially mitigate market exposure during the time it will take to process the exchange. We will require you to make any adjustment to the premiums and Cash Value of your variable policy and the new policy, if necessary.

When you exchange your policy, all riders and benefits for that policy will end, unless otherwise required by law. Requests received after 4:00 pm (Eastern Time) on a Business Day, or on a non-Business Day, will be processed as of the next Business Day.

 

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PREMIUMS

For the purpose of determining whether we require additional underwriting when accepting a premium payment, we classify your premium payments as planned or unplanned premiums.

The currently available methods of payments are: direct payment to NYLIAC, pre-authorized Monthly Deduction Charges from your bank, credit union or similar accounts or any other method agreed to by us.

Acceptance of initial and subsequent premium payments is subject to our suitability standards.

PLANNED PREMIUM

When you apply for your policy, you select a premium payment schedule, which indicates the amount and frequency of premium payments you intend to make. The premium amount you select for this schedule is called your “planned premium.” It is shown on the Policy Data Page. Factors that should be considered in determining your premium payment are: age, underwriting class, gender, policy Face Amount, Investment Division performance, loans, and riders you add to your policy.

You can make additional planned premium payments before the policy anniversary on which the insured is age 100. We will require one or more additional premium payments in the circumstance where the Net Cash Value of your policy is determined to be insufficient to pay the charges needed to keep your policy in effect. Should the additional payment(s) not be made, your policy will lapse.

 

   

You may increase or decrease the amount of your planned premium and change the frequency of your payments, within limits.

 

   

Planned premium payments end on the policy anniversary on which the insured is age 100.

 

   

Your policy will not automatically terminate if you are unable to pay the planned premium.

However, payment of your planned premium does not guarantee your policy will remain in effect. Your policy will terminate if the Net Cash Value is insufficient to pay the Monthly Deduction, the No Lapse Guarantee is not in effect, and if you reach the end of the late period and have not made the necessary payment.

UNPLANNED PREMIUM

An unplanned premium is a payment you make that is not part of the premium schedule you choose.

 

   

While the insured is living, you may make unplanned premium payments at any time before the policy anniversary on which the insured is age 100. However, if payment of an unplanned premium will cause the Life Insurance Benefit of your policy to increase more than the Cash Value will increase, we may require proof of insurability before accepting that payment and applying it to your policy. The Life Insurance Benefit increase may occur in order for your policy to continue to qualify as life insurance under the IRC.

 

   

If you exchange another life insurance policy to acquire this policy under IRC Section 1035, we will treat the proceeds of that exchange as an unplanned premium.

 

   

The minimum unplanned premium amount we allow is $50.

 

   

We may limit the number and amount of any unplanned premium payments.

Unplanned premiums must be sent to NYLIAC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). Acceptance of initial and subsequent premium payments is subject to our suitability standards.

RISK OF MINIMALLY FUNDED POLICIES

We will require one or more additional premium payments in the circumstance where the Net Cash Value of your policy is determined to be insufficient to pay the charges needed to keep your policy in effect. Should the additional payment(s) not be made, your policy will lapse.

 

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Although premium payments are flexible, you may need to make subsequent premium payments so that the Net Cash Value of your policy is sufficient to pay the charges needed to keep your policy in effect. A policy that is maintained with a Net Cash Value just sufficient to cover deductions and charges, or that is otherwise minimally funded, is more likely to be unable to maintain its Net Cash Value because of market fluctuation and performance-related risks. When determining the amount of your planned premium payments, you should consider funding your policy at a level that has the potential to maximize the investment opportunities within your policy and to minimize the risks associated with market fluctuations. (Your policy can lapse even if you pay all of the planned premiums on time.)

TIMING AND VALUATION

Your premium will be credited to your policy on the Business Day that it is received, assuming it is received prior to the close of regular trading on the New York Stock Exchange, generally 4:00 p.m. Eastern Time. Any premiums received after that time will be credited to your policy on the next Business Day.

The Fund assets making up the Investment Divisions will be valued only on those days that the NYSE is open for trading. Generally, the NYSE is closed on Saturdays, Sundays and major U.S. holidays.

FREE LOOK

You have the right to cancel your policy, within certain limits. Under the Free Look provision of your policy, in most jurisdictions, you have 20 days after you receive your policy to return it and receive a refund. You can cancel increases in the Face Amount of your policy under the same time limits. (See Appendix B for state-by-state details.) To receive a refund, you must return the policy to the VPSC at one of the addresses noted on the first page of the prospectus (or any other address we indicate to you in writing) or to the registered representative from whom you purchased the policy, along with a written request for cancellation in a form acceptable to us.

We will allocate premium payments you make with your application or during the Free Look period to our General Account until the end of the free look period. On the Business Day following the free look period, we will allocate the Net Premium plus any accrued interest to the Investment Divisions you have selected.

If you cancel your policy, however, we will pay you only the greater of (a) your policy’s Cash Value calculated as of the Business Day either the VPSC or the registered representative through whom you purchased it receives the policy along with the written request for cancellation, or (b) the total premium payments you have made, less any loans and any partial surrenders you have taken.

If you cancel an increase in Face Amount of your policy, we will refund the premium payments you have paid in excess of the planned premiums that are allocated to the increase, less any part of the excess premium payments that we have already paid to you.

PREMIUM PAYMENTS

Premium payments must be mailed to: NYLIAC, 75 Remittance Drive, Suite 3021, Chicago, IL 60675-3021 or by express mail to NYLIAC, Suite 3021, c/o The Northern Trust Bank, 350 North Orleans Street, Receipt & Dispatch, 8th Floor, Chicago, IL 60654. Acceptance of initial and subsequent premium payments are subject to our suitability standards.

The currently available methods of payment are: direct payment to NYLIAC, pre-authorized Monthly Deductions from your bank, credit union or similar accounts and any other method agreed to by us.

We apply the Net Premium to the Investment Divisions, the Fixed Account and/or DCA Plus Account, according to your instructions.

If you elect the Guideline Premium Test (“GPT”) to determine whether your policy qualifies as life insurance under IRC Section 7702, we may limit your premium payments. If the premiums paid during any Policy Year exceed the maximum amount permitted under the GPT, we will return to you the excess amount within 60 days after the end of the Policy Year. The excess amount of the premiums we return to you will not include any gains or losses attributable to the investment return on those premiums. We will credit interest at a

 

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rate of not less than 3% on those premiums from the date such premiums cause the policy to exceed the amount permitted under the GPT to the date we return the premiums to you. (See “Policy Payment Information—Life Insurance Benefit Options” for more information.)

For premium payments you make during the free look period, we apply your Net Premium to our General Account. After this period is over, we allocate the Net Premium, along with any interest credited, to the Investments Divisions of the Separate Account, the Fixed Account, and/or the DCA Plus Account according to the most recent premium allocation election you have given us. You can change the premium allocation any time you make a subsequent premium payment by submitting a revised premium allocation form to one of the addresses listed for payment of subsequent premiums on the first page of this prospectus (or any other address we indicate to you in writing). Your revised premium allocation selection will be effective as of the Business Day the revised premium allocation is received by VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). Premium allocation selections received after market close will be effective the next Business Day. The allocation percentages must be in whole numbers.

CHECK-O-MATIC

Check-O-Matic is a service that allows you to authorize monthly electronic deductions from your checking account in order to make premium payments. You can select any day of the month to initiate drafts except the 29th, 30th and 31st. If a draft date is not selected, it will be the Policy Date. A voided blank check must be forwarded along with an application to begin Check-O-Matic. To set up the Check-O-Matic feature, you must submit your request in writing on a form we approve to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing).

PREMIUM PAYMENTS RETURNED FOR INSUFFICIENT FUNDS

If your premium payment is returned by the bank for insufficient funds, we will reverse the Investment Options you have chosen and reserve the right to charge you a $20 fee for each returned payment. In addition, if we incur any losses as a result of a returned payment, we will deduct the amount of the loss from your policy’s Cash Value. If an electronic (“Check-O-Matic”) premium withdrawal is returned for insufficient funds for two consecutive months, this premium payment arrangement will be suspended until you provide written notification in a form acceptable to us to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing) that you wish to resume the arrangement and we agree to do so.

POLICY PAYMENT INFORMATION

WHEN LIFE INSURANCE COVERAGE BEGINS

If you have coverage under a conditional temporary agreement and if the policy is issued, the policy will replace the temporary coverage. Your coverage under the policy will be deemed to have begun on the Policy Date.

In all other cases, if the policy is issued, coverage under the policy will take effect when we receive the initial premium payment that you are required to make when the policy is delivered to you. You can call 1-800-598-2019 to determine if we have received your premium payment.

The monthly deduction of charges will be taken from the initial premium payment beginning on the first Monthly Deduction Day, which will be the monthly anniversary of the Policy Date on or following the Issue Date. However, if we have not received your initial premium payment as of the Issue Date, the first Monthly Deduction Day will be the monthly anniversary of the Policy Date on or following the date we receive the initial premium payment.

 

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CHANGING THE FACE AMOUNT OF YOUR POLICY

You can request to increase or decrease the Face Amount of your policy under certain circumstances once it is in force provided that the insured is age 65 or younger and the new Face Amount is at least $100,000. Face Amount increases are not allowed on ACSV policies in the first 10 years. The Face Amount of your policy affects the Life Insurance Benefit to be paid.

To increase the Face Amount of your policy, you must either contact your registered representative or send a written request, in a form acceptable to us, to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). If an increase is approved, we will increase the Face Amount on the Monthly Deduction Day on or after the date we approve the increase.

You should consider the following consequences when increasing the Face Amount of your policy:

 

   

additional cost of insurance charges;

 

   

an additional per-thousand charge;

 

   

a new suicide and contestability period applicable only to the amount of the increase;

 

   

a new ten-year surrender charge period applicable only to the amount of the increase;

 

   

a change in the life insurance percentage applied to the entire policy under Section 7702 of the IRC; and

 

   

a possible new seven-year testing period for modified endowment contract status.

Under certain circumstances, it may be more advantageous to purchase additional insurance through an existing term insurance rider rather than increasing the policy’s Face Amount. (See “Description of The Policy—The Policy—Additional Benefits Through Riders and Options” for details.)

Under certain circumstances, you can request a decrease in the Face Amount of your policy. To decrease the Face Amount of your policy, you must send a written request, in a form acceptable to us, to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). You should consider the following possible consequences when decreasing the Face Amount of your policy:

 

   

a change in the total policy cost of insurance charge;

 

   

a surrender charge applicable to the amount of the decreased Face Amount (We will deem the amount attributable to your most recent increase in the Face Amount to be canceled first); and

 

   

adverse tax consequences.

We reserve the right to limit any increase or decrease in Face Amount. For more information about changing the Face Amount of your policy, see the SAI.

POLICY PROCEEDS

We will pay proceeds to your beneficiary when we receive satisfactory proof that the Primary Insured died. These proceeds will equal:

1) the Life Insurance Benefit calculated under the Life Insurance Benefit Option you have chosen, valued as of the date of death; plus

2) any additional death benefits available on the Primary Insured under the riders you have chosen; less

3) any outstanding loans (including any accrued loan interest as of the date of death) on the policy.

We will pay interest on these proceeds from the date the insured died until the date we pay the proceeds or the date when the payment option you have chosen becomes effective. See “Policy Payment Information—Life Insurance Benefit Options” for more information.

 

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Every state has unclaimed property laws, which generally declare a life insurance policy to be abandoned after a period of inactivity of three to five years from the contract’s maturity date or the date the death benefit is due and payable. For example, if the payment of a death benefit has been triggered, but, if after a thorough search, we are unable to locate the beneficiary of the death benefit, or the beneficiary does not come forward to claim the death benefit in a timely manner, the death benefit may be paid to the abandoned property division or unclaimed property office of the state in which the beneficiary or the insured last resided, as shown on our books and records, or to our state of domicile. This escheatment is revocable, however, and the state is obligated to pay the death benefit (without interest) if 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 1-800-598-2019 or send a written request to NYLIAC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing) to make such changes.

PAYEES

The beneficiary is the person(s) or entity(ies) you have specified on our records to receive the Policy Proceeds from your policy. You have certain options regarding the policy’s beneficiary:

 

   

You name the beneficiary when you apply for the policy. The beneficiary will receive the Policy Proceeds after the insured dies.

 

   

You can elect to have different classes of beneficiaries, such as primary and secondary, where these classes determine the order of payment. You may identify more than one beneficiary per class.

 

   

To change a revocable beneficiary while the insured is living, you must send a written request in a form acceptable to VPSC to one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing).

 

   

If no beneficiary is living when the insured dies, we will pay the Policy Proceeds to you (the policyowner), or if you are deceased, to your estate, unless we have other instructions from you to do otherwise.

You can name only those individuals who are able to receive payments on their own behalf as payees or successor payees, unless we agree otherwise. We may require proof of the age of the payee or proof that the payee is living. If we still have an unpaid amount, or there are some payments that still must be made when the last surviving payee dies, we will pay the unpaid amount with interest to the date of payment, or pay the present value of the remaining payments, to that payee’s estate. We will make this payment in one sum. The present value of the remaining payments is based on the interest rate used to compute them, and is always less than their sum.

HOW POLICY PROCEEDS WILL BE PAID

While the Insured is living, you may designate how the Policy Proceeds will be paid to the beneficiary. Policy Proceeds can be paid in a lump sum or over time through the various payment options described below.

If you do not specify how Policy Proceeds will be paid, they will be paid in a lump sum. If you elect to have Policy Proceeds paid through one of the payment options described below, the beneficiary will not be able to receive a lump sum.

Any Policy Proceeds paid in one sum will include interest compounded each year from the date of the Insured’s death to the date of payment. We set the interest rate each year. This rate will be at least 3%  per year (or a higher rate if required by law).

LUMP SUM PAYMENT

If you specified that the Policy Proceeds be paid in a lump sum, after the death of the insured, the beneficiary can choose among the following methods of payment:

 

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We will issue a single check for the amount of the Policy Proceeds; or

 

   

Policy Proceeds will be paid over time through one of the various payment options described below.

After we are notified of the death of the Insured, the beneficiary will receive a claim form. If no choice is made, we will issue a single check for the amount of the Policy Proceeds.

PAYMENT OPTIONS

If you designated that the Policy Proceeds be paid to the beneficiary over time, or if the beneficiary chooses (or elects a payee) to be paid over time, Policy Proceeds will be paid according to one of the following payment options: an Interest Accumulation Option, an Interest Payment Option, or a Life Income Option. (Those receiving payments under these options — whether they are designated by you or the beneficiary — will be referred to as “payees” below.) Under the Interest Accumulation or Interest Payment Options, the payee can withdraw amounts of at least $100 at any time. We will mail a check for the amount of the proceeds to the payee. If the payee requests a withdrawal, and the balance remaining on deposit with us after the withdrawal would be less than $100, we may pay the entire remaining balance in one sum to the payee.

 

   

Interest Accumulation Option (Option 1 A)

Under this option, the Policy Proceeds will remain on deposit with us until the payee requests a withdrawal. Each year, interest will accumulate on the balance at a rate we reset annually. The interest crediting rate will never be less than 3%. Sums withdrawn will be credited interest up to the date of the withdrawal.

 

   

Interest Payment Option (Option 1 B)

Under this option, the Policy Proceeds will remain on deposit with us until the payee requests a withdrawal. Interest earned on any balance will be paid directly to the payee on a monthly, quarterly, semi-annual or annual basis. The balance will earn interest at a rate we reset annually. The interest crediting rate will never be less than 3%.

 

   

Life Income Option (Option 2)

Under this option, the Policy Proceeds are applied to the purchase of a single premium life annuity policy that will make equal monthly payments during the lifetime of the payee. The annuity policy is issued when the first premium payment is due. Payments under the annuity will remain level and are guaranteed for a period that you (or the beneficiary, if applicable) specify—5, 10, 15 or 20 years—even if the specified payee dies sooner.

Payments are based on an adjusted annuity premium rate in effect at the time of issue, but will never be less than the corresponding minimum amount shown in the “Option 2” table of your policy. Upon request, we will send you (or the beneficiary, if applicable) a statement of the minimum amount of each monthly payment—based on the gender and adjusted age of the payee(s)—before this option is elected.

If the first annuity payment was due in 2016 or after, we will decrease the payee’s actual age to arrive at the payee’s adjusted age. Such decreases will result in lower monthly annuity payments to the payee. Adjustments to the payee’s age will be made as follows:

 

2006-2015

  

2016-2025

  

2026-2035

  

2036 and later

0    -1    -2    -3

A decrease in the payee’s age results in lower payments than if no decrease was made.

ELECTING OR CHANGING A PAYMENT OPTION

While the Primary Insured is living, you can elect or change your payment option. To change your payment option, you must send a written request to VPSC in a form acceptable to us at one of the addresses listed on the first page of this prospectus. You can also elect or change one or more of the beneficiaries who will be the payee(s) under that option. (See “Policy Payment Information—Payees” for more information).

 

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After the Primary Insured dies, any person who is entitled to receive Policy Proceeds in one sum (other than an assignee) can elect a payment option and name payees. The person who elects a payment option can also name one or more successor payees to receive any amount remaining at the death of the payees. Naming these payees cancels any prior choice of successor payees. A payee who did not elect the payment option has the right to advance or assign payments, take the payments in one sum, change the payment option, or make any other change, only if the person who elects the payment option notifies us in writing at VPSC and we agree.

WHEN WE PAY POLICY PROCEEDS

If the policy is still in effect, NYLIAC will pay any Cash Surrender Value, partial withdrawal, loan proceeds, or the Policy Proceeds generally within seven days after we receive all of the necessary requirements at the VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing).

Under the following situations, payment of proceeds may be delayed:

 

   

We may delay payment of any loan proceeds attributable to the Separate Account, any partial withdrawal from the Separate Account, the Cash Surrender Value, or the Policy Proceeds during any period that:

(1) we are unable to determine the amount to be paid because the NYSE is closed (other than customary weekend and holiday closings), trading is restricted by the Securities and Exchange Commission (“SEC”) or the SEC declares that an emergency exists; or

(2) the SEC, by order, permits us to delay payment in order to protect our policyowners.

 

   

We may delay payment of any portion of any loan or surrender request, including requests for partial withdrawals, from the Fixed Account and/or the DCA Plus Account for up to six months from the date we receive your request.

 

   

We may delay payment of the entire Policy Proceeds if we contest the payment. We investigate all death claims that occur within the two-year contestable period. Upon receiving information from a completed investigation, we will make a determination, generally within five days, as to whether the claim should be authorized for payment. Payments are made promptly after the authorization.

 

   

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, loans, or death benefits. If a policy or an account is frozen, the Cash Value would be moved to a special segregated interest-bearing account and held in that account until instructions are received from the appropriate federal regulator.

 

   

If you have submitted a recent check or draft, we have the right to defer payment of any withdrawal, loans, death benefit proceeds, or payments under a settlement option until such check or draft has been honored. It may take up to 15 days for a check to clear through the banking system.

We add interest at an annual rate of 3% (or at a higher rate if required by law) if we delay payment of a partial withdrawal or Cash Surrender Value for 30 days or more.

We add interest to Policy Proceeds from the date of death to the date of payment at a rate at least equal to the amount required by law.

LIFE INSURANCE BENEFIT OPTIONS

Under your policy, the Life Insurance Benefit depends on the Life Insurance Benefit option you choose. Your policy offers three options:

 

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Option 1 —   

The Life Insurance Benefit under this option is equal to the policy’s Face Amount in force on the Primary Insured’s date of death. Except as described below, your Life Insurance Benefit under this option will be a level amount.

 

Option 2 —   

The Life Insurance Benefit under this option is equal to the policy’s Face Amount in force on the Primary Insured’s date of death plus the policy’s Cash Value on that date. The Life Insurance Benefit under this option will vary with the policy’s Cash Value. Cash Value will fluctuate due to the performance results of the Investment Divisions you choose. Your Life Insurance Benefit never will be less than your policy’s Face Amount.

 

Option 3 —    The Life Insurance Benefit under this option is equal to the policy’s Face Amount in force on the Primary Insured’s date of death plus the Adjusted Total Premium. The Life Insurance Benefit under this option will vary with the policy’s Adjusted Total Premium. The Adjusted Total Premium equals the total premiums paid minus any partial withdrawals. Your Life Insurance Benefit will never be less than your policy’s Face Amount.

Under all options, your Life Insurance Benefit may be greater if the policy’s Cash Value, multiplied by the minimum percentage necessary for the policy to qualify as life insurance under IRC Section 7702, is greater than the amount calculated under the option you have chosen. You can find this percentage on the Policy Data Page.

Under Section 7702, a policy will generally be treated as life insurance for federal tax purposes if, at all times, it meets either the GPT or the CVAT. You must choose either the GPT or CVAT before the policy is issued. Once the policy is issued, you may not change to a different test. The Life Insurance Benefit will vary depending on which test is used.

The GPT has two components, a premium limit component and a corridor component. The premium limit restricts the amount of premium that can be paid into a policy. The corridor requires that the Life Insurance Benefit be at least a certain percentage (varying each year by the age of the insured) of the Cash Value. The CVAT does not have a premium limit, but does have a corridor that requires that the Life Insurance Benefit be at least a certain percentage (varying based on age, gender, and risk class of the insured) of the Cash Value.

The corridor under the CVAT is different than the corridor under the GPT. Specifically, the CVAT corridor requires more Life Insurance Benefit in relation to Cash Value than is required by the GPT corridor. Therefore, as your Cash Value increases, your Life Insurance Benefit will increase more rapidly under CVAT than it would under GPT.

Your policy will be issued using the GPT unless you choose otherwise. In deciding whether or not to choose the CVAT, you should consider that the CVAT generally permits more premiums to be contributed to a policy, but may require the policy to have a higher Life Insurance Benefit.

Assuming your Life Insurance Benefit does not increase in order to meet the requirements of IRC Section 7702, and assuming the same Face Amount and premium payments:

 

   

If you choose Option 1, your Life Insurance Benefit will not vary in amount, and generally you will have lower total policy cost of insurance charges and lower Policy Proceeds.

 

   

If you choose Option 2, your Life Insurance Benefit will vary with your policy’s Cash Value, and generally you will have higher total policy cost of insurance charges and higher Policy Proceeds than under Option 1.

 

   

If you choose Option 3, your Life Insurance Benefit will vary with your policy’s Adjusted Total Premium, and generally you will have higher total policy cost of insurance charges and higher Policy Proceeds than under Option 1.

(See the SAI for examples of the effect of the GPT and CVAT on sample Life Insurance Benefit options.)

Tax law provisions relating to “employer-owned life insurance contracts” may impact whether and to what extent the Life Insurance Benefit may be received on a tax-free basis. You may be required to take certain

 

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actions before acquiring the Policy in order to ensure that such Benefit may be received on a tax-free basis. See the discussion under “Federal Income Tax Considerations—Life Insurance Status of the Policy—IRC Section  101(j)—Impact on Employer-Owned Policies” for more information.

CHANGING YOUR LIFE INSURANCE BENEFIT OPTION

You can change the Life Insurance Benefit Option for your policy to Option 1 or to Option 2 while the Primary Insured is alive. (Changes to Option 3 are not permitted.) We may, however, prohibit you from changing the Life Insurance Benefit Option if the change would cause: (1) the Face Amount of the policy to be less than the policy minimum, (2) the policy to fail to qualify as life insurance under Section 7702 of the IRC or (3) the policy’s Face Amount to exceed our limits on the risk we retain, which we set at our discretion. Option changes are not permitted: (1) on or after the policy anniversary on which the insured is age 100, or (2) when the No-Lapse Guarantee has been invoked.

 

Changes From Option 1 To Option 2

 

If you change from Option 1 to Option 2, we will decrease the Face Amount of your policy by the amount of the Cash Value, so that your Life Insurance Benefit immediately before and after the change remains the same. If a surrender charge applies to a Face Amount decrease at the time you change your Life Insurance Benefit option, we will assess a surrender charge based on the amount of the Face Amount decrease.

  

Changes From Option 2 To Option 1

 

If you change from Option 2 to Option 1, we will increase the Face Amount of your policy by the amount of the Cash Value, so that your Life Insurance Benefit immediately before and after the change remains the same. We will continue to apply the existing surrender charge schedule to your policy, and we will not apply a new surrender charge schedule to the increased Face Amount resulting from the change in this option.

Changes From Option 3 To Option 1

 

If you change from Option 3 to Option 1, we will increase the policy’s Face Amount by the amount of Adjusted Total Premiums, so that your Life Insurance Benefit immediately before and after the change remains the same.

  

Changes From Option 3 To Option 2

 

If you change from Option 3 to Option 2 at a time when the Cash Value is greater than the Adjusted Total Premium, we will decrease the Face Amount of your policy by the difference between the Cash Value and the Adjusted Total Premium so that your Life Insurance Benefit immediately before and after the change remains the same.

 

If you change from Option 3 to Option 2 at a time when the Cash Value is less than the Adjusted Total Premium, we will increase the Face Amount of your policy by the difference between the Adjusted Total Premium and the Cash Value so that your Life Insurance Benefit immediately before and after the change remains the same. If a surrender charge applies to a Face Amount decrease at the time you change your Life Insurance Benefit option, we will assess a surrender charge based on the amount of the Face Amount decrease.

In order to change your Life Insurance Benefit option, you must submit a signed written request to the VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to

 

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you in writing). We will change your Life Insurance Benefit option on the Monthly Deduction Day on or after the date we receive your written request. Surrender charges may apply to any Face Amount decrease due to a change in Life Insurance Benefit Option. Changing your Life Insurance Benefit Options may have tax consequences. You should consult a tax adviser before changing your Life Insurance Benefit Option.

(See the SAI for examples of how an option change can impact your Life Insurance Benefit.)

ADDITIONAL POLICY PROVISIONS

 

LIMITS ON OUR RIGHTS TO CHALLENGE YOUR POLICY

Generally, we must bring any legal action contesting the validity of your policy within two years of the Issue Date, including any action taken to contest a Face Amount increase as a result of a change in the Life Insurance Benefit option. For any increase(s) in Face Amount other than one due to a change in the Life Insurance Benefit option, this two-year period begins on the effective date of the increase. No new suicide exclusion period will apply if the Face Amount Increase was due solely to a change in the Life Insurance Benefit Option.

SUICIDE

If the death of the insured is a result of suicide within two years of the Issue Date, we will pay a limited life insurance benefit in one sum to the beneficiary. The limited life insurance benefit is the total amount of premiums, less any outstanding loans (including accrued loan interest) and/or amounts withdrawn. If a suicide occurs within two years of the effective date of a Face Amount increase, we will also pay the limited life insurance benefit for that increase, or, if the limited life insurance benefit is not payable, the Monthly Deductions from Cash Value made for the increase.

MISSTATEMENT OF AGE OR GENDER

If the policy application misstates any insured’s age or gender, we will adjust the Cash Value, the Cash Surrender Value, and the Life Insurance Benefit to reflect the correct age and gender. We will adjust the Policy Proceeds provided by your policy based on the most recent mortality charge for the correct date of birth and gender.

ASSIGNMENT

While an insured is living, you can assign this policy as collateral for a loan or other obligation. In order for this assignment to be binding on us, we must receive a signed copy of such assignment at the VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). We are not responsible for the validity of any assignment. If your policy is a modified endowment contract, assigning your policy may result in taxable income to you. (See “Federal Income Tax Considerations” for more information.)

PARTIAL WITHDRAWALS AND SURRENDERS

PARTIAL WITHDRAWALS

You can request a partial withdrawal from your policy if the insured is living, the partial withdrawal being requested is at least $100, and the partial withdrawal will not cause the policy to fail to qualify as life insurance under IRC Section 7702 or to drop below the minimum Face Amount.

AMOUNT AVAILABLE FOR A PARTIAL WITHDRAWAL

You may request a partial withdrawal from the policy for an amount up to the Cash Surrender Value of your policy. We process a partial withdrawal at the price next determined after we receive your written request. We will not allow a partial withdrawal if it would reduce the policy’s Face Amount below the minimum Face Amount requirement of $100,000. See “The Effect of a Partial Withdrawal” for more information about how a partial withdrawal can reduce the policy’s Face Amount.

 

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REQUESTING A PARTIAL WITHDRAWAL

You can request a partial withdrawal from your policy by sending a written request to the VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing) or by calling 1-800-598-2019. Faxed requests are not acceptable and will not be honored at any time. In addition, we will not accept e-mailed partial withdrawal requests or e-mails of imaged, signed requests. Please note that partial withdrawal requests for amounts greater than $50,000 must be received in a form acceptable by us and include a notarized confirmation of the owner(s) signature or a medallion signature guarantee. If your address or bank account information 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 a means acceptable to us, before we will process a request to send partial withdrawal proceeds electronically to that bank account or through the mail to that address. In addition, partial withdrawal requests made from policies that are less than 90 days old or that had an ownership change within 30 days of such partial withdrawal request must be made in writing and sent to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). Faxed requests are not acceptable and will not be honored at any time. We will also not accept e-mailed partial withdrawal requests or e-mails of imaged, signed requests.

We will pay any partial withdrawals generally within seven days after we receive all of the necessary documentation and information. However, we may delay payment under certain circumstances. (See “Policy Payment Information—When We Pay Policy Proceeds” for more information.)

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 closing of regular trading on the New York Stock Exchange, then the requested partial withdrawal will be effective on the next Business Day.

When you make a partial withdrawal, we reserve the right to deduct a fee, not to exceed $25, for processing the partial withdrawal. You can specify how much of the partial withdrawal you want taken from the amount you have in each of the Investment Divisions and in the Fixed Account and/or DCA Plus Account. If you do not specify how you would like your partial withdrawal allocated, we will deduct the partial withdrawal and any partial withdrawal charge from the Investment Divisions, the Fixed Account and/or the DCA Plus Account in proportion to the amounts you have in each of these Investment Options. We will not accept a partial withdrawal request that is greater than the amount in the Investment Divisions, the Fixed Account and/or the DCA Plus Account you have chosen.

A partial withdrawal may result in taxable income to you and a 10% penalty tax may apply. (See “Federal Income Tax Considerations” for more information.)

SURRENDER CHARGE DUE TO PARTIAL WITHDRAWAL

A partial withdrawal may result in a decrease in your policy’s Face Amount, which may cause a surrender charge to apply. This charge will equal the difference between the surrender charge that we would have charged had you surrendered your entire policy before the decrease and the surrender charge that we would charge if you were to surrender your policy after the decrease.

PERIODIC PARTIAL WITHDRAWALS

After the end of the guarantee period, you may elect to receive regularly scheduled withdrawals from your VUL policy. These periodic partial withdrawals (PPW) can be paid on a monthly, quarterly, semi-annual, or annual basis. You will elect the frequency of the withdrawals, and the day of the month for the withdrawals to be made (may not be the 29th, 30th, or 31st of a month). In order to process a PPW, we must receive a request in writing no later than five (5) Business Days prior to the date the withdrawals are to begin at one of the addresses listed on the first page of the prospectus (or any other address we indicate to you in writing). If your request for this option is received less than five (5) Business Days prior to the date you request it to begin, the withdrawals will begin one month after the date you requested it to begin. We will make all withdrawals on the day of each calendar month you specify, or on the next Business Day (if the day you have specified is not a Business Day). The minimum amount of withdrawal is $100, or such lower amount as we may permit. PPWs

 

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may be taxable transactions, and the 10% penalty tax provisions may be applicable. We will deduct the Partial Withdrawal Charge, not to exceed $25 or 2% of the initial PPW, when you elect the PPW option. You can specify which Investment Divisions and/or Fixed Account from which the PPWs will be made. If you do not specify, we will withdraw money on a pro rata basis from each Investment Division and/or the Fixed Account. If a PPW would cause the policy’s Face Amount to be less than the minimum Face Amount, we will not process that PPW and the PPW arrangement will be suspended. If the policy’s Cash Surrender Value falls below $2,000, the PPW arrangement will also be suspended. If a PPW payment causes the policy’s Face Amount to decrease, a surrender charge may apply. You may not request this option if your policy is a MEC or is below the minimum Face Amount at the time of that request. The PPW arrangement will automatically terminate when total withdrawals taken (including PPWs) equal the total premiums paid under the policy.

THE EFFECT OF A PARTIAL WITHDRAWAL

When you make a partial withdrawal, we reduce your Cash Value and Cash Surrender Value by the amount of the partial withdrawal, and any applicable partial surrender fee and surrender charge. A partial withdrawal will also result in a reduction to Net Cash Value.

 

   

Option 1

If you have elected Life Insurance Benefit Option 1, we reduce your policy’s Face Amount by the difference between:

 

  (1) the amount of the withdrawal; and

 

  (2) the greater of:

 

  (a) the Cash Value of the policy immediately prior to the withdrawal, minus the Face Amount divided by the applicable percentage for the Insured’s age at the time of withdrawal, as shown on the Policy Data Page, or

 

  (b) zero.

If the above results in zero or a negative amount, there will be no adjustment in the Face Amount.

 

   

Option 2

If you have elected Life Insurance Benefit Option 2, we will not reduce your policy’s Face Amount.

 

   

Option 3

If you have elected Life Insurance Benefit Option 3, we reduce your policy’s Face Amount by the difference between:

 

  (1) the amount of the withdrawal; and

 

  (2) the greater of:

 

  (a) the Cash Value of the policy immediately prior to the withdrawal minus the Face Amount divided, by the applicable percentage at the time of the withdrawal, as shown on the Policy Data Page, or

 

  (b) the Adjusted Total Premium immediately prior to the withdrawal.

If the above results in zero or a negative amount, there will be no adjustment in the Face Amount.

Any decrease in the Face Amount caused by the withdrawal will first be applied against the most recent increase in Face Amount. It will then be applied to other increases in Face Amount and then to the initial Face Amount in the reverse order in which they took place. Surrender charges may apply to Face Amount decreases. However, we will not apply a surrender change if you have elected the 24 Month Exchange Privilege.

 

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If a partial withdrawal results in a reduction of Net Cash Value, you may need to make additional premium payments so that the Net Cash Value of your policy is sufficient to pay the charges to keep your policy in effect.

SURRENDERS

CASH SURRENDER VALUE

The Cash Surrender Value of your policy is the amount we will pay you if you surrender your policy. The Cash Surrender Value of your policy is equal to the Cash Value of the policy less any surrender charges that may apply and any outstanding policy loans (including any accrued loan interest). If you surrender your policy during the first Policy Year, an additional contract charge applies. Since the Cash Value of the policy fluctuates with the performance of the Investment Divisions and the interest credited to the Fixed Account and/or DCA Plus Account and because a surrender charge may apply, the Cash Surrender Value may be more or less than the total premium payments you have made less any applicable fees and charges. You can surrender your policy for its Cash Surrender Value at any time while the insured is living. If you surrender during the first Policy Year, an additional surrender charge will apply. (See “Table of Fees and Expenses” and “Transaction Charges” for more information.)

ALTERNATIVE CASH SURRENDER VALUE—(ACSV) Not Applicable To All Policies (Not available in Indiana, Maryland and New Jersey)

An ACSV Benefit may be made available at an additional cost to a corporation, an irrevocable trust, or other defined policyowner class if we agree. The ACSV Benefit can be elected only at issue. The current Mortality and Expense Risk charges will be higher, and the current crediting rate for amounts in the Fixed Account may be lower, for policies with an ACSV Benefit.

If your policy has the ACSV Benefit, then for a period of 10 years from the Policy Date, while the insured is still living, you may surrender the policy for the Alternative Cash Surrender Value. The ACSV is equal to the Cash Surrender Value plus the unamortized value of the ACSV Benefit plus the full surrender charge. The cumulative ACSV Benefit is the sum of all sales expense charges and the monthly per thousand Face Amount charges deducted since the Policy Date. The ACSV Benefit will be amortized beginning with the 13th policy month and continuing through the end of the 10th Policy Year.

Your ACSV Benefit for policy months 1 through 12, as calculated on each Monthly Deduction Day, is equal to the sum of a + b + c, where:

(a) = the current ACSV Benefit;

(b) = any sales expense charges deducted from premiums paid since the last Monthly Deduction Day; and

(c) = the current month’s per thousand Face Amount charge.

Your ACSV Benefit for policy months 13 through the end of the 10th Policy Year, as calculated on each Monthly Deduction Day, is equal to the sum of (a + b + c) – d, where:

(a) = the current ACSV Benefit;

(b) = any sales expense charges deducted from premiums paid since the last Monthly Deduction Day;

(c) = the current month’s per thousand face amount charge; and

(d) = the current month’s amortization of the ACSV Benefit.

Upon our receipt of your request to surrender this policy in full during the first 10 Policy Years, we will increase the current ACSV Benefit by any sales expense charges that have been deducted from premium payments received since the last Monthly Deduction Day. We will then pay you the ACSV.

The ACSV Benefit is only used to calculate the Alternative Cash Surrender Value payable in the event of a full surrender of all of the NYLIAC policies you own that include an ACSV Benefit. The ACSV Benefit is not

 

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invested and will not accumulate interest. The ACSV Benefit is not included as part of Cash Surrender Value and is therefore not available for loans or partial surrenders.

You do not receive the ACSV on a 1035 exchange, as part of a Life Insurance Benefit payment, or, unless we agree, in the event the policy is assigned. In any of these circumstances the ACSV Benefit is retained by NYLIAC.

Upon any reinstatement of the policy, the ACSV Benefit will equal zero. We will then calculate the value of this benefit from the period beginning on the reinstatement date up to the 10th policy anniversary. At reinstatement, the amortization of the ACSV Benefit will be calculated based on the number of months remaining in the 10-year period.

REQUESTING A SURRENDER

To surrender the policy, you must send a written notification in a form acceptable to us to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). Faxed requests are not acceptable and will not be honored at any time. In addition, we will not accept e-mailed requests or e-mails of imaged, signed requests. If your address or bank account information has been on file with us for less than 15 days, we may require additional verification of your identity, in a form acceptable to us, before we will process a request to send surrender proceeds electronically to that bank account or through the mail to that address.

WHEN THE SURRENDER IS EFFECTIVE

Your surrender will be effective as of the end of the Business Day VPSC receives your written request. If the day we receive your request is not a Business Day or if your request is received after the close of the NYSE, the requested surrender will be effective on the next Business Day on which the NYSE is open. Generally, we will mail surrender proceeds within seven days after the effective date, subject to the limits explained in the “Policy Payment Information—When We Pay Policy Proceeds” section. A surrender may result in taxable income and a tax penalty to you. (See “Federal Income Tax Considerations” for more information.)

SURRENDER CHARGES

If you surrender your policy during the first 10 Policy Years or within 10 years after you increase the Face Amount of your policy, a surrender charge will apply. We will deduct any applicable surrender charge before we pay you the surrender proceeds. (See “Table of Fees and Expenses—Transaction Fees” for more information.) Because the surrender charge may be significant during early Policy Years, you should not purchase this policy unless you intend to hold the policy for an extended period of time.

LOANS

You can borrow any amount up to the loan value of the policy. The loan value at any time is equal to the greater of:

 

  I. 90% of the Cash Surrender Value less, in the first Policy Year, the amount of any additional contract charge, which would apply if you were to fully surrender your policy during that time, or

 

  II. ((100% – a) x b) – c, where:

a = the current loan interest rate;

b = the policy’s Cash Surrender Value; and

c = the sum of three months of Monthly Deductions.

Your policy will be used as collateral to secure this loan. Any amount that secures a loan remains part of your policy’s Cash Value but is transferred to the Fixed Account. We credit any amount that secures a loan

 

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(the loaned amount) with an interest rate that we expect to be different from the interest rate we credit on any unloaned amount in the Fixed Account and/or DCA Plus Account.

If your address or bank account information has been on file with us for less than 15 days, we may require additional verification of your identity, in a form acceptable to us, before we will process a request to send loan proceeds electronically to that bank account or through the mail to that address.

YOUR POLICY AS COLLATERAL FOR A LOAN

When you request a loan, a transfer of funds will be made from the Separate Account (and/or the DCA Plus Account, if so requested) to the Fixed Account so that the Cash Value in the Fixed Account is at least 100% of the requested loan plus any outstanding loans, including accrued loan interest. We will transfer these funds from the Investment Divisions of the Separate Account and/or from the DCA Plus Account in accordance with your instructions or, if you have not provided us with any instructions, in proportion to the amounts you have in each Investment Division. While any policy loan is outstanding, we will not allow you to make any partial withdrawals or transfer any funds from the Fixed Account if the partial withdrawal or transfer would cause the cash value of the Fixed Account to fall below 100% of all outstanding loans including accrued loan interest. Additionally, if the monthly deductions from Cash Value will cause the Cash Value of the Fixed Account to fall below the total amount of all outstanding policy loans and any accrued interest, we will take these deductions first from the Investment Divisions in proportion to the amounts you have invested and then from the DCA Plus Account.

Please note that loan requests for amounts greater than $50,000 must be received in a form acceptable to us and include a notarized confirmation of the owner(s) signature or a medallion signature guarantee. If your address or bank account information 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 a means acceptable to us, before we will process a request to send loan proceeds electronically to that bank account or through the mail to that address. In addition, loan requests made from policies that are less than 90 days old or that had an ownership change within 30 days of such loan request must be made in writing and sent to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing). Faxed requests are not acceptable and will not be honored at any time. We will also not accept e-mailed loan requests or e-mails of imaged, signed requests.

LOAN INTEREST

We currently charge an effective annual loan interest rate of 4% during the first 10 Policy Years and 3% beginning in Policy Year 11. We may increase or decrease this rate but we guarantee that the rate will never exceed 6%. We will determine the loan interest rate at least once every twelve months, but not more frequently than once every three months. If we increase the rate, we will not increase it by more than 1% per calendar year.

INTEREST ON THE CASH VALUE HELD AS COLLATERAL

When you take a loan against your policy, the loaned amount that we hold in the Fixed Account may earn interest at a different rate from the rate we charge you for loan interest. The rate on the loaned amount in the Fixed Account may also be different from the rate we credit on other amounts in the Fixed Account or amounts in the DCA Plus Account. We guarantee that the interest rate we credit on loaned amounts will always be at least 3%. For the first ten Policy Years, the rate we expect to credit on loaned amounts is 1% less than the rate we charge for loan interest, and we guarantee that the rate we credit on loan amounts will never be lower than the rate we charge for policy loans less 2% (for example, if the rate we charge for policy loans is 6%, then the rate we credit on loaned amounts will never be lower than 4%). Beginning in Policy Year 11, we guarantee that the rate we credit on loaned amounts will never be lower than the rate we charge for policy loans less 0.25% (for example, if the rate we charge for policy loans is 6%, then the rate we credit on loaned amounts will never be lower than 5.75%.

The interest earned on amounts held as collateral for the policy loan will remain in the Fixed Account.

 

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WHEN LOAN INTEREST IS DUE

The interest we charge on a loan accrues daily and is payable on the earliest of the following dates:

 

   

the policy anniversary;

 

   

the date you surrender the policy;

 

   

the date you fully repay a loan;

 

   

the date the policy lapses;

 

   

the date on which the insured dies.

Any loan interest due on a policy anniversary that you do not pay will be charged against the policy as an additional loan. You should be aware that the larger the loan becomes relative to the Net Cash Value, the greater the risk that the remaining Net Cash Value may not be sufficient to support the policy charges and expenses, including any loan interest due, and the greater the risk of the policy lapsing. In addition, the interest amount will be withdrawn on a pro rata basis if the interest charged would cause the amount of the borrowing to exceed the greater of (I) 90% of the Cash Surrender Value less, in the first Policy Year, the amount of any additional contract charge, which would apply if you were to fully surrender your policy during that time, or (II) ((100% – a) x b) – c, where: a = the current loan interest rate; b = the policy’s Cash Surrender Value; and c = the sum of three months of Monthly Deductions.

LOAN REPAYMENT

You can repay all or part of a policy loan at any time while your policy is in effect. We will consider any payment we receive from you while you have a loan outstanding to be a premium payment unless you tell us in writing that it is a loan repayment. When we receive a loan repayment, we will first use that money to repay any portion of the outstanding loan that was originally taken from the Fixed Account and/or DCA Plus Account. We will allocate any remaining portion of the loan repayment to the Investment Divisions in the same proportion as the amount of money you have in each Investment Division on the date of the loan repayment, unless you indicate otherwise and we agree. Repayment of loans from the DCA Plus Account will be allocated to the Fixed Account. Loan repayments must be sent to NYLIAC at one of the addresses for payment of premiums listed on the first page of this prospectus (or any other address we indicate to you in writing).

EXCESS LOAN CONDITION

If the amount of any unpaid loans (including any accrued loan interest) is greater than the Cash Value of your policy less surrender charges, we will mail a notice to you at your last known address. We will also send a copy of the notice to the last known assignee, if any, on our records. If you do not pay the necessary amount within 31 days after the day we mail you this notice, we will terminate your policy. This could result in a taxable gain and penalty tax to you.

THE EFFECT OF A POLICY LOAN

A loan, repaid or not, has a permanent effect on your Cash Value. This effect occurs because the investment results of each Investment Division apply only to the amounts remaining in such Investment Divisions. The longer a loan is outstanding, the greater the effect on your Cash Value is likely to be. The effect could be favorable or unfavorable. If the Investment Divisions earn more than the annual interest rate credited on loaned amounts held in the Fixed Account, your Cash Value will not increase as rapidly as it would have had no loan been made. If the Investment Divisions earn less than the interest on loaned amounts held in the Fixed Account, then your Cash Value may be greater than it would have been had no loan been made. If not repaid, the aggregate amount of the outstanding loan principal and any accrued interest will reduce the Policy Proceeds that might otherwise be payable.

In addition, unpaid loan interest generally will be treated as a new loan under the IRC. If the policy is a modified endowment contract, a loan may result in taxable income and penalty taxes to you. In addition, for all policies, if the loans taken, including unpaid loan interest, exceed the premiums paid, policy surrender or policy lapse will result in a taxable gain to you. Finally, it is possible that a loan could be treated as a taxable

 

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distribution if there is no spread or a very small spread between the interest rate charged on the loan and the interest rate credited to the loaned amount. (See “Federal Tax Considerations” for more information.) Loans can affect the No Lapse Guarantee.

TERMINATION AND REINSTATEMENT

LATE PERIOD

If your policy’s Net Cash Value on any Monthly Deduction Day is less than the Monthly Deductions due for the next policy month and the No Lapse Guarantee is not in effect, your policy will enter a late period for 62 days after that date. During this period, you have the opportunity to pay any premium needed to cover any overdue charges. We will mail a notice to your last known address stating this amount. We will send a copy of the notice to the last known assignee, if any, on our records. We will mail these notices at least 31 days before the end of the late period. Your policy will remain in effect during the late period. If the late period expires without sufficient payment being made to us, we will terminate your policy without any benefits.

If the insured dies during the late period, we will pay the Policy Proceeds to the beneficiary. We will reduce the benefit by any unpaid Monthly Deductions due from the Cash Value for the full policy month(s) from the beginning of the late period through the policy month in which the insured dies. If your policy has the no-lapse guarantee, it may prevent your policy from terminating during the first three years.

NO-LAPSE GUARANTEE (NOT AVAILABLE IN NEW JERSEY AND TEXAS)

The no-lapse guarantee ensures that the policy will remain in effect during the first three Policy Years if it passes a minimum premium test. In order to pass that test, the total premiums you have paid into the policy (adjusted for loans or partial withdrawals you have taken) must be at least equal to the minimum monthly premium payment amount of the policy, as shown on the Policy Data Page, multiplied by the number of months that the policy has been in effect.

If the policy passes the minimum premium test, it will not enter the late period even if the Net Cash Value on a Monthly Deduction Day is insufficient to pay for the Monthly Deductions for the next policy month. Rather, we will deduct the charges from your Net Cash Value to the extent possible. We will defer the deduction of any additional amount due until the end of the three-year no-lapse guarantee period. When the guarantee period ends, if there is insufficient Net Cash Value to cover the current and any deferred monthly charges, you will be sent a bill. If that bill is not paid, the policy will end.

The No-Lapse Guarantee will end on the earliest of:

 

   

the third policy anniversary;

 

   

the date on which you change (1) the Face Amount of the policy or (2) the Life Insurance Benefit option resulting in a change in the Face Amount;

 

   

the date you add or delete any riders to the policy;

 

   

the date you increase or decrease any rider coverage amounts; or

 

   

the date on which a change in underwriting class takes effect.

REINSTATEMENT OPTION

If your policy has lapsed, you can request that we reinstate your policy if all of these conditions are met:

 

   

you send a written request for reinstatement, in a form acceptable to us, to VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing), within five years after your policy is terminated;

 

   

the insured is alive; and

 

   

you have not surrendered your policy for its Cash Surrender Value.

 

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Keep in mind that a termination and subsequent reinstatement may cause your policy to become a modified endowment contract. Modified endowment contracts are subject to less favorable tax treatment on amounts withdrawn or borrowed from the policy.

If the policy lapses during the first Policy Year and is subsequently reinstated, we will deduct an additional contract charge from the Cash Value.

Before we reinstate your policy, we must also receive the following:

(1) a payment equal to (a) multiplied by (b) where:

(a) is an amount sufficient to keep the policy in effect for at least three months. This amount will consist of any amount necessary to bring the Net Cash Value above zero plus three Monthly Deductions, and any Monthly Deductions due and unpaid at time of lapse and

(b) is a factor in order to account for premium expenses and surrender charges; and

(2) satisfactory evidence of insurability, if your reinstatement request is more than 90 days after the end of the late period.

We will apply your payment to the Investment Divisions and/or the Fixed Account as of the Business Day we receive it and in accordance with your instructions at the time you make such payment. Payments received after 4:00 p.m. (Eastern Time) on any Business Day, or any non-Business Day, will be credited on the next Business Day.

The effective date of reinstatement will be the Monthly Deduction Day on or following the date we approve your request for reinstatement. The approval for reinstatement is contingent upon our receipt from you of the reinstatement payment due, which is the amount specified in (1) above.

If we reinstate your policy, the Face Amount for the reinstated policy will be the same as it would have been if the policy had not terminated.

The Cash Value of the reinstated policy will be the Cash Value at the time the policy lapsed plus the reinstatement payment net of administrative expenses, less any Monthly Deductions due and unpaid at the time of lapse less the difference between the surrender charge assessed at the time of lapse and the surrender charge that applies at the time the policy is reinstated. We will deduct any unpaid loan and accrued loan interest from this Cash Value, or any unpaid loan can be repaid together with loan interest, up to 6% compounded annually, from the end of the late period to the date of reinstatement.

If the policy lapses during the first Policy Year and is subsequently reinstated, we will assess the first-year lapse reinstatement charge.

During a late period, transfers may be made; however, no new loans or partial withdrawals may be taken.

 

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DISTRIBUTION AND COMPENSATION ARRANGEMENTS

NYLIFE Distributors, the underwriter and distributor of the policies, is registered with the SEC and FINRA as a broker-dealer. The firm is an indirect wholly-owned subsidiary of NYLIC, and an affiliate of NYLIAC. Its principal business address is 169 Lackawanna Avenue, Parsippany, New Jersey 07054.

The policies were sold by registered representatives of NYLIFE Securities, a broker-dealer that is an affiliate of NYLIFE Distributors, and by registered representatives of unaffiliated broker-dealers. Your registered representative is also a licensed insurance agent with NYLIC. 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 NYLIC or its affiliates and products provided by other companies.

The selling broker-dealer, and in turn your registered representative, will 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 received by your registered representative will vary depending on the policy that he or she sells, on sales production goals, and on the specific payment arrangements of the relevant broker-dealer. Differing compensation arrangements have the potential to influence the recommendation made by your registered representative or broker-dealer.

The maximum commissions payable to a broker-dealer in the first 30 years are equivalent to the present value of an annual commission rate for 30 years of 4.6% per year. (This figure is a percentage of planned annual premiums of $10,000 and assumes a discount rate of 6%. Additional assumptions for the VUL Provider product are: Male, issue age 40, issued Preferred, with an initial face amount of $250,000.) Broker-dealers may also receive an allowance for expenses that ranges generally from 0% to 41% of first year premiums. Broker-dealers may also receive additional compensation based on a percentage of a policy’s Separate Account Value, less any policy loans, beginning in Policy Year 11.

The total commissions paid during the fiscal year ended December 31, 2014, 2013 and 2012 were $404,123, $482,308, and $771,890, respectively. NYLIFE Distributors did not retain any of these commissions.

NYLIC also has other compensation programs where registered representatives, managers, and employees involved in the sales process receive additional compensation related to the sale of products manufactured and issued by NYLIC or its affiliates. NYLIFE Securities registered representatives who are members of the General Office management team receive compensation based on a number of sales-related incentive programs designed to compensate for education, supervision, training, and recruiting of agents.

Unaffiliated broker-dealers may receive sales support for products manufactured and issued by New York Life or its affiliates from Brokerage General Agents (“BGAs”) who are not employed by NYLIC. BGAs receive commissions on the policies based on a percentage of the commissions the registered representative receives and an allowance for expenses based on first year premiums paid.

NYLIFE Securities registered representatives can qualify to attend NYLIC-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 NYLIC depends on the sale of products manufactured and issued by NYLIC or its affiliates.

NYLIAC has discontinued sales of these policies. Premium payments on existing policies, however, are accepted on a continuous basis.

Please refer to the Statement of Additional Information for additional information on distribution and compensation arrangements. You may obtain a paper copy of the SAI by mail (at the VPSC at one of the addresses listed on the first page of this prospectus (or any other address we indicate to you in writing), through the internet on our corporate website (www.newyorklife.com), or by phone on our toll-free number (1-800-598-2019). The SAI is also posted on our corporate website, which is referenced above.

 

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FEDERAL INCOME TAX CONSIDERATIONS

OUR INTENT

Our intent in the discussion in this section is to provide general information about federal income tax considerations related to the policies. This is not an exhaustive discussion of all tax questions that might arise under the policies. This discussion is not intended to be tax advice for you. Tax results may vary according to your particular circumstances, and you may need tax advice in connection with the purchase or use of your policy.

The discussion in this section is based on our understanding of the present federal income tax laws as they are currently interpreted by the IRS. We have not included any information about applicable state or other tax laws (except as noted in “Other Tax Issues”, below). Further, you should note that tax law changes from time to time. We do not know whether the treatment of life insurance policies under federal income tax or estate or gift tax laws will continue. Future legislation, regulations, or interpretations could adversely affect the tax treatment of life insurance policies. Lastly, there are many areas of the tax law where minimal guidance exists in the form of Treasury Regulations or Revenue Rulings. You should consult a tax advisor for information on the tax treatment of the policies, for the tax treatment under the laws of your state, or for information on the impact of proposed or future changes in tax legislation, regulations, or interpretations.

The ultimate effect of federal income taxes on values under the policy and on the economic benefit to you or the beneficiary depends upon NYLIAC’s tax status, upon the terms of the policy, and upon your circumstances.

TAX STATUS OF NYLIAC AND THE SEPARATE ACCOUNT

NYLIAC is taxed as a life insurance company under Subchapter L of the IRC. The Separate Account is not a separate taxable entity from NYLIAC and we take its operations into account in determining NYLIAC’s income tax liability. 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. All investment income and realized net capital gains on the assets of the Separate Account are reinvested and taken into account in determining policy Cash Values, and are automatically applied to increase the book reserves associated with the policies. Under existing federal income tax law, neither the investment income nor any net capital gains of the Separate Account, are taxed to NYLIAC to the extent those items are applied to increase tax deductible reserves associated with the policies.

CHARGES FOR TAXES

We impose a federal tax charge on Non-Qualified Policies equal to 1.25% of premiums received under the policy to compensate us for taxes we have to pay under Section 848 of the IRC in connection with our receipt of premiums under Non-Qualified Policies. No other charge is currently made to the Separate Account for our federal income taxes that may be attributable to the Separate Account. In the future, we may impose a charge for our federal income taxes attributable to the Separate Account. In addition, depending on the method of calculating interest on amounts allocated to the Fixed Account and/ or DCA Plus Account, we may impose a charge for the policy’s share of NYLIAC’s federal income taxes attributable to the Fixed Account and/or DCA Plus Account.

Under current laws, we may incur state or local taxes other than premium taxes (including income, franchise and capital taxes) in several states and localities. At present we do not charge the Separate Account for these taxes. We, however, reserve the right to charge the Separate Account for the portion of such taxes, if any, attributable to the Separate Account or the policies.

DIVERSIFICATION STANDARDS AND CONTROL ISSUES

In addition to other requirements imposed by the IRC, a policy will qualify as life insurance under the IRC only if the diversification requirements of IRC Section 817(h) are satisfied by the Separate Account. We intend

 

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for the Separate Account to comply with IRC Section 817(h) and related regulations. To satisfy these diversification standards, the regulations generally require that on the last day of each calendar quarter, no more than 55% of the value of a Separate Account’s assets can be represented by any one investment, no more than 70% can be represented by any two investments, no more than 80% can be represented by any three investments, and no more than 90% can be represented by any four investments. For purposes of these rules, all securities of the same issuer generally are treated as a single investment, but each U.S. Government agency or instrumentality is treated as a separate issuer. Under a “look through” rule, we are able to meet the diversification requirements by looking through the Separate Account to the underlying Eligible Portfolio. Each of the Funds has committed to us that the Eligible Portfolios will meet the diversification requirements.

The IRS has stated in published rulings that a variable policyowner will be considered the owner of separate account assets if he or she possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In those circumstances, income and gains from the separate account assets would be includable in the variable policyowner’s gross income. In connection with its issuance of temporary regulations under IRC Section 817(h) in 1986, the Treasury Department announced that such temporary regulations did not provide guidance concerning the extent to which policyowners could be permitted to direct their investments to particular Investment Divisions of a separate account and that guidance on this issue would be forthcoming. Regulations addressing this issue have not yet been issued or proposed. The ownership rights under your policy are similar to, but different in certain respects from, those described by the IRS in rulings in which it was determined that policyowners were not owners of separate account assets. For example, you have additional flexibility in allocating premium payments and policy Cash Values. These differences could result in your being treated as the owner of your policy’s pro rata portion of the assets of the Separate Account. In addition, we do not know what standards will be set forth, if any, in the regulations or ruling which the Treasury Department has stated it expects to issue. We therefore reserve the right to modify the policy, as deemed appropriate by us, to attempt to prevent you from being considered the owner of your policy’s pro rata share of the assets of the Separate Account. Moreover, in the event that regulations are adopted or rulings are issued, there can be no assurance that the Eligible Portfolios will continue to be available, will be able to operate as currently described in the Fund prospectuses, or that a Fund will not have to change an Eligible Portfolio’s investment objective or investment policies.

LIFE INSURANCE STATUS OF POLICY

We believe that the policy meets the statutory definition of life insurance under IRC Section 7702 and that you and the beneficiary of your policy, subject to the discussion below under “IRC Section 101(j)—Impact on Employer-Owned Policies”, will receive the same federal income tax treatment as that accorded to owners and beneficiaries of fixed benefit life insurance policies. Specifically, subject to the discussion below under “IRC Section 101(j)—Impact on Employer-Owned Policies”, we believe that the Life Insurance Benefit under your policy will be excludable from the gross income of the beneficiary subject to the terms and conditions of Section 101(a)(1) of the IRC. Pursuant to Section 101(g) of the IRC, amounts received by the policyowner may, as described below, also be excludable from the policyowner’s gross income when the insured has a terminal illness and benefits are paid under the Living Benefits Rider. (Life insurance benefits under a “modified endowment contract” as discussed below are treated in the same manner as Life Insurance Benefits under life insurance policies that are not so classified.)

In addition, unless the policy is a “modified endowment contract,” in which case the receipt of any loan under the policy may result in recognition of income to the policyowner, we believe that the policyowner will not be deemed to be in constructive receipt of the cash values, including increments thereon, under the policy until proceeds of the policy are received upon a surrender of the policy or a partial withdrawal or, in certain circumstances where there is an existing policy loan, upon a surrender or lapse of the policy.

We reserve the right to make changes to the policy if we think it is appropriate to attempt to assure qualification of the policy as a life insurance contract. If a policy were determined not to qualify as life insurance, the policy would not provide the tax advantages normally provided by life insurance.

 

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IRC SECTION 101(J)—IMPACT OF EMPLOYER-OWNED POLICIES

For an “employer-owned life insurance contract” issued after August 17, 2006 (unless issued in a 1035 exchange for a contract originally issued prior to that date where the new contract is not materially different from the exchanged contract), if certain specific requirements described below are not satisfied, IRC Section 101(j) generally requires policy beneficiaries to treat death proceeds paid under such contract as income to the extent such proceeds exceed the premiums and other amounts paid by the policyholder for the contract. This rule of income inclusion will not apply if, before the policy is issued, the employer-policyholder provides certain written notice to and obtains certain written consents from insureds (who must be United States citizens or residents) in circumstances where:

(1) the insured was an individual who was an employee within 12 months of his death;

(2) the insured was a “highly compensated employee” at the time the contract was issued. In general, highly compensated employees for this purpose are more than 5 percent owners, employees who for the preceding year received in excess of $120,000 (for 2015), directors and anyone else in the top 35 percent of employees based on compensation;

(3) the death proceeds are paid to a family member of the insured (as defined under Code Section 267 (c)(4)), an individual who is a designated beneficiary of the insured under the policy (other than the policyholder), a trust established for either the family member’s or beneficiary’s benefit, or the insured’s estate; or

(4) the death proceeds are used to buy an equity interest in the policyholder from the family member, beneficiary, trust or estate.

Policyholders that own one or more contracts subject to the Act will also be subject to annual reporting and record-keeping requirements.

You should consult with your tax advisor to determine whether and to what extent the Act may apply to the Policy. Assuming the Act applies, you should, to the extent appropriate, (in consultation with your tax advisor), take the necessary steps, before you acquire the Policy, to ensure that the income inclusion rule described above does not apply to the Policy.

MODIFIED ENDOWMENT CONTRACT STATUS

Internal Revenue Code Section 7702A defines a class of life insurance policies referred to as modified endowment contracts. Under this provision, the policies will be treated for tax purposes in one of two ways. Policies that are not classified as modified endowment contracts will be taxed as conventional life insurance policies, as described below. Taxation of pre-death distributions (including loans) from policies that are classified as modified endowment contracts is somewhat different, as described below.

A life insurance policy becomes a “modified endowment contract” if, at any time during the first seven policy years, the sum of actual premiums paid exceeds the sum of the “seven-pay premium.” Generally, the “seven-pay premium” is the level annual premium, such that if paid for each of the first seven policy years, will fully pay for all future life insurance and endowment benefits under a life insurance policy. For example, if the “seven-pay premium” was $1,000, the maximum premium that could be paid during the first seven policy years to avoid “modified endowment” treatment would be $1,000 in the first year, $2,000 through the first two years and $3,000 through the first three years, etc. Under this test, a policy may or may not be a modified endowment contract, depending on the amount of premium paid during each of the policy’s first seven years. A policy received in exchange for a modified endowment contract will be taxed as a modified endowment contract even if it would otherwise satisfy the seven-pay test.

Certain changes in the terms of a policy, including a reduction in Life Insurance Benefits, will require a policy to be retested to determine whether the change has caused the policy to become a modified endowment contract. A reduction in Life Insurance Benefits will require retesting if it occurs within seven years after the beginning of the test period. In addition, if a “material change” occurs at any time while the policy is in force, a new seven-pay test period will start and the policy will need to be retested to determine whether it continues to

 

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meet the seven-pay test. A “material change” generally includes increases in Life Insurance Benefits, but, where applicable, does not include an increase in Life Insurance Benefits which is attributable to the payment of premiums necessary to fund the lowest level of Life Insurance Benefits payable during the first seven Policy Years, or which is attributable to the crediting of interest with respect to such premiums.

Because the policy provides for flexible premiums, NYLIAC has instituted procedures to monitor whether, under our current interpretation of the law, increases in Life Insurance Benefits or additional premiums cause either the start of a new seven-year test period or the taxation of distributions and loans. All additional premiums will be considered in these determinations.

If a policy fails the seven-pay test, all distributions (including loans) occurring in the Policy Year of failure and thereafter will be subject to the rules for modified endowment contracts. A recapture provision also applies to loans and distributions that are received in anticipation of failing the seven-pay test. Under the IRC, any distribution or loan made within two years prior to the date that a policy fails the seven-pay test is considered to have been made in anticipation of the failure.

Any amounts distributed under a “modified endowment contract” (including proceeds of any loan) are taxable to the extent of any accumulated income in the policy. Penalty taxes may apply to such taxable amounts as well. In general, the amount that may be subject to tax is the excess of the Cash Value (both loaned and unloaned) over the previously unrecovered premiums paid.

For purposes of determining the amount of income received upon a distribution (or loan) from a modified endowment contract, the IRC requires the aggregation of all modified endowment contracts issued to the same policyowner by an insurer and its affiliates within the same calendar year. Therefore, loans and distributions from any one such policy are taxable to the extent of the income accumulated in all the modified endowment contracts required to be so aggregated.

If any amount is taxable as a distribution of income under a modified endowment contract (as a result of a policy surrender, a partial withdrawal, or a loan), it may also be subject to a 10% penalty tax under IRC Section 72(v). Limited exceptions from the additional penalty tax are available for certain distributions to individuals who own policies. The penalty tax will not apply to distributions: (i) that are made on or after the date the taxpayer attains age 591/2; or (ii) that are attributable to the taxpayer’s becoming disabled; or (iii) that are part of a series of substantially equal periodic payments (made not less frequently than annually) made for the life or life expectancy of the taxpayer or for the joint lives or joint life expectancies of the taxpayer and his or her beneficiary.

STATUS OF THE POLICY AFTER THE INSURED IS AGE 100

The policy provides that unless the Life Extension Rider is in effect, your policy matures on the policy anniversary on which the insured is age 100. Beginning on this maturity date, the Face Amount of your policy, as shown on the Policy Data Page, will no longer apply. Instead, your Life Insurance Benefit will equal the Cash Value of your policy less any loans and any interest due on loans. The IRS has not issued final guidance on the status of a life insurance policy after the insured becomes age 100.

There is a risk that the policy may not qualify as life insurance under the Federal tax law after the insured becomes age 100 and that the policyowner may become subject to adverse tax consequences at that time. For this reason, a tax advisor should be consulted about the advisability of continuing the policy after the insured becomes age 100.

POLICY SURRENDERS AND PARTIAL WITHDRAWALS

Upon a full surrender of a policy for its Cash Surrender Value, you will recognize ordinary income for federal tax purposes to the extent that the Cash Value less surrender charges and any uncollected additional contract charges, exceeds the investment in your policy (the total of all premiums paid but not previously recovered plus any other consideration paid for the policy). The tax consequences of a partial withdrawal from your policy will depend upon whether the partial withdrawal results in a reduction of future benefits under your policy and whether your policy is a modified endowment contract. If upon a full surrender of a policy the

 

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premium payments made exceed the surrender proceeds plus the amount of any outstanding loans, you will recognize a loss, which is not deductible for federal income tax purposes.

If your policy is not a modified endowment contract, the general rule is that a partial withdrawal from a policy is taxable only to the extent that it exceeds the total investment in the policy. An exception to this general rule applies, however, if a reduction of future benefits occurs during the first fifteen years after a policy is issued and there is a cash distribution associated with that reduction. In such a case, the IRC prescribes a formula under which you may be taxed on all or a part of the amount distributed. After fifteen years, cash distributions from a policy that is not a modified endowment contract will not be subject to federal income tax, except to the extent they exceed the total investment in the policy. We suggest that you consult with a tax advisor in advance of a proposed decrease in Face Amount or a partial withdrawal. In addition, any amounts distributed under a “modified endowment contract” (including proceeds of any loan) are taxable to the extent of any accumulated income in the policy. Penalty taxes may apply to such taxable amounts as well. In general, the amount that may be subject to tax is the excess of the Cash Value (both loaned and unloaned) over the previously unrecovered premiums paid.

3.8 PERCENT MEDICARE 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 policy (including policy loans).

POLICY LOANS AND INTEREST DEDUCTIONS

We believe that under current law any loan received under your policy will be treated as policy debt to you and that, unless your policy is a modified endowment contract, no part of any loan under your policy will constitute income to you. If your policy is a modified endowment contract (see discussion above) loans will be fully taxable to the extent of the income in the policy (and in any other contracts with which it must be aggregated) and could be subject to the additional 10% penalty tax described above.

Internal Revenue Code Section 264 provides that interest paid or accrued on a loan in connection with a policy is generally nondeductible. Certain exceptions apply, however, with respect to policies covering key employees. In addition, in the case of policies not held by individuals, special rules may limit the deductibility of interest on loans that are not made in connection with a policy. We suggest consultation with a tax advisor for further guidance.

In addition, if your policy lapses or you surrender it with an outstanding loan, and the amount of the loan plus the Cash Surrender Value is more than the sum of premiums you paid, you will generally be liable for taxes on the excess. Such amount will be taxed as ordinary income. A 10% penalty tax may apply as well.

CORPORATE OWNERS

Ownership of a policy by a corporation may affect the policyowner’s exposure to the corporate alternative minimum tax. In determining whether it is subject to alternative minimum tax, a corporate policyowner must make two computations. First, the corporation must take into account a portion of the current year’s increase in the “inside build up” or income on the contract gain in its corporate-owned policies. Second, the corporation must take into account a portion of the amount by which the death benefits received under any policy exceed

 

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the sum of (i) the premiums paid on that policy in the year of death, and (ii) the corporation’s basis in the policy (as measured for alternative minimum tax purposes) as of the end of the corporation’s tax year immediately preceding the year of death.

EXCHANGES OR ASSIGNMENTS OF POLICIES

If you change the policyowner or exchange or assign your policy, it may have significant tax consequences depending on the circumstances. For example, an assignment or exchange of the policy may result in taxable income to you. Further, IRC Section 101(a) provides, subject to certain exceptions, that where a policy has been transferred for value, only the portion of the Life Insurance Benefit which is equal to the total consideration paid for the policy may be excluded from gross income. For complete information with respect to policy assignments and exchanges, a qualified tax advisor should be consulted.

REASONABLENESS REQUIREMENT FOR CHARGES

Another provision of the tax law deals with allowable charges for mortality costs and other expenses that are used in making calculations to determine whether a policy qualifies as life insurance for federal income tax purposes. For life insurance policies entered into on or after October 21, 1988, these calculations must be based upon reasonable mortality charges and other charges reasonably expected to be actually paid. The Treasury Department has issued proposed regulations and is expected to promulgate temporary or final regulations governing reasonableness standards for mortality charges.

LIVING BENEFITS RIDER (ALSO KNOWN AS ACCELERATED BENEFITS RIDER)

A Living Benefits Rider is available in connection with the policy. Amounts received under this rider will generally be excludable from your gross income under Section 101(g) of the IRC. The exclusion from gross income will not apply, however, if you are not the insured and if you have an insurable interest in the life of the insured either because the insured is your director, officer or employee, or because the insured has a financial interest in a business of yours.

In some cases, there may be a question as to whether a life insurance policy that has an accelerated living benefit rider can meet certain technical aspects of the definition of “life insurance contract” under the IRC. We reserve the right (but we are not obligated) to modify the rider to conform with requirements the IRS may prescribe.

OTHER TAX ISSUES

Federal gift and estate and state and local gift, estate, inheritance, and other tax consequences of ownership or receipt of Policy Proceeds depend on the circumstances of each policyowner or beneficiary. You should consult your own tax advisor as to how your particular circumstances may be impacted by any of these taxes.

WITHHOLDING

Under Section 3405 of the IRC, withholding is generally required with respect to certain taxable distributions under insurance policies. In the case of periodic payments (payments made as an annuity or on a similar basis), the withholding is at graduated rates (as though the payments were employee wages). With respect to non-periodic distributions, the withholding is at a flat rate of 10%. If you are an individual, you can elect to have either non-periodic or periodic payments made without withholding except where your tax identification number has not been furnished to us, or where the IRS has notified us that a tax identification number is incorrect. If you are not an individual, you may not elect out of such withholding.

Different withholding rules apply to payments made to U.S. citizens living outside the United States and to non-U.S. citizens living outside of the United States. U.S. citizens who live outside of the United States generally are not permitted to elect not to have federal income taxes withheld from payments. Payments to non-U.S. citizens who are not residents of the United States generally are subject to 30% withholding, unless an income tax treaty between their country of residence and the United States provides for a lower rate of withholding or an exemption from withholding.

 

66


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.

LEGAL PROCEEDINGS

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

Notwithstanding the uncertain nature of litigation and regulatory inquiries, the outcome of which cannot be predicted, 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.

RECORDS AND REPORTS

NYLIC or NYLIAC maintains all records and accounts relating to the Separate Account, the Fixed Account and the DCA Plus Account. Each year we will mail you a report showing the Cash Value, Cash Surrender Value, and outstanding loans (including accrued loan interest) as of the latest policy anniversary. This report contains any additional information required by any applicable law or regulation. We will also mail you a report each quarter showing this same information as of the end of the previous quarter. This quarterly statement reports transactions that you have requested or authorized. Please review it carefully. If you believe it contains an error, we must be notified within 15 days of the date of the statement.

Generally, NYLIAC will immediately mail you confirmation of any transactions involving the Separate Account. When we receive premium payments on your behalf involving the Separate Account initiated through pre-authorized monthly deduction charges from banks, payments forwarded by your employer, or through other payments made by pre-authorized deductions to which we agree, a summary of these policy transactions will only appear on your quarterly statement and you will not receive a confirmation statement after each such transaction.

It is important that you inform NYLIAC of an address change so that you can receive these policy statements (please refer to the section on “Management and Organization—Our Rights—How To Reach Us for Policy Services”). 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 a correct address is obtained. Additionally, no new service requests can be processed until a valid current address is provided.

Reports and promotional literature may contain the ratings NYLIC and NYLIAC have received from independent rating agencies. Both companies are among only a few companies that have consistently received among the highest possible ratings from the four major independent rating companies for financial strength and stability: A.M. Best, Fitch, Moody’s Investor’s Services, Inc. and Standard and Poor’s. However, neither NYLIC nor NYLIAC guarantees the investment performance of the Investment Divisions.

FINANCIAL STATEMENTS

The consolidated balance sheet of NYLIAC as of December 31, 2014 and 2013, 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, 2014 (including the report of the independent registered public accounting firm), and the Separate Account statement of assets and liabilities as of December 31, 2014, and the statement of operations and of changes in net assets and the financial highlights for each of the periods indicated in the Financial

 

67


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.

 

68


APPENDIX A

ILLUSTRATIONS FOR VUL PROVIDER

The following tables demonstrate the way your policy works. The tables are based on the sex, age, underwriting class, initial Life Insurance Benefit, and premium as follows:

The tables are for a policy issued to a Male with Preferred underwriting class and issue age 40 with a planned annual premium of $10,000, a Surrender Charge Premium of $6,827.50, an initial face amount of $250,000 and no riders. It assumes that the Guideline Premium Test was used and that 100% of the Net Premium is allocated to the Separate Account.

The tables show how the Life Insurance Benefit, Cash Value and Cash Surrender Value would vary over an extended period of time assuming hypothetical gross rates of return equivalent to a constant annual rate of 0%, 6%, or 10%. The tables will assist in the comparison of the Life Insurance Benefit, Cash Value and Cash Surrender Value of the policy with other variable life insurance plans.

The Life Insurance Benefit, Cash Value and Cash Surrender Value for a policy would be different from the amounts shown if the actual gross rates of return averaged 0%, 6%, or 10%, but varied above or below those averages for the period. They would also be different depending on the allocation of the assets among the Investment Divisions of the Separate Account and the Fixed Account, if the actual gross rate of return for all Investment Divisions averaged 0%, 6%, or 10%, but varied above or below that average for Individual Investment Divisions. They would also differ if any policy loans or partial surrenders were made or if premium payments were not paid on the policy anniversary during the period of time illustrated. Depending on the timing and degree of fluctuation, the actual values could be substantially more or less than those shown. A lower value may, under certain circumstances, result in the lapse of the policy unless the policyowner pays more than the stated premium.

Table 1 reflects all deductions and charges under the policy and assumes that the cost of insurance charges are based on the current cost of insurance rates. These deductions and charges include all charges from planned premium payments and the Cash Value at their current levels, as well as a monthly Mortality and Expense Risk charge in the range of 0.05% to 0.70% annualized (on a current basis) of the Separate Account Value. The Mortality and Expense Risk charge varies based on Separate Account cash value and policy duration.

Table 2 reflects all deductions and charges under the policy and assumes that the cost of insurance charges are based on the guaranteed cost of insurance rates. These deductions and charges include all charges from planned premium payments and the Cash Value at their guaranteed levels, as well as a monthly Mortality and Expense Risk charge equal to 1.00% annualized (on a guaranteed basis) of the Separate Account Value.

All tables reflect total assumed investment advisory fees together with other expenses incurred by the funds of 0.89% of the average daily net assets of the Funds. This total is based upon an arithmetic average of the management fees, administrative fees and the other expenses for each Investment Division. Please refer to the Fee Table in this prospectus for details of the underlying Fund fees.

Taking into account the average investment advisory fees and expenses of the Funds, the gross rates of return of 0%, 6%, and 10% would correspond to illustrated net investment returns of –0.89%, 5.06%, and 9.02%, respectively.

The actual investment advisory fees and expenses may be more or less than the amounts illustrated and will depend on the allocations made by the policyowner.

NYLIAC will furnish, upon request, a comparable illustration using the age, sex, and underwriting classification of the insured for any initial Life Insurance Benefit and premium request. In addition to an illustration assuming policy charges at their maximum, we will furnish an illustration assuming current policy charges and current cost of insurance rates.

 

A-1


TABLE 1

FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE PROVIDER INSURANCE POLICY

 

  

MALE ISSUE AGE: 40, PREFERRED

PLANNED ANNUAL PREMIUM: $10,000

SURRENDER CHARGE PREMIUM: $6,827.50

INITIAL FACE AMOUNT: $250,000

LIFE INSURANCE BENEFIT OPTION: 2

SWITCHING TO OPTION 1 IN YEAR 25

 

ASSUMING CURRENT CHARGES

  

 

     End of Year Death
Benefit(1) Assuming
Hypothetical Returns
     End of Year Cash
Values(1) Assuming
Hypothetical Returns
     End of Year Cash
Surrender Values
Assuming Hypothetical
Returns
 

Policy Year

   0%      6%      10%      0%      6%      10%      0%      6%      10%  

1

     258,201         258,716         259,060         8,201         8,716         9,060         3,201         3,716         4,060   

2

     266,486         268,031         269,093         16,486         18,031         19,093         9,992         11,545         12,607   

3

     274,608         277,715         279,921         24,608         27,715         29,921         18,516         21,638         23,845   

4

     282,569         287,784         291,609         32,569         37,784         41,609         26,809         32,049         35,874   

5

     290,362         298,247         304,219         40,362         48,247         54,219         35,000         42,921         48,893   

6

     298,577         309,769         318,503         48,577         59,769         68,503         43,542         54,784         63,519   

7

     306,650         321,755         333,979         56,650         71,755         83,979         52,008         67,181         79,404   

8

     314,558         334,270         350,715         64,558         84,270         100,715         60,376         80,173         96,618   

9

     322,326         347,321         368,891         72,326         97,321         118,891         68,533         93,634         115,204   

10

     329,986         360,979         388,573         79,986         110,979         138,573         76,648         107,770         135,364   

15

     367,226         440,606         517,685         117,226         190,606         267,685         116,951         190,606         267,685   

20

     399,872         538,580         711,189         149,872         288,580         461,189         149,397         288,580         461,189   

25

     427,995         660,812         1,006,456         177,995         410,812         756,456         177,292         410,812         756,456   

 

(1) Assumes no policy loan or partial withdrawal has been made.

We emphasize that the hypothetical investment rates of return shown above are illustrative only and you should not deem them to be a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown and will depend on a number of factors, including the investment allocations made by a policyowner and the investment experience of the portfolios of the Funds. The death benefit, Cash Value and Cash Surrender Value for a policy would be different from those shown if the actual gross annual rates of return averaged 0%, 6%, or 10% over a period of years, but also fluctuated above or below those averages for individual Policy Years. They would also be different if any policy loans or partial withdrawals were made. Neither NYLIAC, the Separate Account, nor the Funds represent that these hypothetical rates of return can be achieved for any one year or sustained over a period of time.

 

A-2


TABLE 1 (CONTINUED)

FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE PROVIDER INSURANCE POLICY

 

  

MALE ISSUE AGE: 40, PREFERRED

PLANNED ANNUAL PREMIUM: $10,000

SURRENDER CHARGE PREMIUM: $6,827.50

INITIAL FACE AMOUNT: $250,000

LIFE INSURANCE BENEFIT OPTION 2

SWITCHING TO OPTION 1 IN YEAR 25

 

ASSUMING CURRENT CHARGES

  

 

 

     End of Year Death
Benefit(1) Assuming
Hypothetical Returns
     End of Year Cash
Values(1) Assuming
Hypothetical Returns
     End of Year Cash
Surrender Values
Assuming Hypothetical
Returns
 

Policy Year

   0%      6%      10%      0%      6%      10%      0%      6%      10%  

30

     427,995         660,812         1,400,713         199,223         565,512         1,207,512         198,257         565,512         1,207,512   

35

     427,995         821,823         2,027,356         212,259         768,059         1,894,725         210,980         768,059         1,894,725   

40

     427,995         1,078,280         3,095,198         187,068         1,026,933         2,947,808         184,711         1,026,933         2,947,808   

45

     427,995         1,413,935         4,750,932         101,606         1,346,605         4,524,697         98,278         1,346,605         4,524,697   

50

     0         1,817,134         7,181,579         0         1,730,604         6,839,599         0         1,730,604         6,839,599   

55

     0         2,238,877         10,448,026         0         2,216,710         10,344,581         0         2,216,710         10,344,581   

60

     0         2,884,837         15,952,668         0         2,884,837         15,952,668         0         2,884,837         15,952,668   

 

(1) Assumes no policy loan or partial surrender has been made.

We emphasize that the hypothetical investment rates of return shown above are illustrative only and you should not deem them to be a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown and will depend on a number of factors, including the investment allocations made by a policyowner and the investment experience of the portfolios of the Funds. The death benefit, Cash Value and Cash Surrender Value for a policy would be different from those shown if the actual gross annual rates of return averaged 0%, 6%, or 10% over a period of years, but also fluctuated above or below those averages for individual Policy Years. They would also be different if any policy loans or partial withdrawals were made. Neither NYLIAC, the Separate Account, nor the Funds represent that these hypothetical rates of return can be achieved for any one year or sustained over a period of time.

 

A-3


TABLE 2

FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE PROVIDER INSURANCE POLICY

 

  

MALE ISSUE AGE: 40, PREFERRED

PLANNED ANNUAL PREMIUM: $10,000

SURRENDER CHARGE PREMIUM: $6,827.50

INITIAL FACE AMOUNT: $250,000

LIFE INSURANCE BENEFIT OPTION: 2

SWITCHING TO OPTION 1 IN YEAR 25

 

ASSUMING GUARANTEED CHARGES

  

 

     End of Year Death
Benefit(1) Assuming
Hypothetical Returns
     End of Year Cash
Values(1) Assuming
Hypothetical Returns
     End of Year Cash
Surrender Values
Assuming Hypothetical
Returns
 

Policy Year

   0%      6%      10%      0%      6%      10%      0%      6%      10%  

1

     257,467         257,953         258,277         7,467         7,953         8,277         2,467         2,953         3,277   

2

     264,972         266,409         267,399         14,972         16,409         17,399         8,485         9,923         10,913   

3

     272,247         275,114         277,151         22,247         25,114         27,151         16,171         19,037         21,074   

4

     279,327         284,106         287,615         29,327         34,106         37,615         23,592         28,371         31,880   

5

     286,185         293,368         298,815         36,185         43,368         48,815         30,859         38,043         43,490   

6

     292,826         302,911         310,811         42,826         52,911         60,811         37,842         47,927         55,827   

7

     299,253         312,745         323,666         49,253         62,745         73,666         44,679         58,170         69,091   

8

     305,471         322,882         337,447         55,471         72,882         87,447         51,375         68,786         83,351   

9

     311,454         333,304         352,197         61,454         83,304         102,197         57,767         79,617         98,511   

10

     317,207         344,023         367,994         67,207         94,023         117,994         63,998         90,814         114,785   

15

     342,194         401,994         465,289         92,194         151,994         215,289         92,194         151,994         215,289   

20

     359,582         466,440         601,105         109,582         216,440         351,105         109,582         216,440         351,105   

25

     367,222         535,550         789,869         117,222         285,550         539,869         117,222         285,550         539,869   

 

(1) Assumes no policy loan or partial surrender has been made.

We emphasize that the hypothetical investment rates of return shown above are illustrative only and you should not deem them to be a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown and will depend on a number of factors, including the investment allocations made by a policyowner and the investment experience of the portfolios of the Funds. The death benefit, Cash Value and Cash Surrender Value for a policy would be different from those shown if the actual gross annual rates of return averaged 0%, 6%, or 10% over a period of years, but also fluctuated above or below those averages for individual Policy Years. They would also be different if any policy loans or partial withdrawals were made. Neither NYLIAC, the Separate Account, nor the Funds represent that these hypothetical rates of return can be achieved for any one year or sustained over a period of time.

 

A-4


TABLE 2 (CONTINUED)

FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE PROVIDER INSURANCE POLICY

 

  

MALE ISSUE AGE: 40, PREFERRED

PLANNED ANNUAL PREMIUM: $10,000

SURRENDER CHARGE PREMIUM: $6,827.50

INITIAL FACE AMOUNT: $250,000

LIFE INSURANCE BENEFIT OPTION: 2

SWITCHING TO OPTION 1 IN YEAR 25

 

ASSUMING GUARANTEED CHARGES

  

 

 

     End of Year Death
Benefit(1) Assuming
Hypothetical Returns
     End of Year Cash
Values(1) Assuming
Hypothetical Returns
     End of Year Cash
Surrender Values
Assuming Hypothetical
Returns
 

Policy Year

   0%      6%      10%      0%      6%      10%      0%      6%      10%  

30

     367,222         535,550         947,951         111,211         361,512         817,199         111,211         361,512         817,199   

35

     367,222         535,550         1,306,947         80,694         456,517         1,221,445         80,694         456,517         1,221,445   

40

     0         619,051         1,901,522         0         589,572         1,810,973         0         589,572         1,810,973   

45

     0         783,016         2,765,112         0         745,730         2,633,440         0         745,730         2,633,440   

50

     0         963,166         3,937,415         0         917,301         3,749,919         0         917,301         3,749,919   

55

     0         1,139,611         5,422,273         0         1,128,328         5,368,587         0         1,128,328         5,368,587   

60

     0         1,422,279         7,918,958         0         1,422,279         7,918,958         0         1,422,279         7,918,958   

 

(1) Assumes no policy loan or partial surrender has been made.

We emphasize that the hypothetical investment rates of return shown above are illustrative only and you should not deem them to be a representation of past or future investment rates of return. Actual rates of return may be more or less than those shown and will depend on a number of factors, including the investment allocations made by a policyowner and the investment experience of the portfolios of the Funds. The death benefit, Cash Value and Cash Surrender Value for a policy would be different from those shown if the actual gross annual rates of return averaged 0%, 6%, or 10% over a period of years, but also fluctuated above or below those averages for individual Policy Years. They would also be different if any policy loans or partial withdrawals were made. Neither NYLIAC, the Separate Account, nor the Funds represent that these hypothetical rates of return can be achieved for any one year or sustained over a period of time.

 

A-5


APPENDIX B

STATE VARIATIONS

The following lists by jurisdiction any variations to the statements made in this prospectus.

Pennsylvania, Vermont and Virginia

The definition of “Net Cash Value” in the “Definitions” section of the Prospectus should be deleted and all references in the Prospectus to the term “Net Cash Value” should be deleted and replaced with “Cash Surrender Value.” In addition, sub-paragraph (1) of the “Termination and Reinstatement—Reinstatement Option” section of the Prospectus that describes the reinstatement payment should be deleted and replaced with the following description, “a payment equal to an amount sufficient to keep the policy in effect for at least three months. This amount will equal three Monthly Deductions multiplied by a factor of 250% in order to account for premium expenses and surrender charges, and”. Finally, the first sentence of the eighth paragraph of the “Termination and Reinstatement—Reinstatement Option” section of the Prospectus that describes the Cash Value of the reinstated policy should be deleted and replaced with the following sentence, “The Cash Value of the reinstated policy will be the Cash Value at the time the policy lapsed less the difference between the surrender charge assessed at the time of the lapse and the surrender charge that applies at the time the policy is reinstated, and less any unpaid loan and accrued interest, if not repaid.”

California

 

  Free Look—If you cancel your policy, we will pay you your policy’s Cash Value on the date you return the policy, plus the charges deducted from the premium payments you have made, less any loans and partial withdrawals you have taken.

Colorado

 

  Transfers Between Investment Divisions and/or the Fixed Account—If there is a change in the investment strategy of the Separate Account, you may make an unrestricted transfer from the Separate Account to the Fixed Account, regardless of any limits on such transfers that apply.

 

  The Suicide Exclusion period is one year from the Issue Date.

Connecticut

 

  Loan Interest Rate—Due to state regulation, the loan interest rate is fixed at 6.0% and may not be changed.

District of Columbia

 

  Free Look—You have until the later of 20 days from the date you receive your policy, or 45 days from the date the application is signed, to return the policy and receive a refund. We will allocate the initial premium and any other premium payments you make during the first 20 days following policy issue to our General Account. At the end of this free look period, we will allocate your Net Premiums according to your instructions.

Florida

 

  Termination and Late Period—The late period is the 31 days following the Monthly Deduction Day that the Cash Surrender Value is zero, or less than zero. We will mail a notice to the policyowner (and any known assignee) at least 30 days before the end of the late period.

 

  Life Extension Rider is not available.

Illinois

 

  Life Extension Rider is not available.

 

B-1


Indiana

 

  Free Look—You can return the policy to any of our registered representatives.

 

  ACSV Policy is not available.

 

  When We Pay Policy Proceeds—Any claim for the life insurance proceeds under this policy will be settled within two months of receipt of due proof of the death of the Insured.

Maryland

 

  ACSV Policy is not available.

 

  Unplanned Premiums—You are allowed a maximum of twelve unplanned premium payments each Policy Year.

 

  Term Insurance on Term Insurance Rider—This rider ends at age 98.

 

  Life Extension Rider is not available.

Massachusetts

 

  Transfers Between Investment Divisions and/or the Fixed Account—If there is a change in the investment strategy of the Separate Account, you can make an unrestricted transfer from the Separate Account to the Fixed Account, regardless of any limits on such transfers that apply.

Michigan

 

  Living Benefits Rider—The benefit can be exercised if the insured has a life expectancy of six months or less.

 

  Free Look—You can return the policy to any of our registered representatives.

Montana

 

  Variable Universal Life Provider—Is always issued on a unisex basis in Montana. Any reference in this prospectus that makes a distinction based on the sex of the insured should be disregarded for policies issued in this state.

 

  Free Look—You can return the policy to any of our registered representatives.

New Jersey

 

  No-Lapse Guarantee—The No-Lapse Guarantee is not available.

 

  ACSV is not available.

 

  Face Amount Increases—You are allowed to increase your policy’s Face Amount only once each Policy Year.

 

  Face Amount Decreases—You are allowed to decrease your policy’s Face Amount only once each Policy Year.

 

  Unplanned Premiums—You are allowed a maximum of twelve unplanned premium payments each Policy Year.

 

  State Premium Tax Charge—We will not increase the charge above 2.0%.

 

  Changes in Life Insurance Benefit Option—Only one change can be made per Policy Year.

 

  Partial Withdrawals—You can take one partial withdrawal in the first Policy Year, if Life Insurance Benefit Option 1 is in effect.

New York

 

 

Face Amount Increases—You are allowed to increase your policy’s Face Amount only once each

 

B-2


  Policy Year.

 

  Face Amount Decreases—You are allowed to decrease your policy’s Face Amount only once each Policy Year.

 

  Unplanned Premiums—You are allowed a maximum of twelve unplanned premium payments each Policy Year.

 

  Changes in Life Insurance Benefit Option—Only one change can be made per Policy Year.

 

  Free Look—You have 10 days from the date you receive your policy to return the policy and receive a refund. Until 20 days after issue of the policy we will allocate the initial premium and any other premium payments you make during this period to our General Account. After the first 20 days following policy issue, we will allocate your Net Premiums according to your instructions.

 

  Change in Objective of an Investment Division—If there is a change in the investment strategy of any Investment Division, you have the option of converting, without evidence of insurability, your policy within 60 days after the effective date of such change or the date you receive notification of such change, whichever is later. You may elect to convert your policy to a new fixed benefit life insurance policy, for an amount of insurance not greater than the Life Insurance Benefit of the original policy, on the date of conversion. The new policy will be based on the same issue age, sex, and class of risk as your original policy, but will not offer variable Investment Options such as the Investment Divisions. All riders attached to your original policy will end on the date of any such conversion.

 

  Special Provision Regarding Extended Term Insurance—On each policy anniversary, you have the right to transfer all of your money in the Separate Account to the Fixed Account and obtain an extended term insurance benefit. See your policy for details regarding this option.

 

  Spouse’s Paid-Up Insurance Purchase Option—is called Rider Insured’s Paid-Up Insurance Purchase Option (RIPPO) in New York.

 

  Life Extension Rider is not available.

North Carolina

 

  Free Look—You have until the later of 20 days from the date you receive your policy, or 45 days from the date the application is signed, to return the policy and receive a refund. Until 20 days after policy issue we will allocate the initial premium and any other premium payments you make during this period to our General Account. After the first 20 days following policy issue, we will allocate your Net Premiums according to your instructions.

Oregon

 

  The state premium tax is referred to as a “Tax Charge Back.” The rate may not be changed for the life of the policy.

 

  Free Look—You can return the policy to any of our registered representatives.

Pennsylvania

 

  Misstatement of Age or Sex—In the event of such a misstatement, we will adjust the death benefit provided by your policy, but we will not adjust the Cash Value.

 

  Face Amount Increases—You are allowed to increase your policy’s Face Amount only once each Policy Year.

 

  Face Amount Decreases—You are allowed to decrease your policy’s Face Amount only once each Policy Year.

 

  Unplanned Premiums—You are allowed a maximum of twelve unplanned premium payments each Policy Year.

 

  Changes in Life Insurance Benefit Option—Only one change can be made per Policy Year.

 

B-3


Texas

 

  Free Look—You may return the contract within 10 days of receipt of the contract to receive a refund equal to the premiums paid.

 

  Face Amount Increases—You are allowed to increase your policy’s Face Amount only once each Policy Year.

 

  Face Amount Decreases—You are allowed to decrease your policy’s Face Amount only once each Policy Year.

 

  Life Extension Rider is not available.

 

  No Lapse Guarantee is not available.

 

  Unplanned Premiums—You are allowed a maximum of twelve unplanned premium payments each Policy Year.

 

  Changes in Life Insurance Benefit Option—Only one change can be made per Policy Year.

 

  Partial Withdrawals—You can take one partial withdrawal in the first Policy Year, if Life Insurance Benefit Option 1 is in effect.

Vermont

 

  Vermont law requires that insurance contracts and policies offered to married persons and their families be made available to parties to a civil union and their families, unless federal law prohibits such action or limits the benefits available under the policy to persons recognized as married under federal laws. You should ask your registered representative how this law may impact your policy and the benefits available under it.

 

  Free Look—You can return the policy to any of our registered representatives.

Washington

 

  Living Benefits Rider—The benefit can be exercised if the insured has a life expectancy of 24 months or less.

 

B-4


OBTAINING ADDITIONAL INFORMATION

The Statement of Additional Information (“SAI”) contains additional information about NYLIAC Variable Universal Life Provider (“VUL Provider”), including information about compensation arrangements. The SAI is available without charge upon request. You can request a paper copy of the SAI by mail (at the VPSC at one of the addresses listed on the first page of this prospectus), through the internet on our corporate website (www.newyorklife.com), or by phone on our toll-free number (1-800-598-2019). The current SAI is incorporated by reference into this prospectus and has been filed with the SEC.

TABLE OF CONTENTS FOR THE

STATEMENT OF ADDITIONAL INFORMATION (“SAI”)

 

General Information and History

     2   

Additional Information About the Operations of the Policies

     2   

Distribution and Compensation Arrangements

     15   

Underwriting a Policy

     16   

Additional Information About Charges

     17   

Loans

     21   

Surrender of Your Policy

     21   

Financial Statements

     21   

NYLIAC & Separate Account Financial Statements

     F-1   

Information about VUL Provider (including the SAI) can be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-942-8090. Reports and other information about VUL Provider are available on the SEC’s internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549.

For a personalized illustration or additional information about your policy, contact your Registered Representative or call our toll-free number, 1-800-598-2019.

SEC File Number: 811-07798

 

69


Statement of Additional Information

dated

May 1, 2015

for

Variable Universal Life Provider

from

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION (“NYLIAC”)

This Statement of Additional Information (“SAI”) is not a prospectus. The SAI contains information that expands upon subjects discussed in the current Variable Universal Life Provider (“VUL Provider”) prospectus. You should read the SAI in conjunction with the current prospectus dated May 1, 2015 and any supplements thereto. This SAI is incorporated by reference into the prospectus. You may obtain a paper copy of the prospectus by calling NYLIAC at 1-800-598-2019 or by writing to NYLIAC at the VPSC at one of the addresses listed on the first page of the prospectus (or any other address we indicate to you in writing). The prospectus is also posted on our corporate website, www.newyorklife.com. Capitalized terms used but not defined in the SAI have the same meaning as in the current prospectus.

Table of Contents

 

     Page  

General Information and History

     2   

Additional Information About the Operation of the Policies

     2   

Distribution and Compensation Arrangements

     15   

Underwriting a Policy

     16   

Additional Information About Charges

     17   

Loans

     21   

Surrender of Your Policy

     21   

Financial Statements

     21   

NYLIAC & Separate Account Financial Statements

     F-1   

VUL Provider is offered under NYLIAC Variable Universal Life Separate Account-I.

 

1


GENERAL INFORMATION AND HISTORY

The VUL Provider prospectus and SAI describe a flexible premium variable universal life insurance policy that NYLIAC issues. We have discontinued sales of this policy. However, we will still accept additional premiums under existing policies subject to any contractual restrictions that may exist.

About NYLIAC

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 described in the prospectus, NYLIAC offers other life insurance policies and annuities. NYLIAC and Separate Account financial statements are also included in this SAI. NYLIAC’s principal business address is 51 Madison Avenue, New York, New York 10010.

NYLIAC is a wholly-owned subsidiary of NYLIC, a mutual life insurance company founded in New York in 1845. NYLIAC had total assets amounting to $139.5 billion at the end of 2014. NYLIC has invested in NYLIAC, and will occasionally make additional contributions to NYLIAC in order to maintain capital and surplus in accordance with state requirements.

About NYLIAC Variable Universal Life Separate Account—I

NYLIAC Variable Universal Life Separate Account—I (the “Separate Account”) is a segregated asset account that NYLIAC established to receive and invest your Net Premiums. NYLIAC established the Separate Account on June 4, 1993 under the laws of the State of Delaware, in accordance with resolutions set forth by the NYLIAC Board of Directors. The Separate Account is registered as a unit investment trust with the SEC under the Investment Company Act of 1940, as amended. This registration does not mean that the SEC supervises the management, investment practices, or policies of the Separate Account.

Tax Status of NYLIAC and the Separate Account

NYLIAC is taxed as a life insurance company under IRC Subchapter L. The Separate Account is not a taxable entity separate from NYLIAC, and we take its operations into account in determining NYLIAC’s income tax liability. 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. All investment income and realized net capital gains on the assets of the Separate Account are reinvested and taken into account in determining policy Cash Values and are applied automatically to increase the book reserves associated with the policies. Under existing federal income tax law, neither the investment income nor any net capital gains of the Separate Account are taxed to NYLIAC to the extent that those items are applied to increase tax deductible reserves associated with the policies.

ADDITIONAL INFORMATION ABOUT THE OPERATION OF THE POLICIES

The prospectus provides information about the policy and its riders. The following is additional information about these terms.

Funds and Eligible Portfolios

The Funds and Eligible Portfolios offered though 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 NYLAIC 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 advisor, or its distributor.

The Funds’ shares may be available to certain separate accounts we use to fund our variable annuity policies. This is called “mixed funding.” The Funds’ shares may be available to separate accounts of insurance

 

2


companies that are not affiliated with NYLIAC and, in certain instances, to qualified plans. This is called “shared funding.” Although we do not anticipate that any difficulties will result from mixed and shared funding, it is possible that differences in tax treatment and other considerations may cause the interests of owners of various contracts participating in the Funds to be in conflict. The Board of Directors/Trustees of each Fund, the Funds’ investment advisers, and NYLIAC are required to monitor events to identify any material conflicts that arise from the use of the Funds for mixed and shared funding. In the event of a material conflict, we could be required to withdraw from an Eligible Portfolio. For more information about the risks of mixed and shared funding, please refer to the relevant Fund prospectus.

The investment experience of an Investment Division of the Separate Account reflects increases or decreases in the net asset value of the shares of the underlying Fund, any dividend or capital gains distributions declared by the Fund, and any charges against the assets of the Investment Division. We determine this investment experience each Valuation Day, which is when the net asset value of the underlying Fund is determined. The actual net rate of return for an Investment Division measures the investment experience from the end of one Valuation Day to the end of the next Valuation Day.

Additions, Deletions, or Substitutions of Investments

We may add, delete, or substitute the Eligible Portfolio shares held by any Investment Division, within certain limits. We may eliminate the shares of any of the Eligible Portfolios and substitute shares of another Portfolio of a Fund or of another registered open-end management investment company or other investment vehicles. We may do this if the shares of an Eligible Portfolio are no longer available for investment or if we, in our sole discretion, decide that investment in an Eligible Portfolio is inappropriate given the purposes of the Separate Account. A new Eligible Portfolio may have higher fees and charges than the one it replaces. We will not substitute shares attributable to your interest in an Investment Division until you have been notified of the change, as required by the 1940 Act and we have obtained any necessary regulatory approvals.

We may establish new Investment Divisions and/or eliminate one or more Investment Divisions when marketing, tax, investment, or other conditions make it appropriate. We may decide whether or not the new Investment Divisions should be made available to existing policyowners.

If we make a substitution or change to the Investment Divisions, we may change your policy to reflect such substitution or change. We also reserve the right to: (a) operate the Separate Account as a management company under the 1940 Act, (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 Account, as permitted by law.

Reinvestment

We automatically reinvest all dividends and capital gains distributions from Eligible Portfolios in additional shares of the distributing Portfolio at their net asset value on the date the dividends or distributions are paid.

Changing the Face Amount of Your Policy

You can request an increase in the Face Amount of your policy (Face Amount increases are not allowed on ACSV policies for the first ten years) if all of the following conditions are met:

 

  the Primary Insured is still living;

 

  the Primary Insured is age 65 or younger;

 

  the increase you are requesting is at least $5,000 or more;

 

  the requested increase will not cause the policy’s Face Amount to exceed our maximum limit on the risk we retain, which we set at our discretion; and;

 

 

you submit a written application signed by the insured and the policyowner to either your registered representative or to VPSC at one of the service addresses listed on the first page of the VUL Provider prospectus (or any other address we indicate to you in writing) along with satisfactory evidence of

 

3


  insurability.

We can limit any increase in the Face Amount of your policy.

You can request a decrease in the Face Amount of your policy if all of the following conditions are met:

 

  the insured is still living;

 

  the decrease you are requesting will not reduce the policy’s Face Amount below the minimum Face Amount; and

 

  you submit a written application signed by the insured to VPSC at one of the service addresses listed on the first page of the VUL Provider prospectus (or any other address we indicate to you in writing).

We may limit any decrease in the Face Amount of your policy.

Additional Information About the Amount in the Separate Account: Valuation of Accumulation Units

The value of an accumulation unit on any Valuation Day equals the value of an accumulation unit on the preceding Valuation Day multiplied by the net investment factor. We calculate a net investment factor for the period from the close of the New York Stock Exchange on the immediately preceding Valuation Day to its close on the current Valuation Day using the following formula:

(a/b)

    Where: a = the sum of:

 

  (1) the net asset value of the Fund share held in the Separate Account for that Investment Division at the end of the current Valuation Day, plus

 

  (2) the per share amount of any dividends or capital gains distributions made by the Fund for shares held in the Separate Account for that Investment Division if the ex-dividend date occurs during such period; and

b = the net asset value of the Fund share held in the Separate Account for that Investment Division at the end of the preceding Valuation Day.

The net investment factor may be greater or less than one. Therefore, the value of an accumulation unit may increase or decrease.

Additional Benefits Through Riders and Options

The following riders and options are (or have been) available with this policy, and a description of each is provided in the current prospectus:

Guaranteed Insurability Rider

Insurance Exchange Rider

Life Extension Benefit Rider

Living Benefits Rider

Monthly Deduction Waiver Rider

Spouse’s Paid-Up Insurance Purchase Option Rider

Term Insurance Benefit Rider

Riders and options are subject to regulatory approval in each jurisdiction and may not be available in all jurisdictions. In addition, the rider name and the requirements for any rider may vary by jurisdiction. You should contact your registered representative to determine whether a rider or option you are considering is available in your jurisdiction. Additional information for specific riders and options appears below.

There may be an additional charge for a rider.

 

4


Guaranteed Insurability Rider

Scheduled option dates are the policy anniversaries on which the Primary Insured attains each of the following ages: 22, 25, 28, 31, 34, 37, 40, 43, and 46. An alternative option date is the Monthly Deduction Day on or following the date that is three months after any of these events:

 

  the marriage of the Primary Insured;

 

  the birth of a living child to the Primary Insured; or

 

  the legal adoption of a child by the Primary Insured.

If elected, the new policy or increase in Face Amount will take effect as of a scheduled or alternative option date. This date always will be a Monthly Deduction Day. When one of the events that would trigger an alternative option date occurs, we will automatically provide term insurance for any period before or after a scheduled option date. If you purchase additional insurance coverage on an alternative option date, you may not purchase additional insurance coverage on the next scheduled option date.

In order to exercise this rider’s benefit on an option date, the rider must be in effect on that date. The minimum amount of additional insurance coverage that you can purchase on each option date is $10,000 and the maximum amount is the lesser of $100,000 or a multiple of the policy’s Face Amount based on the Primary Insured’s age when the policy was Issued, The multiples are set forth below:

 

Age At Issue

   Multiple  

18-21

     5 times Face Amount   

22-37

     2 times Face Amount   

38-43

     1 times Face Amount   

This rider will end on the policy anniversary on which the Primary Insured is age 46. However, if any of the events that trigger an alternative option date occurs within 3 months before that anniversary, you will continue to have the right to purchase additional Insurance coverage until that option date. We will provide the automatic term insurance coverage up to that option date as well.

Insurance Exchange Rider

When an exchange is made to a new policy the Cash Value of your policy will be transferred to the new policy and become the Cash Value for the new policy. However, the Cash Surrender Value under the new policy may be different since surrender charges will be based on the new insured’s age and gender. Please note that in order to exercise the Insurance Exchange Rider, you must send a completed Insurance Exchange Rider form to VPSC at one of the addresses listed on the first page of the prospectus (or any other address we indicate to you in writing).

The maximum Face Amount of the new policy is the lesser of the Face Amount of the original policy on the Policy Date or the Face Amount of the original policy on the date of the exchange.

Before we can issue the new policy, you must provide us with evidence of insurability on the new insured and have an insurable interest in the new insured. The Policy Date and the Issue Date of the new policy will be the date on which the policy is exchanged. The new cost of insurance rates, premium payments and charges will be based on the new insured’s age, gender, and risk classification at the time the exchange occurs. However, surrender charges on the new policy will be measured from the Policy Date of the original policy.

Under certain circumstances, you may be required to make a payment in order to exercise the exchange rider:

 

  (1) If the Cash Surrender Value of the new policy will exceed the Cash Surrender Value of the original policy, then a payment equal to 103% of the difference between these two values is required.

 

  (2) If the Cash Surrender Value of the new policy after the exchange would be zero or lower, then a payment in an amount sufficient to keep the new policy in effect for two months following the date of exchange is required.

 

5


This payment will be treated as a premium payment and will be applied to your policy.

The IRS has ruled that an exchange of policies pursuant to this type of rider does not qualify as a tax-deferred exchange under IRC Section 1035. Accordingly, the exercise of your rights under this rider will result in a taxable event. You will be required to include in gross income an amount equal to the gain in the policy. The exercise of your rights under this rider also may result in the new policy’s classification as a modified endowment contract, as discussed in the prospectus. You should consult your tax adviser about the potential adverse tax consequences of exercising your rights under this rider.

Life Extension Benefit Rider

The cost of this rider is calculated as a monthly per thousand charge for the base policy. The percentage is shown on the Policy Data Page. This will be deducted from the policy’s Cash Value on each Monthly Deduction Day and continuing until the policy anniversary on which the Primary Insured is age 100. If the policy is still in effect when the Primary Insured is age 100, the assets of your policy invested in the Separate Account will be transferred to a cash management Investment Division. Thereafter, transfers can only be made between this Investment Division and the Fixed Account. All other riders attached to this policy will end.

To cancel this rider, you must send a signed written notice in a form acceptable to us to VPSC at one of the addresses listed on the first page of the prospectus (or any other address we indicate to you in writing). This rider will end on the next Monthly Deduction Day following receipt of your request.

Living Benefits Rider

You can elect to receive an accelerated death benefit of 25%, 50%, 75%, or 100% of certain eligible proceeds from your Policy Proceeds. We will pay you an amount equal to the results of the following calculation:

 

Calculation Steps            

Step 1

 

Eligible Proceeds X Elected percentage

Step 2

 

Results of Step 1 X Interest factor (varies)

Step 3

 

Result of Step 1 – Result of Step 2

Step 4

 

Result of Step 3 – Unpaid Loan – Administrative Fee

If you accelerate less than 100% of the eligible proceeds, the remaining Face Amount of your policy after we pay this benefit must be at least $50,000. We do not permit any subsequent acceleration.

Minimum accelerated benefit amount: $25,000

Maximum accelerated benefit amount: $250,000 (total for all of your NYLIAC and affiliated companies’ policies).

When we make a payment under this rider we will reduce your policy’s Face Amount, Surrender Charge Premium, rider death benefits, monthly deductions, Cash Value, and any unpaid policy loan based on the percentage you elected. We will deduct an administrative fee of up to $150 at the time you exercise the rider.

Amounts received under this rider generally will be excludable from your gross income under IRC Section 101(g). The exclusion from gross income will not apply, however, if you are not the insured or if you do not

 

6


have an insurable interest in the life of the insured either because the insured is your director, officer, or employee or because the insured has a financial interest in a business of yours.

In some cases, there may be a question as to whether a life insurance policy that has an accelerated living benefit rider can meet certain technical aspects of the definition of a “life insurance contract” under the IRC. We reserve the right (but we are not obligated) to modify the rider to conform to any requirements the IRS may enact.

Monthly Deduction Waiver Rider

You must provide proof that the Primary Insured has been totally disabled for at least six consecutive months before we will waive any monthly deduction charges. We will waive the monthly deduction charges as long as the disability continues. From time to time we may require proof that the insured is totally disabled. We will pay for any medical examination necessary in connection with such proof.

In addition, the following special rules apply:

 

  If the total disability begins on or before the policy anniversary on which the Primary Insured is age 60 and continues to the policy anniversary on which the insured is age 65, we will waive the monthly deduction charges under this policy for the remainder of the time that the policy is in effect. We will not require any further proof of disability.

 

  If the total disability begins after the policy anniversary on which the Primary Insured is age 60 but before age 65, we will waive the monthly deduction charges, as long as the disability continues, until the policy anniversary on which the Primary Insured is age 65.

We will not waive the monthly deduction charges for any disability that begins on or after the policy anniversary on which the Primary Insured is age 65.

In the event of the total disability (as defined in the rider), we will waive the following deductions from Cash Value on each Monthly Deduction Day:

 

  the monthly cost of insurance for the base policy;

 

  the monthly cost of riders, if any;

 

  the monthly contract charge;

 

  the monthly per thousand charge, if any

 

  the monthly Mortality and Expense Risk charge.

Spouse’s Paid-Up Insurance Purchase Option Rider

The maximum face amount of the spouse’s new paid-up whole life policy is the lesser of:

 

  The maximum amount of the Policy Proceeds payable under this policy; or

 

  $5,000,000.

For Policies Issued Prior to May 13, 2005

If the Primary Insured’s spouse dies at the same time as the Primary Insured or within 90 days after the Primary Insured’s death and does not exercise the option under this rider, we will pay a benefit to the spouse’s estate equal to the maximum amount of insurance coverage that could have been purchased under this rider, minus the premium payment that would have been required for that insurance (cannot exceed maximum of $5,000,000).

For Policies Issued On or After May 13, 2005

If the Primary Insured’s spouse dies at the same time as the Primary Insured or within 30 days after the Primary Insured’s death and does not exercise the option under this rider, we will pay a benefit to the spouse’s estate equal to the maximum amount of insurance coverage that could have been purchased under this rider,

 

7


minus the premium payment that would have been required for that insurance (cannot exceed maximum of $2,500,000).

If someone other than the spouse (including a trust) is the owner and beneficiary under the policy, that person can also exercise the option and purchase a paid-up whole life policy on the life of the spouse. The policyowner must have an insurable interest in the life of the spouse, and the spouse must consent in writing to the issuance of the new insurance.

Term Insurance Benefit Rider

The minimum amount of term insurance that you can apply for under this rider is $25,000. The term insurance under this rider will end when the Primary Insured dies. The term insurance under this rider also will end if the base policy ends. In no event will this rider continue beyond the policy anniversary on which the Primary Insured is age 100.

Options Available at No Additional Charge

Dollar Cost Averaging

Dollar Cost Averaging is a systematic method of investing which allows you to purchase shares of the Investment Divisions at regular intervals in fixed dollar amounts so that the cost of your shares is averaged over time and over various market cycles. The main objective of Dollar Cost Averaging is to achieve an average cost per share that is lower than the average price per share in a fluctuating market. Because you transfer the same dollar amount to a given Investment Division with each transfer, you purchase more units in an Investment Division if the value per unit is low and fewer units if the value per unit is high. Therefore, you may achieve a lower than average cost per unit if prices fluctuate over the long term. Similarly, for each transfer out of an Investment Division, you sell more units in an Investment Division if the value is low and fewer units if the value per unit is high. Dollar Cost Averaging does not assure growth or protect against a loss in declining markets. Because it involves continuous investing regardless of price levels, you should consider your financial ability to continue investing during periods of low price levels.

If you decide to use the Dollar Cost Averaging feature, we will ask you to specify:

 

  (1) the dollar amount you want to have transferred (minimum transfer: $100);

 

  (2) the Investment Division you want to transfer money from;

 

  (3) the Investment Divisions and/or Fixed Account you want to transfer money to;

 

  (4) the date on which you would like the transfers to be made, within limits; and

 

  (5) how often you would like the transfers made: monthly, quarterly, semiannually, or annually.

You may not make Dollar Cost Averaging transfers from the Fixed Account, but you can make Dollar Cost Averaging transfers into the Fixed Account. In addition, you cannot make transfers into the DCA Plus Account. Transfers out of the DCA Plus Account are subject to the DCA Plus Program (see below).

We will make Dollar Cost Averaging transfers on the date you specify, or if the date you specify is not a Business Day, on the next Business Day. You can specify any day of the month other than the 29th, 30th or 31st of the month. To process a Dollar Cost Averaging transfer you must send a written request, in a form acceptable to us, to VPSC at one of the addresses listed on the first page of the prospectus (or by any other method we make available or any other address we indicate to you in writing). NYLIAC must receive the request in writing no later than five (5) Business Days prior to the date the transfer(s) are scheduled to begin. If your request for this option is received less than five (5) Business Days prior to the date you request it to begin, the transfer(s) will begin on the date you have specified in the month following receipt of your request.

The minimum Cash Value required to elect this option is $2,500. We will suspend this feature automatically if the Cash Value is less than $2,000 on a transfer date. Once the Cash Value equals or exceeds $2,000, the Dollar Cost Averaging transfers will resume automatically as last requested.

 

8


However, once all money has been transferred to the Investment Divisions of your choice, or the individual separate account fund balance is less than $100.00, the Dollar Cost Averaging Plan will cease. A new request will be required to resume this feature.

You may cancel the Dollar Cost Averaging feature at any time. To cancel the Dollar Cost Averaging feature, you must send a written cancellation request in a form acceptable to us to VPSC at one of the addresses listed on the first page of the prospectus (or by any other method we make available or any other address we indicate to you in writing). You may not elect Dollar Cost Averaging if you have chosen Automatic Asset Rebalancing. However, you have the option of alternating between these two policy features. Dollar Cost Averaging is available when the DCA Plus Program is in place, but funds in the DCA Plus Account are not eligible for Dollar Cost Averaging.

DCA Plus Account (May Be Discontinued At Any Time)

This feature permits you to set up automatic dollar cost averaging using a 12-month DCA Plus Account and is only available at policy issue. The DCA Plus Account will earn a fixed interest rate. This fixed interest rate will be different and generally should earn a higher rate than the Fixed Account. The guaranteed minimum interest rate is the same as Fixed Account’s minimum interest rate (3% for Variable Universal Life Provider). You can request DCA Plus in addition to our existing options.

In order to elect DCA Plus, you must allocate a minimum of $1,000 of your initial premium to the DCA Plus Account. If you do not allocate the minimum amount to the DCA Plus Account, the premium amount will be automatically applied to the Investment Divisions and/or the Fixed Account that you have specified to receive transfers from the DCA Plus Account. You must specify the Investment Divisions into which transfers from the DCA Plus Account are to be made. Amounts in the DCA Plus Account will be transferred to the Investment Divisions within a maximum of 12 monthly transfers. These monthly transfers will begin on a date selected by you. You cannot select the 29th, 30th or 31st as a date for these transfers. Transfers will be made on the same day or on the next Business Day (if the day is not a Business Day) each month for a 12-month period. The amount of transfer will be calculated at the time of the scheduled transfer based on the number of remaining monthly transfers and the remaining value in the DCA Plus Account. For example, the amount of the first monthly transfers our of the DCA Plus Account will equal 1/12 of the value of the DCA Plus Account on the date of the transfer. The amount of the remaining transfers will equal 1/11, 1/10, 1/9, 1/8, 1/7, 1/6, 1/5, 1/4, 1/3, 1/2, and the balance, respectively, of the value of the DCA Plus Account on the date of each transfer.

Any subsequent premium allocated to DCA Plus that we receive during the 12 months of DCA Plus will be added to the existing balance in the DCA Plus Account and be subsequently transferred out in accordance with the remaining transfers. These subsequent premium contributions will be credited with the current interest rate for the DCA Plus Account in effect on the Business Day the premium is received. Interest rates for subsequent premium payments into the Fixed Account and DCA Plus Account may be different from the rate applied to prior premium payments made into the Fixed Account or DCA Plus Account. Amounts in the DCA Plus Account only earn the DCA Plus Account interest rate when they are in the DCA Plus Account waiting to be transferred to the Investment Divisions. Because the entire initial premium is not in the DCA Plus Account for the full year, the annual effective rate will not be achieved. Only new premium contributions can be added to the DCA Plus Account while active. Transfers into the DCA Plus Account are not permitted. The entire value of the DCA Plus Account will be transferred out during the 12 month period or sooner if the balance falls below $100.00. If on any given month, the amount of a transfer would leave a balance of less than $100.00 in the DCA Plus Account, the entire balance will be transferred out at this point. Once the balance of the DCA Plus Account reaches zero, DCA Plus ends. If an additional premium payment is allocated to the DCA Plus Account, after the duration period has expired or the DCA Plus Account balance has reached zero, the premium contribution will be allocated to the DCA Plus destination funds and you will be notified that your allocations should be changed to reflect the end of DCA Plus.

You can make partial withdrawals, loans, and transfers (in addition to the automatic transfers described above) from the DCA Plus Account. Loans from the DCA Plus Account will be repaid to the Fixed Account.

You may cancel the DCA Plus Account at any time. To cancel the DCA Plus Account, you must send a written cancellation request in a form acceptable to us to VPSC at one of the addresses listed on the first page

 

9


of the prospectus (or any other address we indicate to you in writing). Use of the DCA Plus Account does not assure growth or protect against loss in declining markets. Assets in our General Account support the DCA Plus Account.

Automatic Asset Rebalancing

This option allows you to maintain a set investment mix. For example, you could specify that 50% of the amount you have in the Investment Divisions of the Separate Account be allocated to a particular Investment Division, and the other 50% be allocated to another Investment Division. Over time, performance variations in each of these Investment Divisions would cause this balance to shift. If you elect the Automatic Asset Rebalancing (AAR) feature, we will automatically rebalance the amount you have in the Separate Account among the Investment Divisions you have selected so that they are invested in the percentages you specify. Values in the Fixed Account and DCA Plus/Extra Account are exclude from AAR.

We will make AAR transfers either quarterly, semi-annually or annually, but not on a monthly basis, based on your Policy Anniversary Date. If your Policy Anniversary Date is on the 29th, 30th or 31st of a month, the rebalancing transfer will occur on the 28th of the month. Your AAR will be cancelled if a premium allocation change or fund transfer is submitted on your behalf and the AAR is not also modified at the time to be consistent with your fund transfer and premium allocation changes. To process AAR transfers, you must send a written request in a form acceptable to VPSC, or by any other method we make available, at one of the addresses listed on the first page of the Prospectus (or any other addresses we indicate to you in writing). NYLIAC must receive the request in writing no later than five (5) Business Days prior to the date the transfer(s) are scheduled to begin. If your request for this option is received less than five (5) Business Days prior to the date you request it to begin, the transfer(s) will begin on the date you have specified in the month following receipt of your request.

The minimum Separate Account Value is $2,500. We will suspend this feature automatically if the Separate Account Value is less than $2,000 on a rebalancing date. Once the Separate Account Value equals or exceeds this amount, AAR will resume automatically as scheduled. There is no minimum amount that you must allocate among Investment Divisions for this feature.

You can cancel or modify the AAR feature at any time. To cancel or modify the AAR feature, you may call us at 1-800-598-2019 or send a written cancellation request in a form acceptable to VPSC at one of the addresses listed on the first page of the Prospectus (or any other address we indicate to you in writing). You cannot elect AAR if you have chosen Dollar Cost Averaging. However, you have the option of alternating between the two features. AAR is available when the DCA Plus Program is in place but funds in the DCA Plus Account are not eligible for AAR.

Interest Sweep

You can choose to make Interest Sweep transfers out of the Fixed Account if the amount in the Fixed Account is at least $2,500. We will make all Interest Sweep transfers on the date you specify or, if the date you specify is not a Business Day, on the next Business Day. You can specify any day of the month to make these automatic transfers, other than the 29th, 30th, or 31st of the month. We will not process an Interest Sweep transfer unless we have received a written request, in a form acceptable to us, at VPSC at one of the addresses listed on the first page of the prospectus (or by any other method we make available or any other address we indicate to you in writing). NYLIAC must receive the request in writing not later than five (5) Business Days prior to the date the transfer(s) are scheduled to begin. If your request for this option is received less than five (5) Business Days prior to the date you request it to begin, the transfer(s) will begin on the date you have specified in the month following receipt of your request.

You cannot choose the Interest Sweep feature if you have instructed us to pay any part of your policy charges from the Fixed Account. If you want to elect the Interest Sweep feature and you want to allocate your charges, you must allocate your charges to the MainStay VP Cash Management Investment Division.

You can request Interest Sweep in addition to either the Dollar Cost Averaging or Automatic Asset Rebalancing feature. If an Interest Sweep transfer is scheduled for the same day as a Dollar Cost Averaging or Automatic Asset Rebalancing transfer, we will process the Interest Sweep transfer first.

 

10


If an Interest Sweep transfer would cause more than the greater of: (i) $5,000 or (ii) 20% of the amount you have in the Fixed Account at the beginning of the Policy Year to be transferred from the Fixed Account, we will not process the transfer and we will suspend the Interest Sweep feature. If the amount you have in the Fixed Account is less than $2,000, we will automatically suspend this feature. Once the amount you have in the Fixed Account equals or exceeds $2,000, the Interest Sweep feature will resume automatically as scheduled. You can cancel the Interest Sweep feature at any time by written request or by any other method we make available. To cancel the Interest Sweep feature, you must send a written cancellation request in a form acceptable to us to VPSC at one of the addresses listed on the first page of the prospectus (or any other address we indicate to you in writing) or by any other method we make available. Interest Sweep is available when DCA Plus is in place, but funds in the DCA Plus Account are not eligible for Interest Sweep.

 

11


Examples of IRC Section 7702 on Life Insurance Benefits

Under this policy, you can choose from different Life Insurance Benefit Options. The following are standardized examples of how the choice of the Guideline Premium Test (GPT) or the Cash Value Accumulation Test (CVAT) can impact the Life Insurance Benefit.

LIFE INSURANCE BENEFIT EXAMPLES

EXAMPLES

(Effect of IRC Section 7702 on Life Insurance Benefit)

 

LIFE INSURANCE BENEFIT OPTION 1

Example 1:

Female Nonsmoker, Age 45 at death;

7702 Test: GPT

 

     Policy A     Policy B  

(1) Face Amount

   $ 100,000      $ 100,000   

(2) Cash Value

   $ 40,000      $ 50,000   

(3) IRC Sec. 7702 Percentage On Date of Death

     215     215

(4) Cash Value multiplied by 7702 percentage

   $ 86,000      $ 107,500   

(5) Death Benefit = Greater of (1) or (4)

   $ 100,000      $ 107,500   

Example 2:

Female Nonsmoker, Age 45 at death;

7702 Test: CVAT

 

     Policy A     Policy B  

(1) Face Amount

   $ 100,000      $ 100,000   

(2) Cash Value

   $ 25,000      $ 45,000   

(3) IRC Sec. 7702 Percentage On Date of Death

     337     337

(4) Cash Value multiplied by 7702 percentage

   $ 84,250      $ 151,650   

(5) Death Benefit = Greater of (1) or (4)

   $ 100,000      $ 151,650   

LIFE INSURANCE BENEFIT OPTION 2

Example 1:

Female Nonsmoker, Age 45 at death;

7702 Test: GPT

 

     Policy A     Policy B  

(1) Face Amount

   $ 100,000      $ 100,000   

(2) Cash Value

   $ 40,000      $ 90,000   

(3) IRC Sec. 7702 Percentage On Date of Death

     215     215

(4) Cash Value multiplied by 7702 percentage

   $ 86,000      $ 193,500   

(5) Death Benefit = Greater of (1) + (2) or (4)

   $ 140,000      $ 193,500   

Example 2:

Female Nonsmoker, Age 45 at death;

7702 Test: CVAT

 

     Policy A     Policy B  

(1) Face Amount

   $ 100,000      $ 100,000   

(2) Cash Value

   $ 25,000      $ 45,000   

(3) IRC Sec. 7702 Percentage On Date of Death

     337     337

(4) Cash Value multiplied by 7702 percentage

   $ 84,250      $ 151,650   

(5) Death Benefit = Greater of (1) + (2) or (4)

   $ 125,000      $ 151,650   
 

 

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LIFE INSURANCE BENEFIT OPTION 3

Example 1:

Female Nonsmoker, Age 45 at death;

7702 Test: GPT

 

     Policy A     Policy B  

(1) Face Amount

   $ 100,000      $ 100,000   

(2) Adjusted Total Premium

   $ 25,000      $ 25,000   

(3) Cash Value

   $ 50,000      $ 75,000   

(4) IRC Sec. 7702 Percentage On Date of Death

     215     215

(5) Cash Value multiplied by 7702 percentage

   $ 107,500      $ 161,250   

(6) Death Benefit = Greater of (1) + (2) or (5)

   $ 125,000      $ 161,250   

Example 2:

Female Nonsmoker, Age 45 at death;

7702 Test: CVAT

 

     Policy A     Policy B  

(1) Face Amount

   $ 100,000      $ 100,000   

(2) Adjusted Total Premium

   $ 20,000      $ 20,000   

(3) Cash Value

   $ 30,000      $ 40,000   

(4) IRC Sec. 7702 Percentage On Date of Death

     337     337

(5) Cash Value multiplied by 7702 percentage

   $ 101,100      $ 134,800   

(6) Death Benefit = Greater of (1) + (2) or (5)

   $ 120,000      $ 134,800   
 

 

 

13


ADDITIONAL INFORMATION ABOUT CHANGING OPTIONS

You can change your Life Insurance Benefit Option. The following examples demonstrate the impact this change can have on your Life Insurance Benefit.

 

Change From Option 1 To Option 2

 

Cash Value

   $ 200,000   

Face Amount before option change

   $ 1,000,000   

Face Amount after option change ($1,000,000 - $200,000)

   $ 800,000   

Life Insurance Benefit immediately before and after Option Change

   $ 1,000,000   

Change From Option 3 To Option 1

 

Adjusted Total Premium

   $ 100,000   

Cash Value

   $ 150,000   

Face Amount before option change

   $ 1,000,00   

Face Amount after option change ($1,000,000 + $100,000)

   $ 1,100,000   

Life Insurance Benefit immediately before and after Option Change

   $ 1,100,000   

Change From Option 3 To Option 2

Cash Value is less than Adjusted Total Premium

 

Adjusted Total Premium

   $ 250,000   

Cash Value

   $ 200,000   

Face Amount before option change

   $ 1,100,000   

Face Amount after option change ($1,000,000 + $50,000)

   $ 1,050,000   

Life Insurance Benefit immediately before and after Option Change

   $ 1,250,000   

Change From Option 2 To Option 1

 

Cash Value

   $ 150,000   

Face Amount before option change

   $ 1,000,000   

Face Amount after option change ($1,000,000 + $150,000)

   $ 1,150,000   

Life Insurance Benefit immediately before and after Option Change

   $ 1,150,000   

Change From Option 3 To Option 2

Cash Value is greater than Adjusted Total Premium

 

Adjusted Total Premium

   $ 100,000   

Cash Value

   $ 200,000   

Face Amount before option change

   $ 1,000,000   

Face Amount after option change ($1,000,000 - $100,000)

   $ 900,000   

Life Insurance Benefit immediately before and after Option Change

   $ 1,100,00   
  
 

 

14


DISTRIBUTION AND COMPENSATION ARRANGEMENTS

NYLIFE Distributors, the underwriter and distributor of the policies, is registered with the SEC and FINRA as a broker-dealer. The firm is an indirect wholly-owned subsidiary of NYLIC, and an affiliate of NYLIAC. Its principal business address is 169 Lackawanna Avenue, Parsippany, New Jersey 07054.

The policies were sold by registered representatives of NYLIFE Securities, a broker-dealer that is an affiliate of NYLIFE Distributors, and by registered representatives of unaffiliated broker-dealers. Your registered representative is also a licensed insurance agent with NYLIC. 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 NYLIC or its affiliates and products provided by other companies.

The selling broker-dealer, and in turn your registered representative, will 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 received by your registered representative will vary depending on the policy that he or she sells, on sales production goals, and on the specific payment arrangements of the relevant broker-dealer. Differing compensation arrangements have the potential to influence the recommendation made by your registered representative or broker-dealer.

The maximum commissions payable to a broker-dealer in the first 30 years are equivalent to the present value of an annual commission rate for 30 years of 4.6% per year. (This figure is a percentage of planned annual premiums of $10,000 and assumes a discount rate of 6%. Additional assumptions for the VUL Provider product are Male issue age 40, issued Preferred, with a planned annual premium of $10,000 and an initial face amount of $250,000.) Broker-dealers receive commission not to exceed 50% of the premiums paid up to a policy’s Target Premium in Policy Year 1, 8% in Policy Year 2, 7% in Policy Years 3-10, 3.5% in Policy Years 11-15, and 3% in Policy Years 16-30, plus 3.0% of premiums paid in excess of such amount in Policy Years 1-30.

The “Target Premium” is used in the calculation of the maximum commission payable and based on the insured’s age at the inception of the policy, gender, and the face amount of the policy. Broker-dealers may also receive an allowance for expenses that ranges generally from 0% to 41% of first year premiums.

The total commissions paid during the fiscal year ended December 31, 2014, 2013 and 2012 were $404,123, $482,308 and $771,890, respectively. NYLIFE Distributors did not retain any of these commissions.

NYLIC also has other compensation programs where registered representatives, managers, and employees involved in the sales process receive additional compensation related to the sale of products manufactured and issued by NYLIC or its affiliates. NYLIFE Securities registered representatives who are members of the General Office management team receive compensation based on a number of sales-related incentive programs designed to compensate for education, supervision, training, and recruiting of agents.

Unaffiliated broker-dealers may receive sales support for products manufactured and issued by NYLIC or its affiliates from Brokerage General Agents (“BGAs”) who are not employed by NYLIC. BGAs receive commissions on the policies based on a percentage of the commissions the registered representative receives and an allowance for expenses based on first year premiums paid.

NYLIFE Securities registered representatives can qualify to attend NYLIC-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 NYLIC depends on the sale of products manufactured and issued by NYLIC or its affiliates.

NYLIAC has discontinued sales of these policies. Premium payments on existing policies, however, are accepted on a continuous basis.

 

15


UNDERWRITING A POLICY

The underwriting of a policy determines: (1) whether the policy application will be approved or disapproved; and (2) into what premium class the insured should be placed. Risk factors that are considered for these determinations include: (a) the insured’s age; (b) the insured’s health history; (c) whether the insured smokes or not; and (d) the amount of insurance coverage requested on the policy application. As risk factors are added (i.e., higher age, smoker, poor health history, higher insurance coverage) the amount of the premium required for an approved policy will increase.

In the case where a policy’s Face Amount of coverage is increased, premiums and Cash Values are allocated among the original and the incremental contracts based upon their relative surrender charges. For monthly deductions, Cash Values are allocated based on the earliest layer(s) of coverage first.

 

16


ADDITIONAL INFORMATION ABOUT CHARGES

The following example reflects how charges can impact a policy.

EXAMPLE

This example assumes a Male insured, issue age 40, Preferred rating, a scheduled annual premium of $10,000, an initial face amount of $250,000, and a selection of Life Insurance Benefit Option 2 by the policyowner. It also assumes current charges and a 6% hypothetical gross annual investment return, which results in a 5.06% net annual investment return. It also assumes the policy is in its first Policy Year. There is no guarantee that the current charges illustrated below will not change.

 

PREMIUM

   $ 10,000.00   

Less sales expense charge(1)

     499.75   

Less state premium tax charge (2%)

     200.00   

Less Federal tax charge (1.25%) (if applicable)

     125.00   
  

 

 

 

NET PREMIUM

   $ 9,175.25   

Plus net investment performance for
one year (earned from the Investment Divisions and/or the Fixed Account)

     439.80   

Less total annual monthly contract charge(2)

     360.00   

Less total annual monthly cost of insurance charge (varies monthly)

     266.10   

Less annual monthly cost of riders(3)

     0.00   

Less total annual Mortality and Expense Risk charge (based on the Separate Account Value)(4)

     62.76   

Less monthly per thousand Face Amount charge

     210.00   
  

 

 

 

CASH VALUE

   $ 8,716.20   

Less surrender charge(5)
(if applicable)

     5,000.00   

CASH SURRENDER VALUE
(as of the end of the first Policy Year)

   $ 3,716.20   

 

You choose the amount of premium you intend to pay and the frequency that you intend to make these payments. We call this your planned premium. Any additional premium payments you make are called unplanned premiums

We allocate your net premium to the Investment Divisions and/or the Fixed Account based on your instructions.

 

 

 

Cash Value may be used to determine the amount of your Life Insurance Benefit as well as the Net Cash Value and Cash Surrender Value of your policy.

We may assess a surrender charge when you make a Face Amount decrease, partial withdrawal, or full surrender in the first ten Policy Years, or within ten years after you increase the Face Amount.

The amount of loans, withdrawals and surrenders you can make is based on your policy’s Cash Surrender Value. Your policy will terminate if your Net Cash Value is insufficient to pay your policy’s monthly charges.

 

 

 

(1) For details about how we calculate the sales expense charge for your policy, please refer to the Table of Fees and Expenses in the prospectus.
(2) We currently deduct a monthly contract charge of $30 per month from a policy in its first Policy Year. For a policy in a later Policy Year, we currently expect to deduct a monthly contract charge of $10 per month.
(3) This example assumes you have not chosen any riders.
(4) For details about how we calculate the Mortality and Expense Risk charge for your policy, please refer to the Table of Fees and Expenses in the prospectus.
(5) If you surrender your policy in the first Policy Year, we will include an additional contract charge in the surrender charge we deduct from your policy. For details, please refer to the Table of Fees and Expenses in the prospectus.

 

17


The following is additional information about specific charges that can be associated with your policy.

Deductions from Premiums

Sales expense charge

We deduct a sales expense charge from each premium you pay to partially cover our expenses of selling the policy to you. The amount of the sales expense charge in a Policy Year is not necessarily related to our actual expenses for that particular year. To the extent that sales expenses are not covered by the sales expense charge and the surrender charge, they will be recovered from the NYLIAC surplus, including any amounts derived from the Mortality and Expense Risk charge, the charge for cost of insurance protection, or the monthly per thousand Face Amount charge. The sales expense charge we deduct is a percentage of the premium you pay. This percentage varies depending on whether the total premium you have paid in any given Policy Year is above or below the Target Premium for your policy.

State premium tax charge

Some jurisdictions impose a tax on the premiums insurance companies receive from their policyowners currently ranging from 0% to 3.5% of premium payments (the rate may be higher in certain U.S. possessions). We deduct a charge of 2% of all premiums we receive to cover these state premium taxes. This charge may not reflect the actual premium tax charged in your state. We may increase the amount we deduct as a state premium tax charge to reflect changes in the law. Our right to increase this charge is limited in some jurisdictions by law.

Charges for Taxes

We impose a Federal tax charge equal to 1.25% of premiums received under the policy to compensate us for taxes we have to pay under Internal Revenue Code (“IRC”) Section 848 in connection with our receipt of premiums. No other charge is currently made on the Separate Account for our Federal income taxes that may be attributable to the Separate Account. In the future, we may impose a charge for our Federal income taxes that are attributable to the Separate Account. In addition, depending on the method of calculating interest on amounts allocated to the Fixed Account and/or DCA Plus Account, we may impose a charge for the policy’s share of NYLIAC’s Federal income taxes attributable to the Fixed Account and/or DCA Plus Account.

Under current laws, we may incur state or local taxes other than premium taxes (including income, franchise and capital taxes) in several states. At present, these taxes are not significant. If there is a material change in applicable state or local tax laws, we reserve the right to charge the Separate Account for the portion of such taxes, if any, attributable to the Separate Account or the policies.

 

18


Transaction Charges

Surrender Charges

 

  Charges in Policy Years 1-10—The Surrender Charge we deduct is the lesser of 1 or 2:

 

  1. 50% of the total premiums you have paid under the policy; or

 

  2. A percentage of the Surrender Charge Premium (as shown in the table below for the applicable Policy Year). The Surrender Charge Premium is shown on your Policy Data Page. The Surrender Charge we deduct if you surrender your policy or decrease the Face Amount of your policy is described below.

 

     Percentage  

Policy Year

   Applied  

1

     100

2

     95

3

     89

4

     84

5

     78

6

     73

7

     67

8

     60

9

     54

10

     47

 

Example: Assume that a policyowner (a) has a policy with a Surrender Charge Premium of $12,976, (b) has paid $10,000 of premiums under the policy, (c) has not increased the Face Amount of the policy, and (d) surrenders the policy in the third Policy Year. The surrender charge for the policy would be the lesser of (i) 89% of the Surrender Charge Premium ($11,549) or (ii) 50% of the total premiums paid ($5,000). In this case, the surrender charge would be $5,000.

 

  Additional Contract Charge on a Surrender or Lapse in the First Policy Year—If you surrender your policy during the first Policy Year, we will deduct an additional contract charge when you surrender your policy. This charge also will apply if the policy lapses during the first Policy Year and is reinstated subsequently. This additional charge equals (a-b) x c where:

 

   a    =    the monthly contract charge for the first Policy Year;
   b    =    the monthly charge for subsequent Policy Years; and
   c    =    the number of Monthly Deduction Days that fall during the first Policy Year, between the day you surrender your policy (or the date your policy lapsed) and the first anniversary of your Policy Date (or the date of reinstatement).

This charge will not exceed $220.

 

  Surrender Charge Schedule After Face Amount Increases—If you increase your policy’s Face Amount (other than the increase that results from a change in your Life Insurance Benefit option), we will apply a new surrender charge schedule to the amount of the increase in the Face Amount. This schedule will start on the day we process your request. The Surrender Charge Premium we use under this schedule will be based on the insured’s age on the most recent policy anniversary at the time of the increase. The original surrender charge schedule will continue to apply to the original Face Amount of your policy. If you have made multiple increases to the Face Amount of your policy, and later decide to decrease the Face Amount of your policy or surrender it, we will calculate the surrender charge in the following order:

 

  (1) based on the surrender charge associated with the last increase in Face Amount;

 

  (2) based on each prior increase, in the reverse order that the increases occurred; and

 

19


  (3) based on the initial Face Amount.

 

  Surrender Charges on Face Amount Decreases—If you decrease the Face Amount of your policy, we will deduct a surrender charge, if applicable. This charge will equal the difference between the surrender charge that we would have charged if you had surrendered your entire policy before the decrease and the surrender charge that we would charge had you surrendered your entire policy after the decrease. We will not impose a surrender charge on a decrease or termination of any rider.

EXAMPLE

 

Face Amount Prior to Decrease

   $ 500,000   

Amount of Decrease

   $ 100,000   

Face Amount after Decrease

   $ 400,000   

Surrender Charge on Face Amount prior to Decrease ($500,000)

   $ 1,280   

Less Surrender Charge on Face
Amount after Decrease ($400,000)

   $ 1,030   

Surrender Charge Deducted

   $ 250   

 

  Partial Withdrawal Surrender Charge—If the partial withdrawal (including a periodic partial withdrawal) results in a decrease to your policy’s Face Amount, we will deduct a Surrender Charge (as described above).

 

  Transfer Charge—We may impose a charge of $30 per transfer for each transfer after the first twelve in any Policy Year.

Deductions from Cash Value

Charge for Cost of Insurance Protection

The cost of insurance charge is calculated by multiplying the monthly cost of insurance rate that applies to the insured at that time by the Net Amount at Risk on the Monthly Deduction Day and adding any applicable flat extra charge (which might apply to certain insureds based on our underwriting). The Net Amount at Risk is based on the difference between the current Life Insurance Benefit of your policy divided by 1.00327 and the policy’s Cash Value. Your cost of insurance charge will vary from month to month depending on the changes in the Net Amount at Risk as well as the cost of insurance rate. We expect to profit from this charge. Profits derived from this charge can be used for any corporate purpose. We calculate the cost of insurance separately for the initial face amount. If you request and we approve an increase in your policy’s Face Amount, then a different rate class (and therefore cost of insurance rate) may apply to the increase, based on the insured’s age and circumstances at the time of the increase.

Mortality and Expense Risk Charge

We assume a mortality risk that the group of lives we have insured under our policies will not live as long as we expected. In addition, we assume an expense risk that the cost of issuing and administering the policies we have sold will be greater than we have estimated. On each Monthly Deduction Day, we deduct a Mortality and Expense Risk charge based on the Separate Account Value as of that day. This charge varies based on the Separate Account Value and the policy duration. This charge will never be more than, on an annual basis, 1.0% of the Separate Account Value. We may use any profit derived from the charge for any corporate purpose, including any distribution expenses not covered by the sales expense charge.

Monthly Contract Fee

On each Monthly Deduction Day, we deduct a contract fee. In Policy Year 1, this fee will not exceed $35 per month. In Policy Years 2 and beyond, this fee will not exceed $15 per month.

 

20


• Per Thousand Charge

On each Monthly Deduction Day, we deduct a per thousand Face Amount charge that is guaranteed not to exceed $0.07 per $1,000 of coverage.

• Rider Charges

On each Monthly Deduction Day, we deduct any applicable charges for any optional riders you have chosen.

LOANS

You can borrow up to the greater of:

 

  I. 90% of the Cash Surrender Value of your policy less, in the first Policy Year, the amount of any additional contract charge, which would apply if you were to fully surrender your policy during that time, or

 

  II. ((100% – a) x b) – c, where:

a = the current loan interest rate;

b = the policy’s Cash Surrender Value; and

c = the sum of three months of Monthly Deductions.

Assuming that you have not reached this maximum, you may obtain additional loans during the life of your policy.

Currently, the effective annual loan interest rate is 4% during the first 10 Policy Years and 3% beginning in Policy Year 11. If the interest is not paid, it is withdrawn on a pro rata basis across all Investment Divisions.

SURRENDER OF YOUR POLICY

Cash Surrender Value and Net Cash Value are significant for 2 reasons:

 

  Loans and Partial Surrenders: You can take loans and partial surrenders from your policy based on the amount of the policy’s Cash Surrender Value.

 

  Keeping Your Policy in Effect: Your policy may lapse without value if the Net Cash Value is insufficient to pay the monthly policy charges. Therefore, while premium payments are flexible, you may need to make additional premium payments so that the Net Cash Value of your policy is sufficient to pay the charges needed to keep your policy in effect.

FINANCIAL STATEMENTS

The consolidated balance sheet of NYLIAC as of December 31, 2014 and 2013, 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, 2014 included in this SAI have been so included in reliance on the report of PricewaterhouseCoopers LLP, 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, 2014 and the statements of operations and of changes in net assets and the financial highlights for each of the periods indicated in this SAI have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

 

21


NYLIAC Variable Universal Life Separate Account-I

Financial Statements

 

F-1


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities

As of December 31, 2014

 

 

MainStay VP
Balanced—

Initial Class

 

MainStay VP
Bond—

Initial Class

 

MainStay VP

Cash

Management—

Initial Class

 

MainStay

VP Common
Stock—

Initial Class

 

MainStay VP
Conservative
Allocation—

Initial Class

 

MainStay VP

Convertible—

Initial Class

 

MainStay VP
Cornerstone
Growth—

Initial Class

 

MainStay VP

Eagle Small

Cap Growth—

Initial Class

  MainStay VP
Emerging
Markets
Equity—Initial
Class
  MainStay VP
Floating Rate—
Initial Class
 

MainStay VP

Government—

Initial Class

 
 

 

 

ASSETS:

Investment at net asset value

$ 14,274,410    $ 35,546,541    $ 41,076,948    $ 104,023,763    $ 15,669,414    $ 48,846,917    $ 191,418,990    $ 49,746,982    $ 38,890,712    $ 15,790,489    $ 18,378,033   

Dividends due and accrued

            356                                    54,216        

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

  1,784      7,985      (37,435   26,507      920      5,495      11,206      (8,293   3,283      (515   1,465   

Net receivable from (payable to) the Fund for shares sold or purchased

  (1,784   (7,985   37,079      (26,507   (920   (5,495   (11,206   8,293      (3,283   (53,701   (1,465

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

  95      342      641      1,417      149      467      2,854      517      323      103      191   

Administrative charges

  11      36      55      160      15      35      365      49      31      10      21   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net assets

$ 14,274,304    $ 35,546,163    $ 41,076,252    $ 104,022,186    $ 15,669,250    $ 48,846,415    $ 191,415,771    $ 49,746,416    $ 38,890,358    $ 15,790,376    $ 18,377,821   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding

  949,260      2,448,384      41,073,078      3,742,399      1,322,798      3,643,765      6,506,074      3,730,644      4,705,501      1,744,523      1,633,567   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 15.04    $ 14.52    $ 1.00    $ 27.80    $ 11.85    $ 13.41    $ 29.42    $ 13.33    $ 8.26    $ 9.05    $ 11.25   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total units outstanding

  742,191      1,605,443      32,539,253      3,214,022      935,316      1,702,250      8,387,776      3,753,189      4,661,497      1,141,564      910,769   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $14.16 to $19.75      $10.70 to $28.16      $1.00 to $1.51      $20.59 to $53.59      $12.24 to $17.27      $13.73 to $37.09      $12.71 to $32.94      $13.15 to $13.41      $8.26 to $8.42      $10.93 to $14.29      $10.45 to $24.69   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 10,894,520    $ 35,705,636    $ 41,112,799    $ 65,143,918    $ 15,568,276    $ 39,102,084    $ 146,300,539    $ 37,791,645    $ 46,532,692    $ 15,895,761    $ 19,072,618   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Not all investment divisions are available under all policies.

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

 

F-2


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

 

MainStay VP
Growth
Allocation—

Initial Class

 

MainStay VP
High Yield
Corporate
Bond—

Initial Class

 

MainStay VP
ICAP Select
Equity—

Initial Class

 

MainStay

VP Income
Builder—

Initial Class

 

MainStay VP
International
Equity—

Initial Class

 

MainStay

VP Janus
Balanced—

Initial Class

 

MainStay

VP Large

Cap Growth—

Initial Class

 

Mainstay VP
Marketfield—

Initial Class

  MainStay VP
MFS® Utilities—
Initial Class
 

MainStay

VP Mid Cap
Core—

Initial Class

 

MainStay VP
Moderate
Allocation—

Initial Class

 
 

 

 

ASSETS:

Investment at net asset value

$ 48,088,023    $ 130,500,293    $ 146,520,912    $ 65,269,115    $ 45,210,531    $ 137,765,309    $ 48,109,085    $ 1,162,572    $ 35,335,066    $ 105,581,652    $ 41,705,941   

Dividends due and accrued

                                                      

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

  2,685      11,894      (14,732   4,863      7,375      (7,465   6,146      1,168      8,329      2,029      (151,877

Net receivable from (payable to) the Fund for shares sold or purchased

  (2,685   (11,894   14,732      (4,863   (7,375   7,465      (6,146   (1,168   (8,329   (2,029   151,877   

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

  270      1,181      1,467      841      364      1,545      395      5      215      701      317   

Administrative charges

  26      130      150      107      40      124      27           21      63      36   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net assets

$ 48,087,727    $ 130,498,982    $ 146,519,295    $ 65,268,167    $ 45,210,127    $ 137,763,640    $ 48,108,663    $ 1,162,567    $ 35,334,830    $ 105,580,888    $ 41,705,588   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding

  3,966,118      13,264,410      7,735,515      3,771,835      3,384,634      10,493,888      2,140,282      118,364      2,633,420      6,671,512      3,466,456   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 12.12    $ 9.84    $ 18.94    $ 17.30    $ 13.36    $ 13.13    $ 22.48    $ 9.82    $ 13.42    $ 15.83    $ 12.03   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total units outstanding

  2,822,307      4,042,123      6,589,742      2,299,027      2,053,098      10,127,533      2,432,760      127,278      2,408,786      3,097,393      2,420,391   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $16.54 to $17.33      $12.78 to $42.97      $15.40 to $24.55      $13.69 to $38.40      $10.76 to $27.33      $13.49 to $13.78      $14.48 to $23.69      $9.10 to $9.14      $14.48 to $14.77      $31.32 to $36.05      $12.94 to $17.72   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 38,522,566    $ 122,478,073    $ 91,670,585    $ 55,914,545    $ 44,399,781    $ 107,491,695    $ 31,741,672    $ 1,224,900    $ 30,149,865    $ 74,850,811    $ 39,084,048   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-3


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

 

MainStay VP
Moderate

Growth
Allocation—

Initial Class

 

MainStay

VP PIMCO

Real Return—

Initial Class

 

MainStay

VP S&P 500
Index—

Initial Class

 

MainStay

VP T. Rowe Price
Equity Income—

Initial Class

 

MainStay VP
Unconstrained
Bond—

Initial Class

 

MainStay

VP U.S.

Small Cap—

Initial Class

 

MainStay VP
Van Eck Global

Hard Assets—

Initial Class

 

Alger Capital
Appreciation
Portfolio—

Class I-2

 

AllianceBernstein
VPS International
Value Portfolio—

Class A

 

AllianceBernstein

VPS Small/Mid

Cap Value

Portfolio—

Class A

 

American
Century

Investments® VP

Inflation

Protection
Fund—

Class II

 
 

 

 

ASSETS:

Investment at net asset value

$ 66,849,485    $ 9,465,491    $ 304,366,514    $ 78,796,849    $ 6,120,554    $ 25,660,865    $ 37,010,720    $ 1,700,423    $ 285    $ 8,836,652    $ 285,276   

Dividends due and accrued

                                                      

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

  215,133      896      115,919      2,576      4,285      (968   10,353                (62,423     

Net receivable from (payable to) the Fund for shares sold or purchased

  (215,133   (896   (115,919   (2,576   (4,285   968      (10,353             62,423        

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

  417      56      3,244      596      31      162      207                52        

Administrative charges

  46      5      370      49      3      12      21                4        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net assets

$ 66,849,022    $ 9,465,430    $ 304,362,900    $ 78,796,204    $ 6,120,520    $ 25,660,691    $ 37,010,492    $ 1,700,423    $ 285    $ 8,836,596    $ 285,276   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding

  5,232,166      1,088,073      7,249,315      5,670,741      604,752      1,897,575      4,592,275      23,832      21      402,578      27,457   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 12.78    $ 8.70    $ 41.99    $ 13.90    $ 10.12    $ 13.52    $ 8.06    $ 71.35    $ 13.53    $ 21.95    $ 10.39   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total units outstanding

  3,814,311      966,869      10,223,122      5,245,457      539,734      1,231,156      4,552,785      45,884      28      480,450      19,051   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $13.69 to $17.89      $9.66 to $9.86      $19.12 to $57.09      $14.85 to $15.15      $11.19 to $11.40      $20.37 to $21.11      $8.02 to $8.18      $16.95 to $40.31      $10.14 to $10.14      $17.55 to $18.91      $11.52 to $15.19   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 55,550,438    $ 10,959,713    $ 176,144,788    $ 59,436,558    $ 6,299,730    $ 17,042,570    $ 44,945,678    $ 1,348,108    $ 271    $ 7,704,972    $ 305,119   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-4


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

 

American Century
Investments® VP
International
Fund—

Class II

  American
Century
Investments® VP
Value Fund—
Class II
 

American
Funds IS®

New

World Fund®

Class 2

 

BlackRock®
Global Allocation
V.I. Fund—

Class III

 

BlackRock®
High Yield V.I.
Fund—

Class I

  Columbia
Variable
Portfolio—Small
Cap Value
Fund—Class 2
  Delaware VIP®
Diversified
Income Series—
Standard Class
  Delaware VIP®
Emerging
Markets Series—
Standard Class
 

Delaware

VIP®
International
Value Equity
Series—

Standard

Class

 

Delaware VIP®
Small Cap

Value Series—

Standard

Class

 

Delaware VIP®
Value Series—

Standard Class

 
 

 

 

ASSETS:

Investment at net asset value

$ 1,954,712    $ 1,961,197    $ 1,174,718    $ 8,899,526    $ 576,952    $ 19,484    $ 89,966    $ 1,645,078    $ 10,572    $ 4,303,478    $ 52,516   

Dividends due and accrued

                      2,629                                 

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

            1,961      13,541      (306             2,186           5,773        

Net receivable from (payable to) the Fund for shares sold or purchased

            (1,961   (13,541   (2,323             (2,186        (5,773     

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

            4      35      4                8           25        

Administrative charges

                 3                     1           2        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net assets

$ 1,954,712    $ 1,961,197    $ 1,174,714    $ 8,899,488    $ 576,948    $ 19,484    $ 89,966    $ 1,645,069    $ 10,572    $ 4,303,451    $ 52,516   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding

  196,059      208,195      57,191      628,051      77,532      1,063      8,299      84,190      962      106,971      1,796   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 9.97    $ 9.42    $ 20.54    $ 14.17    $ 7.44    $ 18.33    $ 10.84    $ 19.54    $ 10.99    $ 40.23    $ 29.24   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total units outstanding

  83,720      67,772      126,862      748,162      58,081      1,397      7,586      149,860      1,015      292,714      2,870   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $23.35 to $23.35      $28.94 to $28.94      $9.23 to $9.27      $11.78 to $12.00      $9.91 to $9.95      $13.95 to $13.95      $11.86 to $11.86      $9.45 to $11.08      $10.42 to $10.42      $14.54 to $15.09      $18.30 to $18.30   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 1,601,923    $ 1,178,906    $ 1,294,021    $ 9,538,614    $ 594,607    $ 19,555    $ 89,803    $ 1,754,784    $ 10,480    $ 4,048,435    $ 40,065   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-5


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

 

  Deutsche Small
Cap Index VIP—
Class A
 

Deutsche Small
Mid Cap

Value VIP—

Class A

 

DFA VA

Global Bond

Portfolio

  DFA VA
International
Small Portfolio
  DFA VA
International
Value Portfolio
  DFA VA Short-
Term Fixed
Portfolio
  DFA VA U.S.
Large Value
Portfolio
  DFA VA U.S.
Targeted Value
Portfolio
 

Dreyfus IP
Technology
Growth
Portfolio—

Initial Shares

 

Dreyfus VIF
Opportunistic
Small Cap
Portfolio—

Initial Shares

 

Fidelity® VIP
Contrafund®
Portfolio—

Initial Class

 
 

 

 

ASSETS:

Investment at net asset value

$ 28,236    $ 4,151,394    $ 19,372    $ 40,848    $ 49,618    $ 42,460    $ 92,727    $ 68,863    $ 18,853,631    $ 2,573,297    $ 228,028,879   

Dividends due and accrued

                                                      

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

       4,751                                    (4,082        8,909   

Net receivable from (payable to) the Fund for shares sold or purchased

       (4,751                                 4,082           (8,909

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

       23                                    113           2,152   

Administrative charges

       3                                    8           218   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net assets

$ 28,236    $ 4,151,368    $ 19,372    $ 40,848    $ 49,618    $ 42,460    $ 92,727    $ 68,863    $ 18,853,510    $ 2,573,297    $ 228,026,509   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding

  1,630      233,354      1,809      3,693      4,230      4,171      4,037      3,773      1,010,912      53,857      6,103,493   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 17.32    $ 17.79    $ 10.71    $ 11.06    $ 11.73    $ 10.18    $ 22.97    $ 18.25    $ 18.65    $ 47.78    $ 37.36   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total units outstanding

  1,836      250,128      1,837      3,246      4,042      4,214      5,538      4,228      821,893      114,784      6,659,486   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $15.38 to $15.38      $16.05 to $16.81      $10.54 to $10.54      $12.59 to $12.59      $12.27 to $12.27      $10.08 to $10.08      $16.74 to $16.74      $16.29 to $16.29      $18.56 to $26.35      $22.42 to $22.42      $15.73 to $47.43   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 25,415    $ 3,190,500    $ 19,724    $ 45,184    $ 52,656    $ 42,634    $ 85,381    $ 69,636    $ 13,233,719    $ 1,510,709    $ 163,320,205   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-6


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

 

Fidelity® VIP
Equity-Income
Portfolio—

Initial Class

 

Fidelity® VIP
Freedom 2020
Portfolio—

Initial Class

 

Fidelity® VIP
Freedom 2030
Portfolio—

Initial Class

 

Fidelity® VIP
Freedom 2040
Portfolio—

Initial Class

 

Fidelity® VIP
Growth
Opportunities
Portfolio—

Initial Class

 

Fidelity® VIP
Growth
Portfolio—

Initial Class

 

Fidelity® VIP
Index 500
Portfolio—

Initial Class

 

Fidelity® VIP
Investment
Grade Bond
Portfolio—

Initial Class

  Fidelity® VIP Mid
Cap Portfolio—
Initial Class
 

Fidelity® VIP
Overseas
Portfolio—

Initial Class

 

Invesco V.I.
American

Value Fund—

Series I

 
 

 

 

ASSETS:

Investment at net asset value

$ 77,773,020    $ 435,776    $ 487,396    $ 674,819    $ 254,512    $ 5,209,143    $ 13,299,771    $ 1,219,822    $ 8,038,919    $ 5,887,277    $ 1,915,892   

Dividends due and accrued

                                                      

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

  (3,790        120      (1,745   386                     7,084      192      3,796   

Net receivable from (payable to) the Fund for shares sold or purchased

  3,790           (120   1,745      (386                  (7,084   (192   (3,796

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

  726      4      4      2      2                     17           11   

Administrative charges

  81           1                               2           1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net assets

$ 77,772,213    $ 435,772    $ 487,391    $ 674,817    $ 254,510    $ 5,209,143    $ 13,299,771    $ 1,219,822    $ 8,038,900    $ 5,887,277    $ 1,915,880   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding

  3,204,459      34,125      37,463      36,164      7,595      82,060      63,904      95,373      213,347      314,828      96,179   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 24.27    $ 12.77    $ 13.01    $ 18.66    $ 33.51    $ 63.48    $ 208.12    $ 12.79    $ 37.68    $ 18.70    $ 19.92   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total units outstanding

  3,073,453      38,465      41,501      56,223      22,383      264,150      593,101      70,007      342,150      288,648      122,864   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $15.51 to $31.73      $11.27 to $11.41      $11.67 to $11.81      $11.89 to $12.03      $11.34 to $11.39      $19.72 to $19.72      $16.77 to $22.47      $11.86 to $17.74      $12.93 to $40.32      $11.54 to $20.41      $15.41 to $16.38   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 68,418,259    $ 431,240    $ 486,715    $ 672,746    $ 241,678    $ 3,012,969    $ 7,467,154    $ 1,208,534    $ 6,745,023    $ 4,870,816    $ 1,821,830   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-7


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

  Invesco V.I.
Global Real
Estate Fund—
Series I
Invesco V.I.
International
Growth Fund—
Series I

Janus Aspen
Enterprise

Portfolio—

Institutional
Shares

Janus Aspen
Forty Portfolio—

Institutional
Shares

Janus Aspen
Global Research

Portfolio—

Institutional
Shares

LVIP Baron
Growth
Opportunities
Fund—

Service Class

MFS®
International
Value
Portfolio—

Initial Class

MFS® Investors
Trust Series—

Initial Class

MFS® New
Discovery
Series—

Initial Class

MFS® Research
Bond Series—

Initial Class

MFS® Research
Series—

Initial Class

 

 

ASSETS:

                     

Investment at net asset value

  $ 37,658     $ 10,416,194     $ 532,266     $ 13,024     $ 94,491,119     $ 9,390     $ 4,431,374     $ 614,648     $ 5,283,310     $ 85,405     $ 1,008,794  

Dividends due and accrued

                                                                 

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

          7,641                   334             4,716       868       37             296  

Net receivable from (payable to) the Fund for shares sold or purchased

          (7,641 )                 (334 )           (4,716 )     (868 )     (37 )           (296 )

LIABILITIES:

                     

Liability to New York Life Insurance and Annuity Corporation for:

                     

Mortality and expense risk charges

          56                   1,202             32       1       14             5  

Administrative charges

          6                   108             3             1             1  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total net assets

  $ 37,658     $ 10,416,132     $ 532,266     $ 13,024     $ 94,489,809     $ 9,390     $ 4,431,339     $ 614,647     $ 5,283,295     $ 85,405     $ 1,008,788  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total shares outstanding

    2,184       298,713       8,618       323       2,279,609       200       203,927       20,212       323,731       6,326       34,654  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value per share (NAV)

  $ 17.24     $ 34.87     $ 61.76     $ 40.27     $ 41.45     $ 47.03     $ 21.73     $ 30.41     $ 16.32     $ 13.50     $ 29.11  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total units outstanding

    2,710       859,496       15,927       822       5,162,652       551       324,968       43,972       297,066       7,104       64,594  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Variable accumulation unit value (lowest to highest)

    $13.90 to $13.90       $11.48 to $12.68       $16.13 to $34.57       $15.85 to $15.85       $14.34 to $25.73       $17.04 to $17.04       $13.50 to $14.51       $10.94 to $23.10       $13.32 to $26.42       $12.02 to $12.02       $14.82 to $20.52  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Identified cost of investment

  $ 34,853     $ 9,125,884     $ 398,423     $ 13,737     $ 59,295,457     $ 8,168     $ 4,182,008     $ 536,442     $ 5,393,969     $ 84,957     $ 929,329  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-8


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

 

 

MFS® Value
Series—

Initial Class

 

Neuberger
Berman AMT

Mid Cap

Growth
Portfolio—

Class I

 

PIMCO VIT
Foreign Bond
Portfolio
(U.S. Dollar-

Hedged)—

Institutional
Class

 

PIMCO VIT

Global Bond

Portfolio
(Unhedged)—

Administrative
Class

 

PIMCO VIT Low
Duration
Portfolio—

Administrative
Class

 

PIMCO VIT

Total Return
Portfolio—

Administrative

Class

 

PIMCO VIT

Total Return
Portfolio—

Institutional

Class

  Royce Micro-Cap
Portfolio—
Investment Class
 

T. Rowe Price
Blue Chip

Growth Portfolio

  T. Rowe Price
International
Stock Portfolio
  T. Rowe Price
Limited-Term
Bond Portfolio
 
 

 

 

ASSETS:

Investment at net asset value

$ 5,111    $ 2,843,280    $ 843,552    $ 294,138    $ 353,429    $ 2,017,785    $ 559,419    $ 16,955,163    $ 40,209    $ 18,787    $ 604,270   

Dividends due and accrued

            1,925      576      554      4,485      1,202                     512   

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

       10,899      2,898                     1,095      1,539                  

Net receivable from (payable to) the Fund for shares sold or purchased

       (10,899   (4,823   (576   (554   (4,485   (2,297   (1,539             (512

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

       8      5                     3      91                  

Administrative charges

       1      1                          9                  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net assets

$ 5,111    $ 2,843,271    $ 843,546    $ 294,138    $ 353,429    $ 2,017,785    $ 559,416    $ 16,955,063    $ 40,209    $ 18,787    $ 604,270   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding

  251      116,052      77,390      24,614      33,405      180,159      49,948      1,491,211      1,941      1,231      123,826   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 20.34    $ 24.50    $ 10.90    $ 11.95    $ 10.58    $ 11.20    $ 11.20    $ 11.37    $ 20.72    $ 15.26    $ 4.88   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total units outstanding

  309      173,513      78,532      18,302      27,540      122,081      54,696      1,044,949      2,340      1,630      43,456   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $16.55 to $16.55      $13.59 to $30.04      $10.71 to $10.76      $16.08 to $16.08      $12.84 to $12.84      $11.66 to $16.83      $10.20 to $10.24      $15.64 to $16.51      $17.18 to $17.18      $11.53 to $11.53      $10.50 to $14.14   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 4,346    $ 3,137,131    $ 822,731    $ 307,728    $ 350,666    $ 2,017,399    $ 558,648    $ 15,229,631    $ 36,844    $ 17,947    $ 617,974   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-9


NYLIAC VUL Separate Account-I

Statement of Assets and Liabilities (Continued)

As of December 31, 2014

  T. Rowe Price
New America
Growth Portfolio
 

The Merger

Fund VL

 

UIF Emerging
Markets Debt
Portfolio—

Class I

 

UIF U.S. Real
Estate
Portfolio—

Class I

 

Van Eck VIP
Multi-Manager
Alternatives
Fund—

Initial Class

 

Victory VIF
Diversified

Stock Fund—

Class A

 
 

 

 

ASSETS:

Investment at net asset value

$ 2,814    $ 36,649    $ 579,574    $ 19,165,382    $ 2,426,741    $ 2,423   

Dividends due and accrued

$    $    $    $    $    $   

Net receivable from (payable to) New York Life Insurance and Annuity Corporation

$    $    $    $ 84,171    $ 2,440    $   

Net receivable from (payable to) the Fund for shares sold or purchased

$    $    $    $ (84,171 $ (2,440 $   

LIABILITIES:

Liability to New York Life Insurance and Annuity Corporation for:

Mortality and expense risk charges

                 99      6        

Administrative charges

                 9             
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total net assets

$ 2,814    $ 36,649    $ 579,574    $ 19,165,274    $ 2,426,735    $ 2,423   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total shares outstanding

$ 113    $ 3,372    $ 72,902    $ 952,075    $ 240,747    $ 160   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net asset value per share (NAV)

$ 24.90    $ 10.87    $ 7.95    $ 20.13    $ 10.08    $ 15.15   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total units outstanding

$ 177    $ 3,411    $ 25,203    $ 1,197,045    $ 226,973    $ 159   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Variable accumulation unit value (lowest to highest)

  $15.87 to $15.87      $10.74 to $10.74      $23.00 to $23.00      $14.48 to $36.92      $10.19 to $11.49      $15.27 to $15.27   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Identified cost of investment

$ 2,824    $ 36,210    $ 626,616    $ 14,961,951    $ 2,359,931    $ 2,235   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Not all investment divisions are available under all policies.

 

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

 

F-10


NYLIAC VUL Separate Account-I

Statement of Operations

For the year ended December 31, 2014

 

 

MainStay VP
Balanced—

Initial

Class

 

MainStay
VP Bond—

Initial Class

 

MainStay VP
Cash
Management—

Initial Class

 

MainStay
VP

Common
Stock—

Initial Class

 

MainStay VP
Conservative
Allocation—

Initial Class

 

MainStay VP
Convertible—

Initial Class

 

MainStay

VP
Cornerstone
Growth—

Initial Class

 

MainStay

VP Eagle

Small Cap

Growth—

Initial

Class

 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 121,642    $ 711,792    $ 4,214    $ 1,252,331    $ 382,605    $ 1,555,786    $ 1,183,674    $   

Mortality and expense risk charges

  (33,442   (126,587   (121,182   (491,951   (53,110   (168,753   (1,010,560   (190,494

Administrative charges

  (3,763   (13,557   (10,921   (55,626   (5,478   (12,549   (129,137   (18,192
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  84,437      571,648      (127,889   704,754      324,017      1,374,484      43,977      (208,686
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  1,503,484      4,075,491      16,250,463      8,473,814      2,078,610      3,635,357      16,063,509      5,768,744   

Cost of investments sold

  (1,138,938   (3,930,889   (16,248,845   (6,069,706   (1,835,226   (3,303,236   (10,377,416   (4,478,451
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  364,546      144,602      1,618      2,404,108      243,384      332,121      5,686,093      1,290,293   

Realized gain distribution received

  951,098                     989,820      1,951,014      37,726,890      233,699   

Change in unrealized appreciation (depreciation) on investments

  (25,171   1,147,681      (1,618   9,927,115      (954,113   (172,408   (28,781,010   (347,102
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  1,290,473      1,292,283           12,331,223      279,091      2,110,727      14,631,973      1,176,890   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 1,374,910    $ 1,863,931    $ (127,889 $ 13,035,977    $ 603,108    $ 3,485,211    $ 14,675,950    $ 968,204   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

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

F-11


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

MainStay VP
Emerging
Markets
Equity—

Initial Class

 

MainStay
VP Floating
Rate—

Initial Class

 

MainStay VP
Government—

Initial Class

 

MainStay
VP Growth
Allocation—

Initial Class

 

MainStay VP
High Yield
Corporate
Bond—

Initial Class

 

MainStay
VP ICAP
Select
Equity—

Initial Class

  MainStay
VP Income
Builder—
Initial Class
  MainStay VP
International
Equity—
Initial Class
 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 496,223    $ 635,230    $ 576,719    $ 614,014    $ 7,884,740    $ 1,980,076    $ 3,750,041    $ 316,624   

Mortality and expense risk charges

  (137,896   (39,206   (70,939   (97,234   (460,964   (520,033   (308,406   (141,937

Administrative charges

  (13,239   (3,877   (7,549   (9,343   (50,781   (52,866   (39,195   (15,358
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  345,088      592,147      498,231      507,437      7,372,995      1,407,177      3,402,440      159,329   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  4,588,853      2,890,265      2,407,274      3,051,890      14,403,675      11,465,414      5,444,835      4,402,849   

Cost of investments sold

  (4,985,131   (2,814,012   (2,448,735   (2,483,996   (13,964,560   (8,841,111   (5,055,205   (6,176,878
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  (396,278   76,253      (41,461   567,894      439,115      2,624,303      389,630      (1,774,029

Realized gain distribution received

            60,845      2,918,710                2,692,397        

Change in unrealized appreciation (depreciation) on investments

  (5,457,640   (566,329   244,375      (1,896,761   (5,804,693   7,611,105      (1,754,907   267,685   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  (5,853,918   (490,076   263,759      1,589,843      (5,365,578   10,235,408      1,327,120      (1,506,344
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ (5,508,830 $ 102,071    $ 761,990    $ 2,097,280    $ 2,007,417    $ 11,642,585    $ 4,729,560    $ (1,347,015
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

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

F-12


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

  MainStay
VP Janus
Balanced—
Initial Class
  MainStay VP
Large Cap
Growth—
Initial Class
  Mainstay VP
Marketfield—
Initial Class(a)
  MainStay
VP MFS®
Utilities—
Initial Class
  MainStay
VP Mid Cap
Core—
Initial Class
  MainStay VP
Moderate
Allocation—
Initial Class
  MainStay VP
Moderate
Growth
Allocation—
Initial Class
  MainStay VP
PIMCO
Real Return—
Initial Class
 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 1,929,266    $    $    $ 581,615    $ 510,747    $ 911,848    $ 1,177,451    $ 82,664   

Mortality and expense risk charges

  (559,586   (138,908   (605   (72,729   (248,299   (116,491   (149,329   (21,867

Administrative charges

  (44,826   (9,496   (45   (7,213   (22,376   (13,107   (16,514   (2,186
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  1,324,854      (148,404   (650   501,673      240,072      782,250      1,011,608      58,611   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  11,442,849      4,226,738      40,532      2,225,179      10,332,568      3,469,049      4,398,353      2,059,066   

Cost of investments sold

  (8,914,998   (2,056,028   (40,502   (1,666,632   (5,129,777   (2,406,156   (3,732,746   (2,144,279
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  2,527,851      2,170,710      30      558,547      5,202,791      1,062,893      665,607      (85,213

Realized gain distribution received

  2,366,707      5,113,610           1,399,068      14,210,681      2,708,665      4,265,199      864,859   

Change in unrealized appreciation (depreciation) on investments

  4,500,908      (2,555,746   (63,496   949,878      (6,264,356   (2,866,228   (3,261,420   (623,763
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  9,395,466      4,728,574      (63,466   2,907,493      13,149,116      905,330      1,669,386      155,883   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 10,720,320    $ 4,580,170    $ (64,116 $ 3,409,166    $ 13,389,188    $ 1,687,580    $ 2,680,994    $ 214,494   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

F-13


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

  MainStay VP
S&P 500
Index—
Initial Class
  MainStay
VP T. Rowe
Price Equity
Income—
Initial Class
  MainStay VP
Unconstrained
Bond—
Initial Class
  MainStay VP
U.S.
Small Cap—
Initial Class
 

MainStay
VP Van Eck
Global Hard
Assets—

Initial Class

 

Alger
Capital
Appreciation
Portfolio—

Class I-2

  AllianceBernstein
VPS International
Value Portfolio—
Class A
 

AllianceBernstein
VPS Small/Mid
Cap Value
Portfolio—

Class A

 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 4,241,487    $ 1,125,027    $ 183,739    $ 77,035    $ 180,989    $ 1,597    $ 11    $ 59,787   

Mortality and expense risk charges

  (1,134,210   (215,796   (9,017   (57,264   (93,803             (18,306

Administrative charges

  (129,224   (17,803   (853   (4,324   (9,344             (1,369
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  2,978,053      891,428      173,869      15,447      77,842      1,597      11      40,112   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  21,050,738      6,503,363      821,869      2,550,992      4,071,862      117,358      19      1,113,513   

Cost of investments sold

  (11,177,248   (4,674,531   (831,008   (1,335,952   (4,047,157   (48,115   (16   (796,502
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  9,873,490      1,828,832      (9,139   1,215,040      24,705      69,243      3      317,011   

Realized gain distribution received

       3,776,901           1,811,344           255,405           986,151   

Change in unrealized appreciation (depreciation) on investments

  22,607,463      (942,953   (138,684   (1,510,940   (8,574,442   (125,394   (33   (609,001
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  32,480,953      4,662,780      (147,823   1,515,444      (8,549,737   199,254      (30   694,161   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 35,459,006    $ 5,554,208    $ 26,046    $ 1,530,891    $ (8,471,895 $ 200,851    $ (19 $ 734,273   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

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

F-14


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

American
Century
Investments®
VP Inflation
Protection
Fund—

Class II

 

American
Century
Investments®
VP
International
Fund—

Class II

 

American
Century
Investments®
VP Value
Fund—

Class II

 

American
Funds
IS® New
World
Fund®

Class 2(a)

  BlackRock®
Global
Allocation
V.I. Fund—
Class III
  BlackRock®
High Yield
V.I. Fund—
Class I(a)
 

Columbia
Variable
Portfolio—Small
Cap Value
Fund—

Class 2

  Delaware VIP®
Diversified
Income Series—
Standard Class
 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 3,583    $ 30,849    $ 28,058    $ 10,559    $ 199,367    $ 9,973    $ 52    $ 1,010   

Mortality and expense risk charges

                 (468   (12,867   (454          

Administrative charges

                 (28   (1,176   (38          
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  3,583      30,849      28,058      10,063      185,324      9,481      52      1,010   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  16,488      369,935      295,473      39,433      822,073      39,103      98      15,942   

Cost of investments sold

  (17,212   (305,504   (186,185   (42,868   (743,202   (39,122   (91   (15,945
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  (724   64,431      109,288      (3,435   78,871      (19   7      (3

Realized gain distribution received

  6,627                11,677      767,547      3,016      1,378        

Change in unrealized appreciation (depreciation) on investments

  (921   (213,841   111,856      (121,264   (894,825   (19,997   (1,014   1,283   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  4,982      (149,410   221,144      (113,022   (48,407   (17,000   371      1,280   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 8,565    $ (118,561 $ 249,202    $ (102,959 $ 136,917    $ (7,519 $ 423    $ 2,290   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

F-15


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

  Delaware VIP®
Emerging
Markets Series—
Standard Class
 

Delaware VIP®
International
Value Equity
Series—

Standard Class

 

Delaware VIP®
Small Cap
Value Series—

Standard Class

  Delaware VIP®
Value Series—
Standard Class
 

Deutsche
Small Cap
Index VIP—

Class A

 

Deutsche
Small Mid
Cap
Value VIP—

Class A

  DFA VA
Global
Bond
Portfolio
  DFA VA
International
Small
Portfolio
 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 8,752    $ 182    $ 18,503    $ 1,136    $ 274    $ 31,828    $ 392    $ 870   

Mortality and expense risk charges

  (3,275        (7,851             (8,176          

Administrative charges

  (341        (691             (892          
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income (loss)

  5,136      182      9,961      1,136      274      22,760      392      870   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  388,070      3,778      355,818      31,121      9,694      610,905      566      45,844   

Cost of investments sold

  (362,883   (3,290   (298,596   (20,944   (7,371   (400,364   (580   (42,617
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net realized gain (loss) on investments

  25,187      488      57,222      10,177      2,323      210,541      (14   3,227   

Realized gain distribution received

  5,122           285,016           1,561      19,037      29      871   

Change in unrealized appreciation (depreciation) on investments

  (165,276   (1,515   (149,506   (3,007   (2,839   (41,095   (197   (8,053
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net gain (loss) on investments

  (134,967   (1,027   192,732      7,170      1,045      188,483      (182   (3,955
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

$ (129,831 $ (845 $ 202,693    $ 8,306    $ 1,319    $ 211,243    $ 210    $ (3,085
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Not all investment divisions are available under all policies.

 

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

F-16


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

  DFA VA
International
Value
Portfolio
  DFA VA
Short-
Term
Fixed
Portfolio
  DFA VA
U.S.
Large
Value
Portfolio
  DFA VA
U.S.
Targeted
Value
Portfolio
 

Dreyfus IP
Technology
Growth
Portfolio—

Initial Shares

 

Dreyfus VIF
Opportunistic
Small Cap
Portfolio—

Initial Shares

 

Fidelity® VIP
Contrafund®
Portfolio—

Initial Class

  Fidelity® VIP
Equity-
Income
Portfolio—
Initial Class
 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 1,965    $ 78    $ 1,614    $ 624    $    $    $ 2,119,610    $ 2,187,720   

Mortality and expense risk charges

                      (40,774        (761,312   (263,495

Administrative charges

                      (2,953        (76,950   (29,430
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  1,965      78      1,614      624      (43,727        1,281,348      1,894,795   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  5,889      303      15,571      69,412      1,684,380      74,941      14,999,845      6,355,807   

Cost of investments sold

  (4,746   (304   (11,400   (53,445   (860,940   (59,753   (11,391,746   (6,455,798
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  1,143      (1   4,171      15,967      823,440      15,188      3,608,099      (99,991

Realized gain distribution received

       23      1,611      3,297      964,080           4,447,026      1,068,621   

Change in unrealized appreciation (depreciation) on investments

  (6,617   (84   (531   (16,638   (571,135   28,687      14,756,295      3,313,079   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  (5,474   (62   5,251      2,626      1,216,385      43,875      22,811,420      4,281,709   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ (3,509 $ 16    $ 6,865    $ 3,250    $ 1,172,658    $ 43,875    $ 24,092,768    $ 6,176,504   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

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

F-17


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

Fidelity® VIP
Freedom 2020
Portfolio—

Initial Class

 

Fidelity® VIP
Freedom 2030
Portfolio—

Initial Class

 

Fidelity® VIP
Freedom 2040
Portfolio—

Initial Class

 

Fidelity® VIP
Growth
Opportunities
Portfolio—

Initial Class(a)

 

Fidelity®
VIP Growth
Portfolio—

Initial Class

 

Fidelity®
VIP Index
500
Portfolio—

Initial
Class

 

Fidelity® VIP
Investment
Grade Bond
Portfolio—

Initial Class

 

Fidelity®
VIP Mid
Cap
Portfolio—

Initial
Class

 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 7,206    $ 7,552    $ 9,903    $ 418    $ 9,584    $ 208,424    $ 26,533    $ 20,568   

Mortality and expense risk charges

  (1,161   (1,040   (840   (138                  (4,420

Administrative charges

  (125   (152   (75   (16                  (427
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  5,920      6,360      8,988      264      9,584      208,424      26,533      15,721   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  18,491      70,724      313,944      2,806      141,123      1,535,759      173,161      545,921   

Cost of investments sold

  (17,281   (64,033   (299,604   (2,619   (96,417   (1,085,839   (167,689   (450,105
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  1,210      6,691      14,340      187      44,706      449,920      5,472      95,816   

Realized gain distribution received

  4,046      6,620      9,271      173           11,571      424      155,449   

Change in unrealized appreciation (depreciation) on investments

  437      (5,432   (4,130   12,448      479,251      1,061,903      28,539      177,727   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  5,693      7,879      19,481      12,808      523,957      1,523,394      34,435      428,992   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 11,613    $ 14,239    $ 28,469    $ 13,072    $ 533,541    $ 1,731,818    $ 60,968    $ 444,713   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

F-18


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

 

Fidelity® VIP
Overseas
Portfolio—

Initial Class

  Invesco V.I.
American
Value Fund—
Series I
 

Invesco V.I.
Global Real
Estate Fund—

Series I

 

Invesco V.I.
International
Growth Fund—

Series I

  Janus Aspen
Enterprise Portfolio—
Institutional Shares
 

Janus
Aspen Forty
Portfolio—

Institutional
Shares

  Janus Aspen Global
Research Portfolio—
Institutional Shares
 

LVIP Baron
Growth
Opportunities
Fund—

Service Class

 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 85,027    $ 7,143    $ 580    $ 161,539    $ 949    $ 19    $ 1,016,617    $ 17   

Mortality and expense risk charges

       (3,244        (20,345             (436,298     

Administrative charges

       (296        (2,125             (38,898     
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income (loss)

  85,027      3,603      580      139,069      949      19      541,421      17   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  552,728      212,082      11,227      679,421      169,289      13,531      7,824,306      4,447   

Cost of investments sold

  (606,275   (151,843   (9,739   (464,326   (96,284   (10,412   (4,807,959   (3,372
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net realized gain (loss) on investments

  (53,547   60,239      1,488      215,095      73,005      3,119      3,016,347      1,075   

Realized gain distribution received

  1,621      127,520                40,613      3,465           53   

Change in unrealized appreciation (depreciation) on investments

  (564,961   (49,919   3,393      (368,819   (44,065   (5,639   2,740,070      (694
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net gain (loss) on investments

  (616,887   137,840      4,881      (153,724   69,553      945      5,756,417      434   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

$ (531,860 $ 141,443    $ 5,461    $ (14,655 $ 70,502    $ 964    $ 6,297,838    $ 451   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Not all investment divisions are available under all policies.

 

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

F-19


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

 

MFS®
International
Value
Portfolio—

Initial Class

 

MFS®
Investors
Trust
Series—

Initial Class

 

MFS® New
Discovery
Series—

Initial
Class

 

MFS®
Research
Bond
Series—

Initial Class

 

MFS®
Research
Series—

Initial
Class

 

MFS®
Value
Series—

Initial Class

 

Neuberger
Berman
AMT Mid
Cap
Growth
Portfolio—

Class I

  PIMCO VIT
Foreign Bond
Portfolio
(U.S. Dollar-
Hedged)—
Institutional
Class(a)
 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 78,209    $ 3,485    $    $ 352    $ 7,536    $ 74    $    $ 4,246   

Mortality and expense risk charges

  (10,610   (140   (5,885        (1,718        (2,612   (450

Administrative charges

  (1,121   (14   (312        (221        (245   (48
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

  66,478      3,331      (6,197   352      5,597      74      (2,857   3,748   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  310,359      51,804      973,718      710      416,023      223      552,902      51,405   

Cost of investments sold

  (251,516   (41,438   (813,569   (708   (288,630   (153   (441,624   (50,741
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  58,843      10,366      160,149      2      127,393      70      111,278      664   

Realized gain distribution received

       28,486      1,149,267           68,383      150      1,044,281      4,631   

Change in unrealized appreciation (depreciation) on investments

  (96,169   (1,056   (1,731,972   599      (104,322   210      (961,703   15,998   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  (37,326   37,796      (422,556   601      91,454      430      193,856      21,293   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 29,152    $ 41,127    $ (428,753 $ 953    $ 97,051    $ 504    $ 190,999    $ 25,041   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

F-20


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

  PIMCO VIT Global Bond
Portfolio (Unhedged)—
Administrative Class
 

PIMCO VIT
Low Duration

Portfolio—

Administrative
Class

 

PIMCO VIT
Total Return
Portfolio—

Administrative
Class

  PIMCO VIT Total
Return Portfolio—
Institutional Class(a)
  Royce Micro-
Cap
Portfolio—
Investment
Class
  T. Rowe
Price Blue
Chip
Growth
Portfolio
  T. Rowe
Price
International
Stock
Portfolio
  T. Rowe
Price
Limited-
Term
Bond
Portfolio
 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$ 8,392    $ 4,056    $ 46,728    $ 5,768    $    $    $ 202    $ 7,036   

Mortality and expense risk charges

                 (371   (34,619               

Administrative charges

                 (45   (3,306               
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income (loss)

  8,392      4,056      46,728      5,352      (37,925        202      7,036   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  143,740      24,491      421,940      13,390      1,747,346      57,597      13,283      32,557   

Cost of investments sold

  (155,776   (23,512   (414,001   (13,326   (1,082,509   (45,859   (10,245   (33,461
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net realized gain (loss) on investments

  (12,036   979      7,939      64      664,837      11,738      3,038      (904

Realized gain distribution received

  8,668                     1,343,192           107        

Change in unrealized appreciation (depreciation) on investments

  2,050      (1,952   36,255      (1,525   (2,646,743   (8,282   (3,454   (3,012
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net gain (loss) on investments

  (1,318   (973   44,194      (1,461   (638,714   3,456      (309   (3,916
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 7,074    $ 3,083    $ 90,922    $ 3,891    $ (676,639 $ 3,456    $ (107 $ 3,120   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Not all investment divisions are available under all policies.

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

F-21


NYLIAC VUL Separate Account-I

Statement of Operations (Continued)

For the year ended December 31, 2014

  T. Rowe Price
New America
Growth
Portfolio
  The Merger
Fund VL
 

UIF
Emerging
Markets
Debt
Portfolio—

Class I

 

UIF U.S.
Real Estate
Portfolio—

Class I

  Van Eck VIP
Multi-
Manager
Alternatives
Fund—
Initial Class
 

Victory
VIF
Diversified
Stock
Fund—

Class A

 
 

 

 

INVESTMENT INCOME (LOSS):

Dividend income

$    $ 473    $ 38,318    $ 232,504    $    $ 59   

Mortality and expense risk charges

                 (30,206   (2,354     

Administrative charges

                 (2,610   (43     
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income (loss)

       473      38,318      199,688      (2,397   59   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS):

Proceeds from sale of investments

  3,912      14,400      258,050      2,823,386      336,726      8,826   

Cost of investments sold

  (3,103   (13,605   (256,811   (2,040,567   (323,767   (7,316
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net realized gain (loss) on investments

  809      795      1,239      782,819      12,959      1,510   

Realized gain distribution received

  394      190      5,272           29,610        

Change in unrealized appreciation (depreciation) on investments

  (931   (806   (18,596   3,104,338      (67,619   (872
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net gain (loss) on investments

  272      179      (12,085   3,887,157      (25,050   638   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net increase (decrease) in net assets resulting from operations

$ 272    $ 652    $ 26,233    $ 4,086,845    $ (27,447 $ 697   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

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

F-22


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets

For the years ended December 31, 2014

and December 31, 2013

  MainStay VP
Balanced—
Initial Class
  MainStay VP
Bond—
Initial Class
  MainStay VP
Cash
Management—
Initial Class
  MainStay VP
Common Stock—
Initial Class
  MainStay VP
Conservative
Allocation—

Initial Class
  MainStay VP
Convertible—

Initial Class
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 84,437    $ 103,923    $ 571,648    $ 526,980    $ (127,889 $ (135,119 $ 704,754    $ 882,270    $ 324,017    $ 306,325    $ 1,374,484    $ 877,551   

Net realized gain (loss) on investments

  364,546      179,539      144,602      383,957      1,618      1,248      2,404,108      820,939      243,384      312,505      332,121      499,037   

Realized gain distribution received

  951,098                574,707                          989,820      372,497      1,951,014      2,908,939   

Change in unrealized appreciation (depreciation) on investments

  (25,171   1,950,146      1,147,681      (2,395,278   (1,618   3,306      9,927,115      24,369,396      (954,113   666,271      (172,408   5,344,414   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  1,374,910      2,233,608      1,863,931      (909,634   (127,889   (130,565   13,035,977      26,072,605      603,108      1,657,598      3,485,211      9,629,941   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  1,317,955      1,058,230      3,277,190      3,474,330      7,112,096      6,133,540      6,514,169      6,492,705      1,238,860      1,123,340      3,799,706      3,549,557   

Cost of insurance

  (795,386   (703,216   (2,202,945   (2,315,272   (4,454,654   (4,496,740   (5,679,478   (5,477,794   (948,901   (842,314   (2,651,005   (2,569,412

Policyowners’ surrenders

  (655,604   (359,268   (1,872,524   (3,574,781   (6,154,541   (6,885,123   (4,927,714   (5,168,156   (491,875   (617,762   (2,329,295   (2,564,105

Net transfers from (to) Fixed Account

  (328,381   107,220      143,710      (27,521   (1,720,581   (283,613   (1,667,936   (1,375,888   16,998      (60,153   (455,245   (582,212

Transfers between Investment Divisions

  412,696      654,527      (848,821   (1,719,327   3,331,561      1,537,953      (186,568   (883,046   377,598      895,621      380,593      (368,210

Policyowners’ death benefits

  (69,515   (48,777   (159,469   (159,274   (37,659   (270,145   (231,361   (295,534   (97,499   (51,093   (108,017   (354,593
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (118,235   708,716      (1,662,859   (4,321,845   (1,923,778   (4,264,128   (6,178,888   (6,707,713   95,181      447,639      (1,363,263   (2,888,975
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  1,256,675      2,942,324      201,072      (5,231,479   (2,051,667   (4,394,693   6,857,089      19,364,892      698,289      2,105,237      2,121,948      6,740,966   

NET ASSETS:

Beginning of period

  13,017,629      10,075,305      35,345,091      40,576,570      43,127,919      47,522,612      97,165,097      77,800,205      14,970,961      12,865,724      46,724,467      39,983,501   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 14,274,304    $ 13,017,629    $ 35,546,163    $ 35,345,091    $ 41,076,252    $ 43,127,919    $ 104,022,186    $ 97,165,097    $ 15,669,250    $ 14,970,961    $ 48,846,415    $ 46,724,467   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-23


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  MainStay VP
Cornerstone
Growth—
Initial Class
  MainStay
VP Eagle Small
Cap Growth—
Initial Class
  MainStay VP
Emerging
Markets
Equity—
Initial Class
  MainStay VP
Floating Rate—
Initial Class
  MainStay VP
Government—

Initial Class
  MainStay VP
Growth Allocation—
Initial Class
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 43,977    $ 372,327    $ (208,686 $ (160,247 $ 345,088    $ 182,227    $ 592,147    $ 616,696    $ 498,231    $ 557,952    $ 507,437    $ 293,328   

Net realized gain (loss) on investments

  5,686,093      4,702,984      1,290,293      846,405      (396,278   (299,874   76,253      158,221      (41,461   123,936      567,894      89,695   

Realized gain distribution received

  37,726,890           233,699                               60,845      35,352      2,918,710      1,782,808   

Change in unrealized appreciation (depreciation) on investments

  (28,781,010   32,919,434      (347,102   12,297,141      (5,457,640   (2,949,667   (566,329   (142,502   244,375      (1,304,980   (1,896,761   7,729,572   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  14,675,950      37,994,745      968,204      12,983,299      (5,508,830   (3,067,314   102,071      632,415      761,990      (587,740   2,097,280      9,895,403   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  15,735,184      16,473,029      3,461,857      3,534,440      4,985,201      5,372,644      1,551,596      1,405,921      1,846,480      2,107,737      6,718,465      4,938,657   

Cost of insurance

  (12,945,702   (13,380,444   (2,556,292   (2,674,142   (2,542,078   (2,879,894   (849,226   (853,479   (1,324,218   (1,461,400   (2,568,268   (2,165,934

Policyowners’ surrenders

  (10,622,734   (11,640,220   (2,867,325   (2,344,154   (2,144,767   (2,825,779   (1,308,343   (960,622   (1,288,808   (1,191,028   (2,009,576   (1,786,961

Net transfers from (to) Fixed Account

  (2,426,787   (2,639,062   (762,170   (916,620   (681,497   (659,961   (1,586   148,525      131,041      (292,220   (280,022   (88,004

Transfers between Investment Divisions

  (2,424,291   (2,167,486   (1,720,958   (2,079,279   (2,044,177   (2,307,059   216,539      896,745      (185,307   (1,768,417   961,954      941,579   

Policyowners’ death benefits

  (1,002,495   (598,835   (49,259   (69,337   (115,676   (58,574   (71,966   (51,582   (107,837   (142,510   (755   (13,167
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (13,686,825   (13,953,018   (4,494,147   (4,549,092   (2,542,994   (3,358,623   (462,986   585,508      (928,649   (2,747,838   2,821,798      1,826,170   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  989,125      24,041,727      (3,525,943   8,434,207      (8,051,824   (6,425,937   (360,915   1,217,923      (166,659   (3,335,578   4,919,078      11,721,573   

NET ASSETS:

Beginning of period

  190,426,646      166,384,919      53,272,359      44,838,152      46,942,182      53,368,119      16,151,291      14,933,368      18,544,480      21,880,058      43,168,649      31,447,076   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 191,415,771    $ 190,426,646    $ 49,746,416    $ 53,272,359    $ 38,890,358    $ 46,942,182    $ 15,790,376    $ 16,151,291    $ 18,377,821    $ 18,544,480    $ 48,087,727    $ 43,168,649   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-24


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  MainStay VP High
Yield Corporate Bond—
Initial Class
  MainStay VP ICAP
Select Equity—
Initial Class
  MainStay VP
Income Builder—
Initial Class
  MainStay VP
International

Equity—
Initial Class
  MainStay VP
Janus Balanced—
Initial Class
  MainStay VP Large
Cap Growth—
Initial Class
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 7,372,995    $ 6,986,393    $ 1,407,177    $ 1,538,967    $ 3,402,440    $ 2,319,382    $ 159,329    $ 385,624    $ 1,324,854    $ 1,265,991    $ (148,404 $ (6,817

Net realized gain (loss) on investments

  439,115      577,347      2,624,303      1,611,914      389,630      (38,225   (1,774,029   (2,114,512   2,527,851      1,426,393      2,170,710      1,975,416   

Realized gain distribution received

                      2,692,397                     2,366,707      198,214      5,113,610      224,394   

Change in unrealized appreciation (depreciation) on investments

  (5,804,693   624,811      7,611,105      31,225,852      (1,754,907   7,334,791      267,685      8,237,637      4,500,908      19,696,924      (2,555,746   10,134,287   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  2,007,417      8,188,551      11,642,585      34,376,733      4,729,560      9,615,948      (1,347,015   6,508,749      10,720,320      22,587,522      4,580,170      12,327,280   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  12,858,983      11,979,418      10,442,514      10,539,869      4,697,638      4,559,155      4,447,432      4,655,723      9,208,699      9,261,686      4,078,063      3,896,133   

Cost of insurance

  (8,320,858   (8,548,483   (7,609,238   (7,700,810   (4,037,213   (4,075,405   (2,521,497   (2,608,544   (7,470,354   (7,620,580   (2,383,460   (2,207,031

Policyowners’ surrenders

  (7,200,003   (6,878,670   (7,140,965   (7,188,059   (2,615,615   (2,892,044   (2,423,064   (3,368,149   (7,005,530   (6,681,564   (2,263,584   (2,372,605

Net transfers from (to) Fixed Account

  (1,158,451   (254,503   (1,504,620   (2,067,767   (1,281,031   (574,496   (534,849   (875,144   (2,249,767   (1,596,046   (759,791   (544,118

Transfers between Investment Divisions

  (3,956,371   (2,449,464   (2,328,616   (4,228,861   416,567      3,865,825      (1,468,723   (1,432,342   271,634      2,074,633      (173,874   (1,959,199

Policyowners’ death benefits

  (1,008,100   (459,510   (499,764   (556,507   (438,396   (265,566   (87,673   (118,603   (559,294   (580,402   (18,780   (65,724
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (8,784,800   (6,611,212   (8,640,689   (11,202,135   (3,258,050   617,469      (2,588,374   (3,747,059   (7,804,612   (5,142,273   (1,521,426   (3,252,544
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  (6,777,383   1,577,339      3,001,896      23,174,598      1,471,510      10,233,417      (3,935,389   2,761,690      2,915,708      17,445,249      3,058,744      9,074,736   

NET ASSETS:

Beginning of period

  137,276,365      135,699,026      143,517,399      120,342,801      63,796,657      53,563,240      49,145,516      46,383,826      134,847,932      117,402,683      45,049,919      35,975,183   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 130,498,982    $ 137,276,365    $ 146,519,295    $ 143,517,399    $ 65,268,167    $ 63,796,657    $ 45,210,127    $ 49,145,516    $ 137,763,640    $ 134,847,932    $ 48,108,663    $ 45,049,919   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-25


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

 

  Mainstay VP
Marketfield—

Initial Class
  MainStay VP MFS®
Utilities—

Initial Class
  MainStay VP
Mid Cap Core—
Initial Class
  MainStay VP
Moderate Allocation—
Initial Class
  MainStay VP Moderate
Growth Allocation—
Initial Class
  MainStay VP
PIMCO Real Return—
Initial Class
  MainStay VP
S&P 500 Index—
Initial Class
 
  2014(a)   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ (650 $ 501,673    $ 504,933    $ 240,072    $ 665,884    $ 782,250    $ 584,284    $ 1,011,608    $ 539,749    $ 58,611    $ 95,202    $ 2,978,053    $ 3,014,814   

Net realized gain (loss) on investments

  30      558,547      397,272      5,202,791      2,283,527      1,062,893      929,442      665,607      109,565      (85,213   43,010      9,873,490      6,990,826   

Realized gain distribution received

       1,399,068      312,232      14,210,681      5,391,299      2,708,665      1,137,301      4,265,199      1,527,427      864,859      67,234             

Change in unrealized appreciation (depreciation) on investments

  (63,496   949,878      2,825,097      (6,264,356   21,668,648      (2,866,228   3,207,108      (3,261,420   9,369,394      (623,763   (1,337,682   22,607,463      59,799,720   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  (64,116   3,409,166      4,039,534      13,389,188      30,009,358      1,687,580      5,858,135      2,680,994      11,546,135      214,494      (1,132,236   35,459,006      69,805,360   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  432,841      5,020,552      3,257,855      7,736,892      7,093,023      4,250,222      3,350,645      8,879,268      6,575,828      1,476,751      1,580,016      19,572,974      19,007,562   

Cost of insurance

  (60,951   (1,931,092   (1,412,195   (5,164,418   (4,822,504   (2,144,864   (1,867,314   (3,906,427   (3,130,935   (618,722   (706,990   (15,449,030   (15,071,722

Policyowners’ surrenders

  (3,892   (1,237,898   (1,061,232   (5,271,146   (4,479,880   (1,777,293   (1,898,559   (3,117,790   (2,623,693   (616,756   (378,462   (13,661,192   (12,643,963

Net transfers from (to) Fixed Account

  62,047      (317,288   480,373      (1,607,682   (1,563,265   1,185,611      347,222      2,268,262      196,188      101,566      124,632      (3,947,209   (3,650,612

Transfers between Investment Divisions

  796,638      3,741,308      3,066,178      (2,793,772   470,240      784,610      2,519,085      1,740,007      1,657,853      (667,082   (2,416,931   (881,048   (1,197,059

Policyowners’ death benefits

       (23,892   (61,946   (315,463   (102,685   (149,435   (14,626   (36,295   (90,004   (97,431   (18,898   (926,252   (629,706
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  1,226,683      5,251,690      4,269,033      (7,415,589   (3,405,071   2,148,851      2,436,453      5,827,025      2,585,237      (421,674   (1,816,633   (15,291,757   (14,185,500
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  1,162,567      8,660,856      8,308,567      5,973,599      26,604,287      3,836,431      8,294,588      8,508,019      14,131,372      (207,180   (2,948,869   20,167,249      55,619,860   

NET ASSETS:

Beginning of period

 

  
  26,673,974      18,365,407      99,607,289      73,003,002      37,869,157      29,574,569      58,341,003      44,209,631      9,672,610      12,621,479      284,195,651      228,575,791   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 1,162,567    $ 35,334,830    $ 26,673,974    $ 105,580,888    $ 99,607,289    $ 41,705,588    $ 37,869,157    $ 66,849,022    $ 58,341,003    $ 9,465,430    $ 9,672,610    $ 304,362,900    $ 284,195,651   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

 

F-26


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  MainStay VP T. Rowe
Price Equity Income—
Initial Class
  MainStay VP
Unconstrained
Bond—

Initial Class
  MainStay VP U.S.
Small Cap—
Initial Class
  MainStay VP Van Eck
Global Hard Assets—
Initial Class
  Alger Capital
Appreciation
Portfolio—

Class I-2
  AllianceBernstein
VPS
International
Value
Portfolio—

Class A
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 891,428    $ 688,756    $ 173,869    $ 119,825    $ 15,447    $ 102,725    $ 77,842    $ 390,408    $ 1,597    $ 4,429    $ 11    $ 22   

Net realized gain (loss) on investments

  1,828,832      1,110,849      (9,139   (4,269   1,215,040      1,183,932      24,705      (384,658   69,243      144,543      3      31   

Realized gain distribution received

  3,776,901      566,479           60      1,811,344                     255,405      138,329             

Change in unrealized appreciation (depreciation) on investments

  (942,953   15,841,818      (138,684   (21,032   (1,510,940   5,622,253      (8,574,442   4,584,081      (125,394   95,623      (33   27   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  5,554,208      18,207,902      26,046      94,584      1,530,891      6,908,910      (8,471,895   4,589,831      200,851      382,924      (19   80   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  5,650,302      5,406,207      1,444,784      279,919      2,580,046      2,205,426      5,697,747      5,751,618      40,278      47,251           1   

Cost of insurance

  (3,631,330   (3,496,937   (333,786   (126,159   (1,358,845   (1,257,718   (2,641,776   (2,706,162   (35,160   (31,830   (19   (19

Policyowners’ surrenders

  (3,932,372   (3,446,140   (188,665   (77,774   (1,337,174   (1,151,578   (1,855,397   (2,430,143   (55,775   (13,443        (164

Net transfers from (to) Fixed Account

  (966,016   (713,832   391,447      112,424      (653,870   (227,612   (782,065   (1,018,485   (21,739   8,370             

Transfers between Investment Divisions

  (1,007,833   (6,245   1,556,781      1,724,888      (57,326   163,343      (686,048   (3,050,891   212,167      (249,643          

Policyowners’ death benefits

  (209,759   (288,696   (16,354        (4,381   (25,692   (22,094   (56,678                    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (4,097,008   (2,545,643   2,854,207      1,913,298      (831,550   (293,831   (289,633   (3,510,741   139,771      (239,295   (19   (182
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  1,457,200      15,662,259      2,880,253      2,007,882      699,341      6,615,079      (8,761,528   1,079,090      340,622      143,629      (38   (102

NET ASSETS:

Beginning of period

  77,339,004      61,676,745      3,240,267      1,232,385      24,961,350      18,346,271      45,772,020      44,692,930      1,359,801      1,216,172      323      425   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 78,796,204    $ 77,339,004    $ 6,120,520    $ 3,240,267    $ 25,660,691    $ 24,961,350    $ 37,010,492    $ 45,772,020    $ 1,700,423    $ 1,359,801    $ 285    $ 323   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-27


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  AllianceBernstein
VPS Small/Mid
Cap Value
Portfolio—
Class A
  American Century
Investments® VP
Inflation

Protection
Fund—
Class II
  American Century
Investments® VP
International Fund—
Class II
  American Century
Investments®
VP Value Fund—
Class II
  American Funds
IS® New World
Fund®
Class 2
  BlackRock® Global
Allocation

V.I. Fund—
Class III
  BlackRock®
High Yield
V.I. Fund—
Class I
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014(a)   2014   2013   2014(a)  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 40,112    $ 24,007    $ 3,583    $ 4,109    $ 30,849    $ 30,473    $ 28,058    $ 24,472    $ 10,063    $ 185,324    $ 57,458    $ 9,481   

Net realized gain (loss) on investments

  317,011      446,679      (724   596      64,431      (4,754   109,288      16,527      (3,435   78,871      144,394      (19

Realized gain distribution received

  986,151      375,791      6,627      9,019                          11,677      767,547      255,736      3,016   

Change in unrealized appreciation (depreciation) on investments

  (609,001   1,265,266      (921   (36,664   (213,841   383,814      111,856      396,465      (121,264   (894,825   195,852      (19,997
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  734,273      2,111,743      8,565      (22,940   (118,561   409,533      249,202      437,464      (102,959   136,917      653,440      (7,519
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  1,236,568      938,722      15,853      16,662      160,918      196,649      128,081      66,785      263,033      1,917,197      1,393,100      111,012   

Cost of insurance

  (519,351   (435,443   (3,736   (4,469   (67,421   (66,210   (33,674   (30,682   (37,106   (636,839   (399,733   (12,820

Policyowners’ surrenders

  (438,125   (529,536   (6,017        (103,779   (118,275   (241,325        (2,011   (395,149   (1,385,155   (263

Net transfers from (to) Fixed Account

  (42,419   128,590      (4,845   (826   (70,303   (3,815   (7   7      15,365      810,648      726,367      12,218   

Transfers between Investment Divisions

  21,588      129,066      11,006      19,359      (78,068   14,351      (774   11,723      1,038,392      383,612      2,219,556      474,320   

Policyowners’ death benefits

  (1,534   (7,417             (119                       (30,652   (11,416     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  256,727      223,982      12,261      30,726      (158,772   22,700      (147,699   47,833      1,277,673      2,048,817      2,542,719      584,467   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  991,000      2,335,725      20,826      7,786      (277,333   432,233      101,503      485,297      1,174,714      2,185,734      3,196,159      576,948   

NET ASSETS:

Beginning of period

  7,845,596      5,509,871      264,450      256,664      2,232,045      1,799,812      1,859,694      1,374,397           6,713,754      3,517,595        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 8,836,596    $ 7,845,596    $ 285,276    $ 264,450    $ 1,954,712    $ 2,232,045    $ 1,961,197    $ 1,859,694    $ 1,174,714    $ 8,899,488    $ 6,713,754    $ 576,948   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

 

F-28


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

 

  Columbia
Variable
Portfolio—
Small Cap
Value Fund—
Class 2
  Delaware VIP®
Diversified
Income
Series—
Standard Class
  Delaware VIP®
Emerging

Markets Series—
Standard Class
  Delaware VIP®
International
Value Equity
Series—
Standard Class
  Delaware
VIP® Small
Cap Value
Series—
Standard
Class
  Delaware
VIP® Value
Series—
Standard Class
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 52    $ 60    $ 1,010    $ 827    $ 5,136    $ 4,704    $ 182    $ 98    $ 9,961    $ 3,990    $ 1,136    $ 890   

Net realized gain (loss) on investments

  7      253      (3   (21   25,187      1,730      488      2,033      57,222      17,931      10,177      1,811   

Realized gain distribution received

  1,378                481      5,122                     285,016      49,218             

Change in unrealized appreciation (depreciation) on investments

  (1,014   910      1,283      (1,707   (165,276   47,955      (1,515   1,006      (149,506   384,787      (3,007   12,432   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  423      1,223      2,290      (420   (129,831   54,389      (845   3,137      202,693      455,926      8,306      15,133   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  3,763      1,917      8,716      11,712      597,404      165,433      1,641      1,977      758,355      238,310      11,163      18,103   

Cost of insurance

  (534   (294   (2,262   (2,219   (149,899   (47,407   (464   (470   (203,469   (78,105   (2,883   (3,153

Policyowners’ surrenders

            (7,464   (864   (80,618   (115,586   (3,710   (1,050   (87,526   (17,422   (14,467     

Net transfers from (to) Fixed Account

  483      3,722      (1,796   2,675      230,066      106,872      235      5,655      244,965      119,145      (1,328   320   

Transfers between Investment Divisions

  7,751           46,803      2,848      211,606      732,586           (875   584,375      1,615,339      (14,589   (13,506

Policyowners’ death benefits

                           1                                 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  11,463      5,345      43,997      14,152      808,559      841,899      (2,298   5,237      1,296,700      1,877,267      (22,104   1,764   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  11,886      6,568      46,287      13,732      678,728      896,288      (3,143   8,374      1,499,393      2,333,193      (13,798   16,897   

NET ASSETS:

Beginning of period

  7,598      1,030      43,679      29,947      966,341      70,053      13,715      5,341      2,804,058      470,865      66,314      49,417   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 19,484    $ 7,598    $ 89,966    $ 43,679    $ 1,645,069    $ 966,341    $ 10,572    $ 13,715    $ 4,303,451    $ 2,804,058    $ 52,516    $ 66,314   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-29


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  Deutsche Small
Cap Index
VIP—Class A
  Deutsche
Small Mid Cap
Value VIP—
Class A
  DFA VA Global
Bond Portfolio
  DFA VA
International
Small Portfolio
  DFA VA
International
Value Portfolio
  DFA VA Short-
Term Fixed
Portfolio
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 274    $ 361    $ 22,760    $ 26,759    $ 392    $ 22    $ 870    $ 1,258    $ 1,965    $ 775    $ 78    $ 64   

Net realized gain (loss) on investments

  2,323      1,937      210,541      99,639      (14   (8   3,227      499      1,143      1,294      (1     

Realized gain distribution received

  1,561      867      19,037           29      70      871      1,719                23      21   

Change in unrealized appreciation (depreciation) on investments

  (2,839   4,457      (41,095   819,929      (197   (103   (8,053   3,284      (6,617   2,681      (84   (50
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  1,319      7,622      211,243      946,327      210      (19   (3,085   6,760      (3,509   4,750      16      35   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  8,036      7,413      558,679      432,906      2,728      1,084      9,222      10,740      16,345      16,520      8,344      12,266   

Cost of insurance

  (1,259   (1,282   (231,626   (196,776   (1,168   (824   (3,230   (2,235   (4,428   (2,956   (3,268   (2,708

Policyowners’ surrenders

  (5,665   (568   (154,952   (61,268                            (2,099          

Net transfers from (to) Fixed Account

  (396   (1,011   (17,851   52,512      5,210      2,207      177      7,397      1,267      6,619      3,474      5,509   

Transfers between Investment Divisions

  (1,967   (1,145   (77,500   148,196      7,506           (22,138   31,340      6,994           9,382        

Policyowners’ death benefits

            2,596      (14,012                                        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (1,251   3,407      79,346      361,558      14,276      2,467      (15,969   47,242      20,178      18,084      17,932      15,067   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  68      11,029      290,589      1,307,885      14,486      2,448      (19,054   54,002      16,669      22,834      17,948      15,102   

NET ASSETS:

Beginning of period

  28,168      17,139      3,860,779      2,552,894      4,886      2,438      59,902      5,900      32,949      10,115      24,512      9,410   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 28,236    $ 28,168    $ 4,151,368    $ 3,860,779    $ 19,372    $ 4,886    $ 40,848    $ 59,902    $ 49,618    $ 32,949    $ 42,460    $ 24,512   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-30


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  DFA VA U.S.
Large Value
Portfolio
  DFA VA U.S.
Targeted Value
Portfolio
  Dreyfus IP
Technology
Growth
Portfolio—
Initial Shares
  Dreyfus VIF
Opportunistic Small
Cap Portfolio—

Initial Shares
  Fidelity® VIP
Contrafund®
Portfolio—
Initial Class
  Fidelity® VIP
Equity-Income
Portfolio—

Initial Class
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 
INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 1,614    $ 941    $ 624    $ 552    $ (43,727 $ (38,276 $    $    $ 1,281,348    $ 1,341,065    $ 1,894,795    $ 1,510,595   

Net realized gain (loss) on investments

  4,171      3,942      15,967      1,700      823,440      902,569      15,188      3,586      3,608,099      2,735,014      (99,991   (144,509

Realized gain distribution received

  1,611      5,384      3,297           964,080                     4,447,026      55,823      1,068,621      4,708,632   

Change in unrealized appreciation (depreciation) on investments

  (531   6,225      (16,638   14,452      (571,135   3,614,772      28,687      806,173      14,756,295      47,499,025      3,313,079      10,504,685   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  6,865      16,492      3,250      16,704      1,172,658      4,479,065      43,875      809,759      24,092,768      51,630,927      6,176,504      16,579,403   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  23,452      27,789      13,180      20,747      1,936,725      1,754,384      28,315      50,878      15,982,187      14,657,025      5,319,709      5,235,882   

Cost of insurance

  (8,954   (6,963   (8,031   (5,635   (1,132,305   (1,032,079   (16,683   (14,749   (10,757,719   (10,192,155   (3,787,626   (3,712,702

Policyowners’ surrenders

  (7,636        (5,993        (884,964   (982,894   (34,380   (8,236   (11,168,223   (9,960,656   (3,607,274   (3,367,920

Net transfers from (to) Fixed Account

  5,975      9,266      3,835      3,650      (218,057   (134,852   225      3,577      (2,368,489   (2,226,461   (791,546   (887,123

Transfers between Investment Divisions

  2,313      (314   (14,993   20,735      (5,361   (502,775   10,379      63,223      (1,822,208   (635,259   (827,210   2,492,342   

Policyowners’ death benefits

                      (32,715   (43,159             (466,648   (447,232   (614,490   (291,703
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  15,150      29,778      (12,002   39,497      (336,677   (941,375   (12,144   94,693      (10,601,100   (8,804,738   (4,308,437   (531,224
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  22,015      46,270      (8,752   56,201      835,981      3,537,690      31,731      904,452      13,491,668      42,826,189      1,868,067      16,048,179   

NET ASSETS:

Beginning of period

  70,712      24,442      77,615      21,414      18,017,529      14,479,839      2,541,566      1,637,114      214,534,841      171,708,652      75,904,146      59,855,967   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 92,727    $ 70,712    $ 68,863    $ 77,615    $ 18,853,510    $ 18,017,529    $ 2,573,297    $ 2,541,566    $ 228,026,509    $ 214,534,841    $ 77,772,213    $ 75,904,146   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-31


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  Fidelity® VIP
Freedom 2020
Portfolio—

Initial Class
  Fidelity® VIP
Freedom 2030

Portfolio—
Initial Class
  Fidelity® VIP
Freedom 2040
Portfolio—

Initial Class
  Fidelity® VIP
Growth
Opportunities
Portfolio—

Initial Class
  Fidelity® VIP
Growth
Portfolio—
Initial Class
  Fidelity® VIP
Index 500
Portfolio—
Initial Class
 
  2014   2013(b)   2014   2013(b)   2014   2013(b)   2014(a)   2014   2013   2014   2013  
 

 

 
INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 5,920    $ 1,754    $ 6,360    $ 2,115    $ 8,988    $ 3,232    $ 264    $ 9,584    $ 12,341    $ 208,424    $ 216,450   

Net realized gain (loss) on investments

  1,210      3,105      6,691      (103   14,340      16,430      187      44,706      55,374      449,920      69,880   

Realized gain distribution received

  4,046      631      6,620      907      9,271      1,513      173           2,938      11,571      118,891   

Change in unrealized appreciation (depreciation) on investments

  437      4,100      (5,432   5,993      (4,130   7,948      12,448      479,251      1,258,710      1,061,903      2,858,637   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  11,613      9,590      14,239      8,912      28,469      29,123      13,072      533,541      1,329,363      1,731,818      3,263,858   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  71,374      10,696      122,985      14,504      220,314      27,953      24,570      6,205      5,770      132,203      83,460   

Cost of insurance

  (22,773   (5,314   (45,613   (5,507   (68,193   (18,734   (4,494   (33,355   (29,681   (155,117   (146,688

Policyowners’ surrenders

  (1,177   (93   (36,382   (332   (95,759   (1,403   (617        (209,546   (1,222,484   (188,327

Net transfers from (to) Fixed Account

  16,035      7,102      122,841      16,701      77,787      20,118      3,287      (61,303        (43,385   5,973   

Transfers between Investment Divisions

  237,011      101,708      156,558      118,485      264,737      190,405      218,692      (47,206   (10,912   285,466      (1,308,398

Policyowners’ death benefits

                                               (355     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  300,470      114,099      320,389      143,851      398,886      218,339      241,438      (135,659   (244,369   (1,003,672   (1,553,980
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  312,083      123,689      334,628      152,763      427,355      247,462      254,510      397,882      1,084,994      728,146      1,709,878   

NET ASSETS:

Beginning of period

  123,689           152,763           247,462                4,811,261      3,726,267      12,571,625      10,861,747   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 435,772    $ 123,689    $ 487,391    $ 152,763    $ 674,817    $ 247,462    $ 254,510    $ 5,209,143    $ 4,811,261    $ 13,299,771    $ 12,571,625   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014.
(b) For the period May 1, 2013 (commencement of Investment Division) through December 31, 2013.

 

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

 

F-32


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  Fidelity® VIP
Investment

Grade Bond
Portfolio—

Initial Class
  Fidelity® VIP
Mid Cap
Portfolio—
Initial Class
  Fidelity® VIP
Overseas Portfolio—
Initial Class
  Invesco V.I.
American
Value Fund—

Series I
  Invesco V.I.
Global Real
Estate Fund—
Series I
  Invesco V.I.
International

Growth Fund—
Series I
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 
INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 26,533    $ 24,790    $ 15,721    $ 26,591    $ 85,027    $ 82,146    $ 3,603    $ 3,280    $ 580    $ 1,267    $ 139,069    $ 73,894   

Net realized gain (loss) on investments

  5,472      1,263      95,816      179,461      (53,547   (253,877   60,239      34,156      1,488      3,290      215,095      233,737   

Realized gain distribution received

  424      12,715      155,449      683,058      1,621      22,519      127,520                            

Change in unrealized appreciation (depreciation) on investments

  28,539      (56,884   177,727      666,811      (564,961   1,748,751      (49,919   131,201      3,393      (3,051   (368,819   977,701   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  60,968      (18,116   444,713      1,555,921      (531,860   1,599,539      141,443      168,637      5,461      1,506      (14,655   1,285,332   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  42,169      39,632      757,441      214,723      53,165      47,536      354,493      121,254      8,738      12,588      1,941,309      1,201,841   

Cost of insurance

  (30,434   (30,980   (241,488   (105,984   (77,390   (72,765   (114,788   (48,840   (2,015   (1,730   (582,402   (422,797

Policyowners’ surrenders

  (15,504        (196,029   (379,149   (470,628   (102,474   (37,756   (2,944   (7,256   (489   (222,528   (99,089

Net transfers from (to) Fixed Account

  2,261      5,223      140,667      103,014      (7,097   (21,903   76,324      54,113      (1,457   7,088      74,057      352,304   

Transfers between Investment Divisions

  136,256      28,632      1,209,361      345,529      267,822      (383,291   513,509      354,487      (1,080   (18,079   500,213      230,763   

Policyowners’ death benefits

  (415        (341        37                               (2,707   (12,083
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  134,333      42,507      1,669,611      178,133      (234,091   (532,897   791,782      478,070      (3,070   (622   1,707,942      1,250,939   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  195,301      24,391      2,114,324      1,734,054      (765,951   1,066,642      933,225      646,707      2,391      884      1,693,287      2,536,271   

NET ASSETS:

Beginning of period

  1,024,521      1,000,130      5,924,576      4,190,522      6,653,228      5,586,586      982,655      335,948      35,267      34,383      8,722,845      6,186,574   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 1,219,822    $ 1,024,521    $ 8,038,900    $ 5,924,576    $ 5,887,277    $ 6,653,228    $ 1,915,880    $ 982,655    $ 37,658    $ 35,267    $ 10,416,132    $ 8,722,845   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-33


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  Janus Aspen
Enterprise
Portfolio—
Institutional
Shares
  Janus Aspen
Forty
Portfolio—
Institutional
Shares
  Janus Aspen
Global Research
Portfolio—

Institutional
Shares
  LVIP Baron
Growth
Opportunities
Fund—

Service Class
  MFS® International
Value Portfolio—
Initial Class
  MFS® Investors
Trust Series—
Initial Class
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 
INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 949    $ 2,880    $ 19    $ 131    $ 541,421    $ 605,509    $ 17    $ 38    $ 66,478    $ 29,272    $ 3,331    $ 2,162   

Net realized gain (loss) on investments

  73,005      79,199      3,119      973      3,016,347      1,858,466      1,075      434      58,843      15,040      10,366      516   

Realized gain distribution received

  40,613           3,465                     53      684                28,486        

Change in unrealized appreciation (depreciation) on investments

  (44,065   70,220      (5,639   4,003      2,740,070      18,656,876      (694   1,704      (96,169   332,294      (1,056   51,838   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  70,502      152,299      964      5,107      6,297,838      21,120,851      451      2,860      29,152      376,606      41,127      54,516   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  88,121      52,243      1,679      6,385      7,235,265      7,453,974      2,815      2,464      664,793      216,903      209,498      2,322   

Cost of insurance

  (16,661   (16,602   (976   (1,474   (5,378,204   (5,393,602   (534   (443   (179,751   (74,916   (37,207   (3,586

Policyowners’ surrenders

  (131,074   (159,515   (10,381        (5,135,222   (4,642,442   (3,834   (577   (171,645   (16,145   (1,799     

Net transfers from (to) Fixed Account

  (623   391      213      (770   (1,554,022   (1,225,794        (237   122,598      97,826      10,752        

Transfers between Investment Divisions

  376           (1,599   (2,420   (817,387   (1,473,702   311      (109   1,011,366      1,977,380      168,294        

Policyowners’ death benefits

  7                     (235,135   (227,015                  (4,287          
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (59,854   (123,483   (11,064   1,721      (5,884,705   (5,508,581   (1,242   1,098      1,447,361      2,196,761      349,538      (1,264
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  10,648      28,816      (10,100   6,828      413,133      15,612,270      (791   3,958      1,476,513      2,573,367      390,665      53,252   

NET ASSETS:

Beginning of period

  521,618      492,802      23,124      16,296      94,076,676      78,464,406      10,181      6,223      2,954,826      381,459      223,982      170,730   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 532,266    $ 521,618    $ 13,024    $ 23,124    $ 94,489,809    $ 94,076,676    $ 9,390    $ 10,181    $ 4,431,339    $ 2,954,826    $ 614,647    $ 223,982   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-34


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  MFS® New
Discovery Series—
Initial Class
  MFS®
Research
Bond Series—
Initial Class
  MFS® Research
Series—

Initial Class
  MFS® Value
Series—
Initial Class
  Neuberger Berman
AMT Mid Cap

Growth Portfolio—
Class I
  PIMCO VIT
Foreign Bond
Portfolio
(U.S. Dollar-
Hedged)—
Institutional
Class
  PIMCO VIT Global
Bond Portfolio
(Unhedged)—
Administrative
Class
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014(a)   2014   2013  
 

 

 
INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ (6,197 $ (3,263 $ 352    $ 99    $ 5,597    $ 1,041    $ 74    $ 27    $ (2,857 $ (2,585 $ 3,748    $ 8,392    $ 3,730   

Net realized gain (loss) on investments

  160,149      176,080      2           127,393      41,667      70      20      111,278      56,150      664      (12,036   (16,769

Realized gain distribution received

  1,149,267      37,835           37      68,383      1,685      150      7      1,044,281           4,631      8,668      2,243   

Change in unrealized appreciation (depreciation) on investments

  (1,731,972   1,288,833      599      (192   (104,322   138,216      210      530      (961,703   432,998      15,998      2,050      (20,832
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  (428,753   1,499,485      953      (56   97,051      182,609      504      584      190,999      486,563      25,041      7,074      (31,628
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  496,405      261,672      3,764      1,797      170,785      73,704      1,635      421      488,922      275,998      258,724      26,736      37,960   

Cost of insurance

  (175,684   (125,998   (764   (369   (66,340   (47,905   (193   (109   (136,359   (76,355   (30,200   (11,296   (12,912

Policyowners’ surrenders

  (186,222   (205,691             (94,252   (10,915             (63,619   (10,696   (1,192   (41,889   (1,412

Net transfers from (to) Fixed Account

  23,988      (450        2,552      12,553      456           603      (120,838   13,809      33,792      (3,219   (3,703

Transfers between Investment Divisions

  (292,877   1,483,101      73,141           93,937      (2,600   599           195,360      391,544      557,381      (684   8,191   

Policyowners’ death benefits

  (178                  (60                  (323                    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (134,568   1,412,634      76,141      3,980      116,623      12,740      2,041      915      363,143      594,300      818,505      (30,352   28,124   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  (563,321   2,912,119      77,094      3,924      213,674      195,349      2,545      1,499      554,142      1,080,863      843,546      (23,278   (3,504

NET ASSETS:

Beginning of period

  5,846,616      2,934,497      8,311      4,387      795,114      599,765      2,566      1,067      2,289,129      1,208,266           317,416      320,920   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 5,283,295    $ 5,846,616    $ 85,405    $ 8,311    $ 1,008,788    $ 795,114    $ 5,111    $ 2,566    $ 2,843,271    $ 2,289,129    $ 843,546    $ 294,138    $ 317,416   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

 

F-35


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  PIMCO VIT Low
Duration
Portfolio—
Administrative
Class
  PIMCO VIT Total
Return Portfolio—
Administrative Class
  PIMCO VIT
Total
Return
Portfolio—
Institutional
Class
  Royce Micro-Cap
Portfolio—

Investment Class
  T. Rowe Price
Blue Chip
Growth
Portfolio
  T. Rowe Price
International
Stock Portfolio
  T. Rowe Price
Limited-Term
Bond Portfolio
 
  2014   2013   2014   2013   2014(a)   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 
INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$ 4,056    $ 5,379    $ 46,728    $ 55,479    $ 5,352    $ (37,925 $ 47,672    $    $ 11    $ 202    $ 212    $ 7,036    $ 9,886   

Net realized gain (loss) on investments

  979      450      7,939      (216,570   64      664,837      490,832      11,738      1,181      3,038      150      (904   (4,735

Realized gain distribution received

                 17,912           1,343,192      454,088                107                  

Change in unrealized appreciation (depreciation) on investments

  (1,952   (6,410   36,255      75,987      (1,525   (2,646,743   2,147,624      (8,282   10,325      (3,454   2,632      (3,012   (6,938
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  3,083      (581   90,922      (67,192   3,891      (676,639   3,140,216      3,456      11,517      (107   2,994      3,120      (1,787
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  13,113      11,343      102,330      81,627      224,292      2,324,956      2,292,111      7,079      6,247      4,583      6,579      30,398      31,452   

Cost of insurance

  (18,927   (19,055   (65,262   (70,175   (28,841   (1,023,550   (1,010,605   (3,182   (1,397   (1,215   (1,240   (23,158   (23,765

Policyowners’ surrenders

       (3,509   (100,360   (20,769   (955   (666,687   (661,912   (7,602        (3,962   (495   (6,080     

Net transfers from (to) Fixed Account

  (5,437        (9,225   2,625      31,264      (45,432   (45,946   (659   (369   (4,127   300      (1,394   (299,778

Transfers between Investment Divisions

  256      (1,046   (50,028   (887,789   329,765      (978,949   (1,140,713   1,446      (1,558   (2,518   377      151,167      (69,543

Policyowners’ death benefits

                           (18,615   (14,728                       (95     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (10,995   (12,267   (122,545   (894,481   555,525      (408,277   (581,793   (2,918   2,923      (7,239   5,521      150,838      (361,634
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  (7,912   (12,848   (31,623   (961,673   559,416      (1,084,916   2,558,423      538      14,440      (7,346   8,515      153,958      (363,421

NET ASSETS:

Beginning of period

  361,341      374,189      2,049,408      3,011,081           18,039,979      15,481,556      39,671      25,231      26,133      17,618      450,312      813,733   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 353,429    $ 361,341    $ 2,017,785    $ 2,049,408    $ 559,416    $ 16,955,063    $ 18,039,979    $ 40,209    $ 39,671    $ 18,787    $ 26,133    $ 604,270    $ 450,312   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)  For the period May 1, 2014 (commencement of Investment Division) through December 31, 2014

 

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

 

F-36


NYLIAC VUL Separate Account-I

Statement of Changes in Net Assets (Continued)

For the years ended December 31, 2014

and December 31, 2013

  T. Rowe Price
New America
Growth
Portfolio
  The Merger
Fund VL
  UIF Emerging
Markets Debt
Portfolio—Class I
  UIF U.S. Real Estate
Portfolio—Class I
  Van Eck VIP Multi-
Manager Alternatives
Fund—Initial Class
  Victory VIF
Diversified
Stock Fund—
Class A
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013  
 

 

 

INCREASE (DECREASE) IN NET ASSETS:

Operations:

Net investment income (loss)

$    $    $ 473    $ 102    $ 38,318    $ 41,261    $ 199,688    $ 107,891    $ (2,397 $ (1,614 $ 59    $ 56   

Net realized gain (loss) on investments

  809      220      795      32      1,239      36,958      782,819      650,090      12,959      3,237      1,510      1,469   

Realized gain distribution received

  394      925      190           5,272      12,647                29,610      6,108             

Change in unrealized appreciation (depreciation) on investments

  (931   667      (806   1,171      (18,596   (191,947   3,104,338      (617,158   (67,619   90,450      (872   772   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  272      1,812      652      1,305      26,233      (101,081   4,086,845      140,823      (27,447   98,181      697      2,297   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contributions and (Withdrawals):

Payments received from policyowners

  231      771      10,131      14,470      30,765      40,527      2,412,210      1,848,092      321,603      211,372      1,955      2,628   

Cost of insurance

  (192   (195   (2,103   (2,005   (19,934   (25,901   (891,600   (695,455   (109,159   (67,006   (511   (741

Policyowners’ surrenders

  (3,767   (1,064   (7,274        (18,015   (236,958   (630,788   (635,648   (133,239   (32,810   (3,452     

Net transfers from (to) Fixed Account

       270      (2,264   2,772      (36,800   (368   (49,569   330,433      21,838      (65,033   5      360   

Transfers between Investment Divisions

            (1,580   1,052      (183,439   6,706      2,135,910      530,555      152,597      999,739      (5,244   (298

Policyowners’ death benefits

                                (6,622   (18,235                    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net contributions and (withdrawals)

  (3,728   (218   (3,090   16,289      (227,423   (215,994   2,969,541      1,359,742      253,640      1,046,262      (7,247   1,949   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in net assets

  (3,456   1,594      (2,438   17,594      (201,190   (317,075   7,056,386      1,500,565      226,193      1,144,443      (6,550   4,246   

NET ASSETS:

Beginning of period

  6,270      4,676      39,087      21,493      780,764      1,097,839      12,108,888      10,608,323      2,200,542      1,056,099      8,973      4,727   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 2,814    $ 6,270    $ 36,649    $ 39,087    $ 579,574    $ 780,764    $ 19,165,274    $ 12,108,888    $ 2,426,735    $ 2,200,542    $ 2,423    $ 8,973   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

F-37


NYLIAC VUL Separate Account-I

Notes to Financial Statements

NOTE 1—Organization and Significant Accounting Policies:

 

 

N

YLIAC Variable Universal Life Separate Account (“VUL Separate Account-I”) was established on June 4, 1993 under Delaware law by New York Life Insurance and Annuity Corporation (“NYLIAC”), a wholly-owned subsidiary of New York Life Insurance Company (“NYLIC”). VUL Separate Account-I funds Group 1 policies (Variable Universal Life (“VUL”) and Survivorship Variable Universal Life (“SVUL”)—Series 1), Group 2 policies (Variable Universal Life 2000 (“VUL 2000”)—Series 1 and Single Premium Variable Universal Life (“SPVUL”)—Series 1), Group 3 policies (Pinnacle Variable Universal Life (“Pinnacle VUL”) and Pinnacle Survivorship Variable Universal Life (“Pinnacle SVUL”)), Group 4 policies (Variable Universal Life 2000 (“VUL 2000”)—Series 2, Single Premium Variable Universal Life (“SPVUL”)—Series 2 and 3, Legacy Creator Single Premium Variable Universal Life (“Legacy Creator SPVUL”), Survivorship Variable Universal Life (“SVUL”)—Series 2, Variable Universal Life Provider (“VUL Provider”), Variable Universal Life Accumulator (“VUL Accumulator”), Survivorship Variable Universal Life Accumulator (“SVUL Accumulator”) and Variable Universal Life Accumulator Plus (“VUL Accumulator Plus”)) and the Group 5 policy (Lifetime Wealth Variable Universal Life (“LWVUL”)). Sales of VUL were discontinued on September 28, 1999, or the date VUL 2000 was approved in a jurisdiction that had not approved it by September 28, 1999. Sales of VUL Provider, VUL 2000 and SVUL were discontinued on May 23, 2008, or the date VUL Accumulator and SVUL Accumulator were approved in a jurisdiction that had not approved the new products by May 23, 2008. Sales of Pinnacle SVUL and Pinnacle VUL were discontinued on May 23, 2008 in all jurisdictions. Sales of SPVUL Series 3 were discontinued on January 1, 2009 in all jurisdictions. Sales of LWVUL were discontinued on November 18, 2013 in all jurisdictions. Sales of VUL Accumulator were discontinued on December 31, 2013 or the date VUL Accumulator Plus was approved in a jurisdiction that had not approved the new products by December 31, 2013.

All of these policies are designed for individuals who seek lifetime insurance protection and flexibility with respect to premium payments and death benefits. In addition, SVUL Series 1 and 2, Pinnacle SVUL and SVUL Accumulator policies provide life insurance protection on two insureds with proceeds payable upon the death of the last surviving insured. These policies are distributed by NYLIFE Distributors LLC and sold by registered representatives of NYLIFE Securities, LLC and by registered representatives of broker-dealers who have entered into dealer agreements with NYLIFE Distributors LLC. NYLIFE Securities LLC is a wholly-owned subsidiary of NYLIFE LLC and NYLIFE Distributors LLC is a wholly-owned subsidiary of New York Life Investment Management Holdings LLC (“NYLIM Holdings”). NYLIFE LLC and NYLIM Holdings are both wholly-owned subsidiaries of NYLIC. VUL Separate Account-I is registered under the Investment Company Act of 1940, as amended, as a unit investment trust that follows the accounting and reporting guidance under ASC 946.

The assets of VUL Separate Account-I are invested in the shares of the MainStay VP Funds Trust, the Alger Portfolios, the AllianceBernstein Variable Products Series Fund, Inc., the American Century® Variable American Century Investment Portfolios, Inc., the American Funds Insurance Series®, the BlackRock® Variable Series Funds, Inc., the Columbia Funds Variable Insurance Trust, the Delaware VIP® Trust, the DFA Investment Dimensions Group Inc., the Dreyfus Investment Portfolios, the Dreyfus Variable Investment Fund, the Deutsche Investments VIT Funds, the Deutsche Variable Series II, the Fidelity® Variable Insurance Products Fund, the Invesco Variable Insurance Funds, the Janus Aspen Series, the Lincoln Variable Insurance Products Trust, The Merger Fund VL, the MFS® Variable Insurance TrustSM, the MFS® Variable Insurance Trust II, the Neuberger Berman Advisers Management Trust, the PIMCO Variable Insurance Trust, the Royce Capital Fund, the T. Rowe Price Equity Series, Inc., the T. Rowe Price Fixed Income Series, Inc., the T. Rowe Price International Series, Inc., the Universal Institutional Funds, Inc., the Van Eck VIP Trust and the Victory Variable Insurance Funds (collectively “Funds”). These assets are clearly identified and distinguished from the other assets and liabilities of NYLIAC. These assets are the property of NY LIAC; 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, DCA Plus Account, DCA Extra Account and the Enhanced DCA Fixed Account represent a portion of the general account assets of NYLIAC and are not included in this report. NYLIAC’s Fixed Account, DCA Plus Account, DCA Extra Account and the Enhanced DCA Fixed Account may be charged with liabilities arising out of other business NYLIAC may conduct.

As of May 1, 2014, the following Investment Divisions were added to one or more of the products investing in VUL Separate

Account-I:

MainStay VP Marketfield—Initial Class

American Funds® IS New World Fund®—Class 2

BlackRock® High Yield V.I. Fund—Class I

Fidelity® VIP Growth Opportunities Portfolio—Initial Class

PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged)—Institutional Class

PIMCO VIT Total Return Portfolio—Institutional Class

 

F-38


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 1—Organization and Significant Accounting Policies: (Continued):

 

The following Investment Divisions, with their respective Fund portfolios, are available in VUL Separate Account-I:

 

MainStay VP Balanced—Initial Class

MainStay VP Bond—Initial Class

MainStay VP Cash Management—Initial Class

MainStay VP Common Stock—Initial Class

MainStay VP Conservative Allocation—Initial Class

MainStay VP Convertible—Initial Class

MainStay VP Cornerstone Growth—Initial Class

MainStay VP Eagle Small Cap Growth—Initial Class

MainStay VP Emerging Markets Equity—Initial Class (formerly MainStay VP DFA/DuPont Capital Emerging Markets Equity—Initial Class)

MainStay VP Floating Rate—Initial Class

MainStay VP Government—Initial Class

MainStay VP Growth Allocation—Initial Class

MainStay VP High Yield Corporate Bond—Initial Class

MainStay VP ICAP Select Equity—Initial Class

MainStay VP Income Builder—Initial Class

MainStay VP International Equity—Initial Class

MainStay VP Janus Balanced—Initial Class

MainStay VP Large Cap Growth—Initial Class

MainStay VP Marketfield—Initial Class

MainStay VP MFS® Utilities—Initial Class

MainStay VP Mid Cap Core—Initial Class

MainStay VP Moderate Allocation—Initial Class

MainStay VP Moderate Growth Allocation—Initial Class

MainStay VP PIMCO Real Return—Initial Class

MainStay VP S&P 500 Index—Initial Class

MainStay VP T. Rowe Price Equity Income—Initial Class

MainStay VP Unconstrained Bond—Initial Class

MainStay VP U.S. Small Cap—Initial Class

MainStay VP Van Eck Global Hard Assets—Initial Class

Alger Capital Appreciation Portfolio—Class I-2

AllianceBernstein VPS International Value Portfolio—Class A

AllianceBernstein VPS Small/Mid Cap Value Portfolio—Class A

American Century Investments® VP Inflation Protection Fund—Class II

American Century Investments® VP International Fund—Class II

American Century Investments® VP Value Fund—Class II

American Funds IS® New World Fund®—Class 2

BlackRock® Global Allocation V.I. Fund—Class III

BlackRock® High Yield V.I. Fund—Class I

Columbia Variable Portfolio—Small Cap Value Fund—Class 2

Delaware VIP® Diversified Income Series—Standard Class

Delaware VIP® Emerging Markets Series—Standard Class

Delaware VIP® International Value Equity Series—Standard Class

Delaware VIP® Small Cap Value Series—Standard Class

Delaware VIP® Value Series—Standard Class

Deutsche Small Cap Index VIP—Class A (formerly DWS Small Cap Index VIP—Class A)

Deutsche Small Mid Cap Value VIP—Class A (formerly DWS Small Mid Cap Value VIP—Class A)

DFA VA Global Bond Portfolio

DFA VA International Small Portfolio

DFA VA International Value Portfolio

DFA VA Short-Term Fixed Portfolio

DFA VA U.S. Large Value Portfolio

DFA VA U.S. Targeted Value Portfolio

Dreyfus IP Technology Growth Portfolio—Initial Shares

Dreyfus VIF Opportunistic Small Cap Portfolio—Initial Shares

Fidelity® VIP Contrafund® Portfolio—Initial Class

Fidelity® VIP Equity-Income Portfolio—Initial Class

Fidelity® VIP Freedom 2020 Portfolio—Initial Class

Fidelity® VIP Freedom 2030 Portfolio—Initial Class

Fidelity® VIP Freedom 2040 Portfolio—Initial Class

Fidelity® VIP Growth Opportunities Portfolio—Initial Class

Fidelity® VIP Growth Portfolio—Initial Class

Fidelity® VIP Index 500 Portfolio—Initial Class

Fidelity® VIP Investment Grade Bond Portfolio—Initial Class

Fidelity® VIP Mid Cap Portfolio—Initial Class

Fidelity® VIP Overseas Portfolio—Initial Class

Invesco V.I. American Value Fund—Series I

Invesco V.I. Global Real Estate Fund—Series I

Invesco V.I. International Growth Fund—Series I

Janus Aspen Enterprise Portfolio—Institutional Shares

Janus Aspen Forty Portfolio—Institutional Shares

Janus Aspen Global Research Portfolio—Institutional Shares

LVIP Baron Growth Opportunities Fund—Service Class

 

 

F-39


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 1—Organization and Significant Accounting Policies: (Continued):

 

 

MFS® International Value Portfolio—Initial Class

MFS® Investors Trust Series—Initial Class

MFS® New Discovery Series—Initial Class

MFS® Research Bond Series—Initial Class

MFS® Research Series—Initial Class

MFS® Value Series—Initial Class

Neuberger Berman AMT Mid Cap Growth Portfolio—Class I

PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged) —Institutional Class

PIMCO VIT Global Bond Portfolio (Unhedged)—Administrative Class

PIMCO VIT Low Duration Portfolio—Administrative Class

PIMCO VIT Total Return Portfolio—Administrative Class

PIMCO VIT Total Return Portfolio—Institutional Class

Royce Micro-Cap Portfolio—Investment Class

T. Rowe Price Blue Chip Growth Portfolio

T. Rowe Price International Stock Portfolio

T. Rowe Price Limited-Term Bond Portfolio

T. Rowe Price New America Growth Portfolio

The Merger Fund VL

UIF Emerging Markets Debt Portfolio—Class I

UIF U.S. Real Estate Portfolio—Class I

Van Eck VIP Multi-Manager Alternatives Fund—Initial Class

Victory VIF Diversified Stock Fund—Class A

 

 

Not all investment options are available under all policies.

All investments into the MainStay VP Series Funds by VUL Separate Account-I will be made into the Initial Class of shares unless otherwise indicated. Each Investment Division of VUL Separate Account-I will invest exclusively in the corresponding eligible Fund portfolio.

For SVUL, VUL 2000, SPVUL, Lifetime Wealth VUL, VUL Provider, VUL Accumulator,Pinnacle VUL and Pinnacle SVUL policies, any/all premium payments received during the free look period are allocated to the General Account of NYLIAC. After the free look period, these premium payments are allocated in accordance with the policyowner’s allocation instructions. Subsequent premium payments for all policies will be allocated to the Investment Divisions of VUL Separate Account-I in accordance with the policyowner’s allocations instructions. For Legacy Creator SPVUL, SVUL Accumulator, and VUL Accumulator Plus, any/all premium payments received before the Initial Premium Transfer Date will be allocated to the General Account of NYLIAC. On the Initial Premium Transfer Date, the net premium, along with any interest credited to the Investment Divisions of VUL Separate Account-I, the Fixed Account, and/or the DCA Plus Account in accordance with the policyowner’s allocation instructions. Pinnacle VUL and SVUL policies issued on or after October 14, 2002 can have premium payments made in the first 12 policy months allocated to an Enhanced DCA Fixed Account. VUL 2000, VUL Provider, SVUL, VUL Accumulator and SVUL Accumulator policies issued on or after February 11, 2005 can have premium payments made in the first 12 policy months allocated to a DCA Plus Account. Legacy Creator SPVUL policies issued on or after May 15th, 2009, can have the initial premium payment allocated to the 6 months DCA Extra Account. Lifetime Wealth VUL policies issued on or after February 14, 2011, can have premium payments made in the first 12 policy months allocated to a DCA Plus Account. VUL Accumulator Plus policies issued on or after November 18, 2013, can have premium payments made in the first 12 months following the Initial Premium Transfer Date allocated to a DCA Plus Account.

In addition, for all VUL, VUL 2000, SVUL, SPVUL, Legacy Creator SPVUL, Lifetime Wealth VUL, VUL Provider, VUL Accumulator, SVUL Accumulator, Pinnacle VUL, Pinnacle SVUL and VUL Accumulator Plus policies, the policyowner has the option, within limits, to transfer amounts between the Investment Divisions of VUL Separate Account-I and the Fixed Account of NYLIAC.

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

Security Valuation—The investments are 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 Fund 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.

 

F-40


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 1—Organization and Significant Accounting Policies: (Continued):

 

 

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 assumptions in pricing the asset or liability.

Investments in 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 Fund 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-41


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

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

 

T

he cost of purchases and proceeds from sales of investments for the year ended December 31, 2014 were as follows:

 

    Purchases        Sales  
 

 

 

MainStay VP Balanced—Initial Class

  $ 2,421         $ 1,503   

MainStay VP Bond—Initial Class

    2,977           4,075   

MainStay VP Cash Management—Initial Class

    14,248               16,250   

MainStay VP Common Stock—Initial Class

    2,991           8,474   

MainStay VP Conservative Allocation—Initial Class

    3,475           2,079   

MainStay VP Convertible—Initial Class

    5,587           3,635   

MainStay VP Cornerstone Growth—Initial Class

    40,137           16,064   

MainStay VP Eagle Small Cap Growth—Initial Class

    1,298           5,769   

MainStay VP Emerging Markets Equity—Initial Class

    2,384           4,589   

MainStay VP Floating Rate—Initial Class

    3,074           2,890   

MainStay VP Government—Initial Class

    2,002           2,407   

MainStay VP Growth Allocation—Initial Class

    9,329           3,052   

MainStay VP High Yield Corporate Bond—Initial Class

    12,969           14,404   

MainStay VP ICAP Select Equity—Initial Class

    4,242           11,465   

MainStay VP Income Builder—Initial Class

    8,270           5,445   

MainStay VP International Equity—Initial Class

    1,970           4,403   

MainStay VP Janus Balanced—Initial Class

    7,290           11,443   

MainStay VP Large Cap Growth—Initial Class

    7,653           4,227   

Mainstay VP Marketfield—Initial Class

    1,267           41   

MainStay VP MFS® Utilities—Initial Class

    9,377           2,225   

MainStay VP Mid Cap Core—Initial Class

    17,369           10,333   

MainStay VP Moderate Allocation—Initial Class

    9,110           3,469   

MainStay VP Moderate Growth Allocation—Initial Class

    15,508           4,398   

MainStay VP PIMCO Real Return—Initial Class

    2,535           2,059   

MainStay VP S&P 500 Index—Initial Class

    8,752           21,051   

MainStay VP T. Rowe Price Equity Income—Initial Class

    7,079           6,503   

MainStay VP Unconstrained Bond—Initial Class

    3,850           822   

MainStay VP U.S. Small Cap—Initial Class

    3,544           2,551   

MainStay VP Van Eck Global Hard Assets—Initial Class

    3,825           4,072   

Alger Capital Appreciation Portfolio—Class I-2

    514           117   

AllianceBernstein VPS International Value Portfolio—Class A

                

AllianceBernstein VPS Small/Mid Cap Value Portfolio—Class A

    2,408           1,114   

American Century Investments® VP Inflation Protection Fund—Class II

    39           16   

American Century Investments® VP International Fund—Class II

    242           370   

American Century Investments® VP Value Fund—Class II

    176           295   

American Funds IS® New World Fund®—Class 2

    1,339           39   

BlackRock® Global Allocation V.I. Fund—Class III

    3,818           822   

BlackRock® High Yield V.I. Fund—Class I

    636           39   

Columbia Variable Portfolio—Small Cap Value Fund—Class 2

    13             

Delaware VIP® Diversified Income Series—Standard Class

    61           16   

Delaware VIP® Emerging Markets Series—Standard Class

    1,208           388   

Delaware VIP® International Value Equity Series—Standard Class

    2           4   

Delaware VIP® Small Cap Value Series—Standard Class

    1,948           356   

Delaware VIP® Value Series—Standard Class

    10           31   

Deutsche Small Cap Index VIP—Class A

    10           10   

Deutsche Small Mid Cap Value VIP—Class A

    771           611   

DFA VA Global Bond Portfolio

    15           1   

DFA VA International Small Portfolio

    32           46   

DFA VA International Value Portfolio

    28           6   

DFA VA Short-Term Fixed Portfolio

    18             

DFA VA U.S. Large Value Portfolio

    34           16   

DFA VA U.S. Targeted Value Portfolio

    61           69   

Dreyfus IP Technology Growth Portfolio—Initial Shares

    2,310           1,684   

Dreyfus VIF Opportunistic Small Cap Portfolio—Initial Shares

    63           75   

Fidelity® VIP Contrafund® Portfolio—Initial Class

    10,134           15,000   

Fidelity® VIP Equity-Income Portfolio—Initial Class

    5,007           6,356   

Fidelity® VIP Freedom 2020 Portfolio—Initial Class

    329           18   

Fidelity® VIP Freedom 2030 Portfolio—Initial Class

    404           71   

Fidelity® VIP Freedom 2040 Portfolio—Initial Class

    732           314   

Fidelity® VIP Growth Opportunities Portfolio—Initial Class

    245           3   

Fidelity® VIP Growth Portfolio—Initial Class

    15           141   

Fidelity® VIP Index 500 Portfolio—Initial Class

    752           1,536   

Fidelity® VIP Investment Grade Bond Portfolio—Initial Class

    334           173   

Fidelity® VIP Mid Cap Portfolio—Initial Class

    2,387           546   

Fidelity® VIP Overseas Portfolio—Initial Class

    405           553   

Invesco V.I. American Value Fund—Series I

    1,136           212   

Invesco V.I. Global Real Estate Fund—Series I

    9           11   

Invesco V.I. International Growth Fund—Series I

    2,526           679   

Janus Aspen Enterprise Portfolio—Institutional Shares

    151           169   

Janus Aspen Forty Portfolio—Institutional Shares

    6           14   

Janus Aspen Global Research Portfolio—Institutional Shares

    2,489           7,824   

LVIP Baron Growth Opportunities Fund—Service Class

    3           4   

MFS® International Value Portfolio—Initial Class

    1,824           310   

MFS® Investors Trust Series—Initial Class

    433           52   

MFS® New Discovery Series—Initial Class

    1,982           974   

MFS® Research Bond Series—Initial Class

    77           1   

MFS® Research Series—Initial Class

    607           416   

MFS® Value Series—Initial Class

    2             

Neuberger Berman AMT Mid Cap Growth Portfolio—Class I

    1,957           553   

 

F-42


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

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

 

    Purchases        Sales  
 

 

 

PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged)—Institutional Class

    878           51   

PIMCO VIT Global Bond Portfolio (Unhedged)—Administrative Class

    131           144   

PIMCO VIT Low Duration Portfolio—Administrative Class

    18           24   

PIMCO VIT Total Return Portfolio—Administrative Class

    355           422   

PIMCO VIT Total Return Portfolio—Institutional Class

    574           13   

Royce Micro-Cap Portfolio—Investment Class

    2,651           1,747   

T. Rowe Price Blue Chip Growth Portfolio

    55           58   

T. Rowe Price International Stock Portfolio

    6           13   

T. Rowe Price Limited-Term Bond Portfolio

    191           33   

T. Rowe Price New America Growth Portfolio

    1           4   

The Merger Fund VL

    12           14   

UIF Emerging Markets Debt Portfolio—Class I

    74           258   

UIF U.S. Real Estate Portfolio—Class I

    5,913           2,823   

Van Eck VIP Multi-Manager Alternatives Fund—Initial Class

    611           337   

Victory VIF Diversified Stock Fund—Class A

    2           9   
 

 

 

      

 

 

 

Total

  $ 275,707         $ 227,703   
 

 

 

      

 

 

 

Not all investment divisions are available under all policies.

 

F-43


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 3—Expenses and Related Party Transactions:

 

N

ew 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”), Dimensional Fund Advisors LP (“DFA”), DuPont Capital Management Corporation (“DuPont Capital”), Eagle Asset Management, Inc. (“Eagle”), Epoch Investment Partners, Inc. (“Epoch”), Institutional Capital LLC (“ICAP”), Janus Capital Management LLC (“Janus”), MacKay Shields LLC (“MacKay Shields”), Massachusetts Financial Services Company (“MFS”), Pacific Investment Management Company LLC (“PIMCO”), T. Rowe Price Associates, Inc. (“T. Rowe Price”), Van Eck Associates Corporation (“Van Eck”) and Winslow Capital Management Inc. (“Winslow Capital”) to provide investment advisory services to certain portfolios of the MainStay VP Funds Trust.

New York Life Investments, Cornerstone Holdings, MacKay Shields, and ICAP are all indirect, wholly-owned subsidiaries of NYLIC. Capital Research and Management Company is a wholly-owned subsidiary of of The Capital Group Companies, Inc. Eagle is a wholly-owned subsidiary of Raymond James Financial, Inc. Epoch is a wholly-owned subsidiary of Epoch Holding Corporation. Janus is a wholly-owned subsidiary of Janus Capital Group, Inc. MFS is an indirect majority-owned subsidiary of Sun Life Financial Inc. Winslow Capital is a wholly-owned subsidiary of Nuveen Investments, Inc. DFA, PIMCO, T. Rowe Price and Van Eck are independent investment advisory firms.

Deductions from Premiums:

NYLIAC deducts premium expense charges from all premiums received for certain VUL Separate Account-I policies. Premium expense charges are expressed as a percentage of the payment received.

State and Federal Tax Charge: NYLIAC deducts 2% from all premium payments for VUL, SVUL, VUL 2000, SPVUL Series 3, VUL Provider, Lifetime Wealth VUL, VUL Accumulator, SVUL Accumulator, Pinnacle VUL, Pinnacle SVUL and VUL Accumulator Plus policies to pay state premium taxes. NYLIAC deducts 1.25% from all premium payments for non-qualified VUL, SVUL, VUL 2000, SPVUL Series 3, VUL Provider, Lifetime Wealth VUL, VUL Accumulator, SVUL Accumulator, Pinnacle VUL, Pinnacle SVUL and VUL Accumulator Plus policies to cover federal taxes.

Sales Expense Charge: NYLIAC deducts a sales expense charge from all premium payments for VUL, SVUL, VUL 2000, VUL Provider, Lifetime Wealth VUL, VUL Accumulator, SVUL Accumulator, Legacy Creator SPVUL, Pinnacle VUL, Pinnacle SVUL and VUL Accumulator Plus policies to partially cover the expenses associated with selling the policies.

For VUL policies, currently 5% of any premium payment for the first 10 policy years is deducted; NYLIAC reserves the right to impose this charge after the 10th policy year.

For SVUL policies, currently 8% of any premium payments in policy years 1-10, up to the target premium, is deducted. Once the target premium is reached NYLIAC expects to deduct 4% from any premium payments in any given policy year. Beginning with the 11th policy year, NYLIAC expects to deduct 4% of any premium payments up to the target premium, and no charge for premium payments in excess of the target premium in that year. The initial target premium is determined at the time the policy is issued, and it is indicated on the policy data page.

For VUL 2000 policies, currently 2.75% of any premium payments in a policy year, up to the surrender charge premium, is deducted. Once the premium payments equal the surrender charge premium for a policy year, NYLIAC deducts a sales expense charge of 1.25% from any additional premium payments in that policy year. The initial surrender charge premium is determined at the time the policy is issued and can be found on the policy data page.

For VUL Provider policies, currently 6.75% of any premium payment up to the target premium is deducted in policy years 1-5. Once the target premium is reached, 4.25% of any premium payment is deducted. Beginning with the 6th policy year, NYLIAC expects to deduct 2.75% of any premium payments up to the target premium; once the target premium is reached, 0.75% of any premium payment is deducted. The initial target premium is determined at the time the policy is issued, and is indicated on the policy data page.

For Lifetime Wealth VUL policies, in all policy years, we currently do not deduct a sales expense charge on any premium payment up to Target Premium 1. In each of policy years 1-7, we currently deduct 8.75% of any premium payment over Target Premium 1 and up to Target Premium 2; we also deduct 8.75% of all premiums paid over Target Premium 2. In each of policy years 8 and subsequent, we currently do not deduct a sales expense charge on any premium payment over Target Premium 1. Target Premium 1 and Target Premium 2 are determined at the time the policy is issued, and are indicated on the policy data page.

For VUL Accumulator and SVUL Accumulator policies, currently 4.75% of any premium payment up to the target premium is deducted in policy years 1-10. Once the target premium is reached, 1.75% of any premium payment is deducted in policy years 1-5 and 0.75% of any premium payment is deducted in policy years 6-10. Beginning with the 11th policy year, NYLIAC expects to deduct 4.25% of any premium payments up to the target premium; once the target is reached, 0.25% of any premium payment is deducted in policy years 11 and beyond. The initial target premium is determined at the time the policy is issued, and is indicated on the policy data page.

For Pinnacle VUL and Pinnacle SVUL policies, the percentage of premiums deducted varies depending on the age of the policy and whether the total premium payment in a given policy year is above or below the target premium. For premium payments up to the target premium, the sales expense charge in the first policy year is currently 56.75%, in policy years 2-5 the charge is

 

F-44


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

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

 

26.75%, for policy year 6 the charge is 1.75%, and for policy years 7 and beyond the charge is 0.75%. For premium payments in excess of the target premium the charge is currently 2.75% for policy years 1-5, 1.75% for policy year 6 and 0.75% for policy years 7 and beyond. The initial target premium is determined at the time the policy is issued, and it is indicated on the policy data page.

For Legacy Creator SPVUL policies, the current monthly premium expense charge is deducted at an annualized rate of 2.0% of the adjusted total premium for policy years 11 and beyond. The monthly premium expense charge is guaranteed not to exceed the annual rate of 2.25% of the adjusted total premium. This charge also covers state premium tax and federal tax expenses.

For VUL Accumulator Plus policies, currently 4.75% of any premium payment up to the target premium is deducted in policy years 1-10. Once the target premium is reached, 1.75% of any premium payment is deducted in policy years 1-5 and 0.75% of any premium payment is deducted in policy years 6-10. Beginning with the 11th policy year, NYLIAC expects to deduct 4.25% of any premium payments up to the target premium; once the target is reached, 0.25% of any premium payment is deducted in policy years 11 and beyond. The initial target premium is determined at the time the policy is issued, and is indicated on the policy data page.

Deductions from Cash Value:

NYLIAC deducts certain monthly charges from the cash value of VUL Separate Account-I policies. These charges include the monthly contract charge, the administrative charge, the cost of insurance charge, the per thousand face amount charge, the deferred sales expense charge, and the mortality and expense risk charge and are recorded as cost of insurance in the accompanying Statement of Changes in Net Assets. The charges disclosed below were in effect for each of the five periods presented in the Financial Highlights section. Not all charges are deducted from all products, as shown below.

Monthly Contract Charge: A monthly contract charge is assessed on certain VUL Separate Account-I policies to compensate NYLIAC for certain administrative services such as premium collection, record keeping, claims processing and communicating with policyowners. Outlined below is the current schedule for VUL, SVUL, VUL 2000, VUL Provider, VUL Accumulator, SVUL Accumulator, Pinnacle VUL, Pinnacle SVUL and VUL Accumulator Plus:

 

Policy

  Monthly
Contract Charge
Policy Year 1
     Monthly
Contract Charge
Subsequent Policy Years
 

VUL

  $ 26       $ 7   

SVUL

    60         10   

VUL 2000

    30         10   

VUL Provider

    30         10   

Lifetime Wealth VUL

    15        

 

15 in years 2-10;

10 in years 11 and beyond.

  

  

VUL Accumulator

    35        

 

15 in years 2-10;

10 in years 11 and beyond.

  

  

SVUL Accumulator

    35        

 

15 in years 2-10;

10 in years 11 and beyond.

  

  

Pinnacle VUL*

    100         25   

Pinnacle SVUL*

    100         25   

VUL Accumulator Plus

    15        

 

15 in years 2-10;

10 in years 11 and beyond.

  

  

 

 

  * If the target face amount falls below $1 million, the contract charge will not exceed $25 per month.

Administrative Charge: An administrative charge is assessed on VUL 2000, SPVUL, Legacy Creator SPVUL and SVUL (Series 2)** policies monthly. This charge compensates NYLIAC for providing administrative policy services.

For VUL 2000 policies, the administrative charge is expressed as a percentage of the amount of cash value in VUL Separate Account-I and varies based on the amount of cash value in VUL Separate Account-I. The VUL Separate Account-I administrative charge percentage currently ranges from 0% to .20%.

For SPVUL policies, the current administrative charge is made monthly at an annualized rate of .60% of the policy’s cash value for the first three policy years. This charge is waived in the fourth and subsequent policy years if the cash value of the policy exceeds $200,000. If the cash value of the policy does not exceed $200,000, this charge will range from .10% to .60% depending on the cash value of the policy.

For SVUL (Series 2)** the administrative charge is .10%, based on the amount of cash value in VUL Separate Account-I.

For Legacy Creator SPVUL policies, the current asset based administrative charge is deducted monthly at an annualized rate of 2.25% of the policy’s cash value for policy years 1 through 10. The monthly asset based administrative charge is guaranteed not to exceed the annual rate of 2.25% of the cash value of the policy. This charge also covers state premium tax and federal tax expenses.

 

**   Series 2 VUL 2000, SPVUL, and SVUL designates policies issued on and after May 10, 2002 where approved.

 

F-45


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

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

 

Cost of Insurance Charge: A charge to cover the cost of providing life insurance benefits is assessed monthly on all VUL Separate Account-I policies. This charge is based on such factors as issue age of the insured(s), duration, gender, underwriting class, face amount, any riders included and the cash value of the policy.

Per Thousand Face Amount Charge: NYLIAC assesses a monthly per thousand face amount charge on SVUL, VUL Accumulator, SVUL Accumulator, Lifetime Wealth VUL, Pinnacle VUL, Pinnacle SVUL, VUL Provider and VUL Accumulator Plus policies.

For SVUL (Series 1) policies, this charge is $0.04 per $1,000 of the policy’s initial face amount. For SVUL(Series 2) policies, this charge is $0.04 per $1,000 of the policy’s current face amount. For both series of SVUL policies this charge is assessed for the first 3 policy years and will always be at least $10 per month and will never be more than $100 per month.

For VUL Accumulator Plus, this charge is currently deducted during the first 10 policy years and is based on the insured’s age, gender, risk class and face amount. NYLIAC does not expect to deduct this charge in years 11 and beyond.

For VUL Accumulator policies, this charge is based on the insured’s age, gender, risk class and face amount plus any term insurance benefit. NYLIAC does not expect to deduct this charge in years 21 and beyond.

For SVUL Accumulator policies, this charge is based on insured’s age, gender, risk class and face amount plus any term insurance benefit. NYLIAC does not expect to deduct this charge in years 31 and beyond.

For Lifetime Wealth VUL policies, this charge is based on the insured’s age, gender, risk class and face amount plus any term insurance benefit. NYLIAC does not expect to deduct this charge in years 21 and beyond.

For Pinnacle VUL and Pinnacle SVUL policies, this charge is $0.03 per $1,000 of the policy’s face amount plus any term insurance benefit for the first 5 policy years. NYLIAC does not expect to deduct this charge in policy year 6 and beyond.

For VUL Provider policies, this charge is $0.07 per $1,000 of the policy’s face amount plus any term insurance benefit for the first 5 policy years. NYLIAC does not expect to deduct this charge in policy year 6 and beyond.

Deferred Sales Expense Charge: NYLIAC assesses a monthly deferred sales expense charge on SPVUL policies. This charge is deducted from the policy’s cash value for a 10-year period after a premium payment is applied. The deferred sales expense charge is expressed as a percentage of the policy’s cash value for Series 1 and 2. The current 0.90% deferred sales expense is comprised of 0.40% for sales expenses, 0.30% for state taxes and 0.20% for federal taxes. For SPVUL Series 3*** currently the deferred sales expense charge is equal to 0.40%.

Mortality and Expense Risk Charge: NYLIAC deducts a mortality and expense risk charge as follows:

Group 1 & 2 Policies: NYLIAC assesses a mortality and expense risk charge based on the variable accumulation value of the Investment Divisions. These charges are made daily at an annual rate of 0.70%**** for VUL, 0.70%**** for SVUL (Series 1), 0.50% for VUL 2000 (Series 1) and 0.50% for SPVUL (Series 1). For the year ended December 31, 2013 NYLIAC voluntarily waived the mortality and expense risk and administrative charges of $2,901 on the BlackRock® Global Allocation V.I. Fund—Class III Shares Investment Division. The voluntary waiver was terminated on March 22, 2013.

Group 3 Policies: The Pinnacle VUL and Pinnacle SVUL mortality and expense risk charges are based on net assets and the percent ranges from 0.25% to 0.55% in policy years 1-20; and in policy years 21 and beyond, the percentage ranges from 0.05% to 0.35%. In policy years 1-20, if the policy has an Alternative Cash Surrender Value I (ACSV I), the mortality and expense risk is increased by 0.30% in policy years 1-10. For Alternative Cash Surrender Value II (ACSV II), the mortality and expense risk is increased by 0.55% in policy years 1-10. The mortality and expense risk charge is guaranteed not to exceed 1.00%.

Group 4 Policies: On SPVUL (Series 2)** and VUL 2000 (Series 2)** policies, NYLIAC deducts a monthly mortality and expense risk charge at an annual rate of 0.50% of the cash value in VUL Separate Account-I and for SVUL (Series 2)** policies, the mortality and expense risk charge is deducted monthly at an annual rate of 0.60% of the cash value in VUL Separate Account-I.

For VUL Accumulator Plus policies, the monthly mortality and expense risk charge currently ranges from an annual rate of 0.55% to 0.15% of the cash value in VUL Separate Account-I (it declines based on the cash value in VUL Separate Account-I and duration). NYLIAC guarantees that the mortality and expense risk charge on VUL Accumulator Plus policies will never exceed an annual rate of 0.75%.

For VUL Accumulator and SVUL Accumulator policies, the monthly mortality and expense risk charge currently ranges from an annual rate of 0.55% to 0.15% of the cash value in VUL Separate Account-I (it declines based on the cash value in VUL Separate Account-I and duration). NYLIAC guarantees that the mortality and expense risk charge on VUL Accumulator and SVUL Accumulator policies will never exceed an annual rate of 0.75%.

 

**   Series 2 VUL 2000, SPVUL, and SVUL designates policies issued on and after May 10, 2002 where approved.
***   Series 3 SPVUL designates policies issued on and after May 16, 2003 where approved.
****   Includes 0.10% administrative service charge.

 

F-46


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

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

 

For VUL Provider policies, the monthly mortality and expense risk charge currently ranges from an annual rate of 0.70% to 0.05% of the cash value in VUL Separate Account-I (it declines based on the cash value in VUL Separate Account-I and duration). If the VUL Provider policy has the Alternative Cash Surrender Value (ACSV), the mortality and expense risk charge currently ranges from 1.00% to 0.05%. NYLIAC guarantees that the mortality and expense risk charge on VUL Provider policies will never exceed an annual rate of 1.00%.

For Legacy Creator SPVUL policies, the current mortality and expense risk charge is deducted monthly at an annual rate of 0.50% of the cash value in VUL Separate Account-I. The mortality and expense charge is guaranteed not to exceed the annual rate of 0.75% of the cash value in VUL Separate Account-I.

Group 5 Policies: For Lifetime Wealth VUL policies, the monthly mortality and expense risk charge currently ranges from an annual rate of 0.75% to 0.25% of the cash value in VUL Separate Account-I (it declines based on the cash value in VUL Separate Account-I and duration). NYLIAC guarantees that the mortality and expense risk charge on Lifetime Wealth VUL policies will never exceed an annual rate of 0.75%.

Surrender Charges:

Surrender charges are assessed by NYLIAC for VUL, SVUL, VUL 2000, VUL Provider, VUL Accumulator, SVUL Accumulator, SPVUL, Legacy Creator SPVUL and VUL Accumulator Plus policies on complete surrenders, decreases in face amount including decreases caused by a change in life insurance benefit option and some partial withdrawals. Surrender charges are paid to NYLIAC. The amount of this charge is included in surrenders in the accompanying Statement of Changes in Net Assets. In addition, a new surrender charge period will apply to face increases.

For VUL, SVUL and VUL 2000 policies, this charge is deducted during the first 15 policy years or within 15 years after a face amount increase. For VUL Provider, VUL Accumulator, SVUL Accumulator and VUL Accumulator Plus this charge is deducted for the first 10 policy years or within 10 years after a face amount increase. For VUL, the maximum surrender charge is shown on the policy’s data page. For VUL 2000, VUL Provider, VUL Accumulator, SVUL Accumulator and VUL Accumulator Plus the maximum surrender charge is the lesser of 50% of total premium payments or a percentage of the surrender charge premium. This percentage is based on the policy year in which the surrender or decrease in face amount takes place.

Initially for VUL 2000 (Series 2)**policies, the maximum surrender charge is the lesser of 50% of total premium paid less the monthly contract charge incurred during the first three policy years or 100% of the surrender charge premium. Beginning in year four, the maximum surrender charge is the lesser of 50% of total premium payments less the sum of all monthly contract charges incurred in the first three policy years (which will never exceed $636) or a specified percentage of the surrender charge premium, which declines each policy year from 93% in the fourth year to 0% in year sixteen and later.

For SVUL policies, the surrender charge is deducted during the first 15 policy years if the younger insured is less than age 85 at the time the policy was issued. If the younger insured is age 85 or older at the time of issue, the charge is deducted during the first 8 policy years. The maximum surrender charge on SVUL policies varies based on the policy’s target premium, age of the younger insured and year of surrender. The target premium is shown on the policy data page.

For SPVUL policies, the surrender charge is deducted during the first 9 policy years. This charge is equal to a percentage of the cash value of the policy minus any withdrawal taken using the surrender charge free window, or the initial single premium minus any partial withdrawals for which the surrender charge was assessed. The applicable surrender charge percentage is based on the amount of time elapsed from the date the initial single premium was accepted to the effective date of the surrender or partial withdrawal. For Series 1 and 2 the surrender charge percentage declines each policy year from 9% in the first year to 0% in year 10 and later. For Series 3, the percentage declines each year from 7.5% in the first year to 0% in year 10 and after.

For Legacy Creator SPVUL, the surrender charge is deducted during the first 9 policy years. The surrender charge is assessed on the amount of the cash value withdrawn in any policy year that is in excess of the surrender charge free window. The surrender charge free window is the greater of 10% of the policy cash value (minus any partial withdrawals already taken in that year) or 100% of the policy gain. The surrender charge percentage declines each policy year from 7.50% in the first year to 0% in year 10 and later.

V

UL Separate Account-I policyowners may pay certain Fund portfolio company 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 VUL Separate Account-I. Management Fees (which may include administration and/or advisory fees) range from 0.00% to 1.42%, distribution (12b-1) fees range from 0.00% to 0.25%, other expenses range from 0.00% to 3.31%, and underlying portfolio fees and expenses range from 0.01% to 1.14%. These ranges are shown as a percentage of average net assets as of December 31, 2013, and approximate the ranges as of December 31, 2014.

 

 

NOTE 4Distribution of Net Income:

 

V

UL Separate Account-I does 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 or transfers) in excess of the net premium payments.

 

F-47


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

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

 

T

he changes in units outstanding for the years ended December 31, 2014 and 2013 were as follows:

 

    2014      2013  
    Units
Issued
    Units
Redeemed
    Net
Increase
(Decrease)
     Units
Issued
    Units
Redeemed
    Net
Increase
(Decrease)
 
 

 

 

MainStay VP Balanced—Initial Class

    75        (82     (7      113        (68     45   

MainStay VP Bond—Initial Class

    115        (181     (66      122        (311     (189

MainStay VP Cash Management—Initial Class

    11,413        (12,803     (1,390      12,973        (16,110     (3,137

MainStay VP Common Stock—Initial Class

    68        (267     (199      61        (323     (262

MainStay VP Conservative Allocation—Initial Class

    130        (122     8         169        (129     40   

MainStay VP Convertible—Initial Class

    78        (125     (47      66        (181     (115

MainStay VP Cornerstone Growth—Initial Class

    78        (730     (652      69        (816     (747

MainStay VP Eagle Small Cap Growth—Initial Class

    87        (438     (351      164        (565     (401

MainStay VP Emerging Markets Equity—Initial Class

    210        (487     (277      280        (635     (355

MainStay VP Floating Rate—Initial Class

    173        (207     (34      233        (188     45   

MainStay VP Government—Initial Class

    68        (116     (48      76        (211     (135

MainStay VP Growth Allocation—Initial Class

    351        (183     168         310        (174     136   

MainStay VP High Yield Corporate Bond—Initial Class

    175        (432     (257      294        (469     (175

MainStay VP ICAP Select Equity—Initial Class

    112        (529     (417      94        (715     (621

MainStay VP Income Builder—Initial Class

    80        (188     (108      278        (204     74   

MainStay VP International Equity—Initial Class

    79        (194     (115      86        (263     (177

MainStay VP Janus Balanced—Initial Class

    237        (837     (600      460        (904     (444

MainStay VP Large Cap Growth—Initial Class

    136        (235     (99      192        (414     (222

Mainstay VP Marketfield—Initial Class

    131        (4     127                         

MainStay VP MFS® Utilities—Initial Class

    519        (155     364         539        (182     357   

MainStay VP Mid Cap Core—Initial Class

    86        (327     (241      195        (336     (141

MainStay VP Moderate Allocation—Initial Class

    325        (202     123         455        (290     165   

MainStay VP Moderate Growth Allocation—Initial Class

    591        (255     336         392        (229     163   

MainStay VP PIMCO Real Return—Initial Class

    160        (204     (44      270        (457     (187

MainStay VP S&P 500 Index—Initial Class

    196        (703     (507      208        (774     (566

MainStay VP T. Rowe Price Equity Income—Initial Class

    155        (442     (287      232        (432     (200

MainStay VP Unconstrained Bond—Initial Class

    321        (72     249         243        (67     176   

MainStay VP U.S. Small Cap—Initial Class

    85        (128     (43      170        (186     (16

MainStay VP Van Eck Global Hard Assets—Initial Class

    385        (394     (9      331        (701     (370

Alger Capital Appreciation Portfolio—Class I-2

    9        (3     6         5        (12     (7

AllianceBernstein VPS International Value Portfolio—Class A

                                          

AllianceBernstein VPS Small/Mid Cap Value Portfolio—Class A

    79        (64     15         128        (113     15   

American Century Investments® VP Inflation Protection Fund—Class II

    2        (1     1         3        (1     2   

American Century Investments® VP International Fund—Class II

    9        (15     (6      13        (12     1   

American Century Investments® VP Value Fund—Class II

    5        (10     (5      6        (3     3   

American Funds IS® New World Fund®—Class 2

    131        (4     127                         

BlackRock® Global Allocation V.I. Fund—Class III

    241        (68     173         444        (212     232   

BlackRock® High Yield V.I. Fund—Class I

    62        (4     58                         

Columbia Variable Portfolio—Small Cap Value Fund—Class 2

                          1               1   

Delaware VIP® Diversified Income Series—Standard Class

    5        (1     4         1               1   

Delaware VIP® Emerging Markets Series—Standard Class

    101        (33     68         93        (18     75   

Delaware VIP® International Value Equity Series—Standard Class

                          3        (3       

Delaware VIP® Small Cap Value Series—Standard Class

    117        (25     92         165        (9     156   

Delaware VIP® Value Series—Standard Class

    1        (2     (1      1        (1       

Deutsche Small Cap Index VIP—Class A

    1        (1             1        (1       

Deutsche Small Mid Cap Value VIP—Class A

    43        (38     5         56        (30     26   

DFA VA Global Bond Portfolio

    2               2                         

DFA VA International Small Portfolio

    2        (3     (1      3               3   

DFA VA International Value Portfolio

    2               2         2        (1     1   

DFA VA Short-Term Fixed Portfolio

    2               2         1               1   

DFA VA U.S. Large Value Portfolio

    2        (1     1         4        (1     3   

DFA VA U.S. Targeted Value Portfolio

    3        (4     (1      3               3   

Dreyfus IP Technology Growth Portfolio—Initial Shares

    62        (82     (20      76        (135     (59

Dreyfus VIF Opportunistic Small Cap Portfolio—Initial Shares

    3        (3             8        (3     5   

Fidelity® VIP Contrafund® Portfolio—Initial Class

    123        (433     (310      259        (538     (279

Fidelity® VIP Equity-Income Portfolio—Initial Class

    83        (249     (166      217        (219     (2

Fidelity® VIP Freedom 2020 Portfolio—Initial Class

    29        (2     27         17        (6     11   

Fidelity® VIP Freedom 2030 Portfolio—Initial Class

    34        (6     28         16        (2     14   

Fidelity® VIP Freedom 2040 Portfolio—Initial Class

    61        (27     34         129        (107     22   

Fidelity® VIP Growth Opportunities Portfolio—Initial Class

    22               22                         

Fidelity® VIP Growth Portfolio—Initial Class

           (8     (8      1        (16     (15

Fidelity® VIP Index 500 Portfolio—Initial Class

    25        (69     (44      4        (94     (90

Fidelity® VIP Investment Grade Bond Portfolio—Initial Class

    18        (11     7         5        (2     3   

Fidelity® VIP Mid Cap Portfolio—Initial Class

    166        (24     142         92        (44     48   

Fidelity® VIP Overseas Portfolio—Initial Class

    15        (26     (11      4        (32     (28

Invesco V.I. American Value Fund—Series I

    68        (14     54         52        (15     37   

Invesco V.I. Global Real Estate Fund—Series I

    1        (1             2        (2       

Invesco V.I. International Growth Fund—Series I

    192        (55     137         175        (62     113   

Janus Aspen Enterprise Portfolio—Institutional Shares

    4        (6     (2      2        (6     (4

Janus Aspen Forty Portfolio—Institutional Shares

           (1     (1      1               1   

Janus Aspen Global Research Portfolio—Institutional Shares

    89        (434     (345      89        (453     (364

LVIP Baron Growth Opportunities Fund—Service Class

                                          

MFS® International Value Portfolio—Initial Class

    128        (22     106         191        (8     183   

MFS® Investors Trust Series—Initial Class

    36        (3     33                         

MFS® New Discovery Series—Initial Class

    57        (64     (7      162        (33     129   

MFS® Research Bond Series—Initial Class

    6               6         1               1   

MFS® Research Series—Initial Class

    35        (25     10         30        (27     3   

MFS® Value Series—Initial Class

                                          

Neuberger Berman AMT Mid Cap Growth Portfolio—Class I

    70        (41     29         78        (21     57   

PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged)—Institutional Class

    84        (5     79                         

PIMCO VIT Global Bond Portfolio (Unhedged)—Administrative Class

    7        (9     (2      17        (16     1   

PIMCO VIT Low Duration Portfolio—Administrative Class

    2        (2             1        (2     (1

PIMCO VIT Total Return Portfolio—Administrative Class

    19        (26     (7      7        (62     (55

PIMCO VIT Total Return Portfolio—Institutional Class

    56        (1     55                         

Royce Micro-Cap Portfolio—Investment Class

    81        (107     (26      101        (142     (41

T. Rowe Price Blue Chip Growth Portfolio

    3        (4     (1      1               1   

T. Rowe Price International Stock Portfolio

    1        (1                             

T. Rowe Price Limited-Term Bond Portfolio

    13        (3     10         4        (30     (26

T. Rowe Price New America Growth Portfolio

                                          

The Merger Fund VL

           (1     (1      2               2   

UIF Emerging Markets Debt Portfolio—Class I

    1        (11     (10      4        (14     (10

UIF U.S. Real Estate Portfolio—Class I

    425        (198     227         314        (188     126   

Van Eck VIP Multi-Manager Alternatives Fund—Initial Class

    55        (31     24         163        (57     106   

Victory VIF Diversified Stock Fund—Class A

           (1     (1      2        (1     1   

Not all investment divisions are available under all policies.

 

F-48


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 6—Financial Highlights

 

T

he following table presents financial highlights for each Investment Division as of December 31, 2014, 2013, 2012, 2011 and 2010:

 

        Net
Assets
   

Units

Outstanding

   

Variable
Accumulation

Unit Value

  (Lowest to Highest)  

 

Total Return1

(Lowest to Highest)

 

Investment

Income

Ratio2

 
 

 

 
MainStay VP Balanced—Initial Class   2014   $ 14,274        742      $  14.16 to $  19.75   10.1% to 10.9%     0.9
  2013     13,018        749          12.77 to     17.81   21.0% to 21.9%     1.2
  2012     10,075        704          10.48 to     14.61     4.8% to 12.3%     1.3
  2011     9,492        744          12.41 to     13.01   2.1% to 2.8%     1.5
    2010     9,598        771          12.16 to     12.66   12.8% to 13.6%     1.5
MainStay VP Bond—Initial Class   2014   $ 35,546        1,605      $  10.70 to $  28.16   5.1% to 5.8%     2.0
  2013     35,345        1,671          10.11 to     26.80   (2.5%) to (1.8%)     1.8
  2012     40,577        1,860          10.30 to     27.48   3.0% to 4.7%     2.4
  2011     40,239        1,912          17.15 to     26.44   6.5% to 7.2%     3.2
    2010     38,686        1,958          15.99 to     24.83   7.1% to 7.8%     3.1
MainStay VP Cash Management—Initial Class   2014   $ 41,076        32,539      $    1.00 to $    1.51   (0.7%) to 0.0%       0.0
  2013     43,128        33,929            1.00 to       1.52   (0.7%) to 0.0%       0.0
  2012     47,523        37,066            1.00 to       1.53   (0.7%) to 0.0%       0.0
  2011     54,269        42,470            1.00 to       1.54   (0.7%) to 0.0%       0.0
    2010     57,122        44,529            1.18 to       1.55   (0.7%) to 0.0%       0.0
MainStay VP Common Stock—Initial Class   2014   $ 104,022        3,214      $  20.59 to $  53.59   13.7% to 14.5%     1.3
  2013     97,165        3,413          18.07 to     47.12   34.7% to 35.7%     1.6
  2012     77,800        3,675          13.39 to     34.98   15.9% to 16.7%     1.6
  2011     72,901        3,995          11.53 to     30.18   0.9% to 1.6%     1.5
    2010     79,044        4,357          11.41 to     29.92   11.8% to 12.6%     1.6
MainStay VP Conservative Allocation—Initial Class   2014   $ 15,669        935      $  12.24 to $  17.27   3.6% to 4.3%     2.4
  2013     14,971        927          15.84 to     16.56   12.2% to 13.0%     2.5
  2012     12,866        887          10.38 to     14.65     3.8% to 10.7%     2.2
  2011     9,472        730          12.84 to     13.24   2.2% to 2.9%     2.2
    2010     8,123        640          12.55 to     12.86   11.2% to 12.0%     2.6
MainStay VP Convertible—Initial Class   2014   $ 48,846        1,702      $  13.73 to $  37.09   7.2% to 8.0%     3.2
  2013     46,724        1,749          12.71 to     34.59   24.5% to 25.3%     2.4
  2012     39,984        1,864          10.14 to     27.79   1.4% to 9.1%     2.9
  2011     39,881        2,026          17.85 to     25.64   (5.4%) to (4.7%)     2.3
    2010     44,430        2,135          18.74 to     27.11   17.0% to 17.9%     2.9
MainStay VP Cornerstone Growth—Initial Class   2014   $ 191,416        8,388      $  12.71 to $  32.94   8.1% to 8.8%     0.6
  2013     190,427        9,040          11.73 to     30.48   23.8% to 24.7%     0.8
  2012     166,385        9,787            9.46 to     24.61   14.1% to 14.9%     0.4
  2011     157,746        10,637            8.27 to     21.56   (2.1%) to (1.4%)     0.5
    2010     174,413        11,533            8.43 to     22.02   11.4% to 12.2%     0.5
MainStay VP Eagle Small Cap Growth—Initial Class   2014   $ 49,746        3,753      $  13.15 to $  13.41   1.8% to 2.5%     0.0
  2013     53,272        4,104          12.91 to     13.08   30.0% to 30.9%     0.1
    2012     44,838        4,505            9.93 to     10.00   (0.7%) to 0.0%       0.0
MainStay VP Emerging Markets Equity—Initial Class   2014   $ 38,890        4,661      $    8.26 to $    8.42   (12.6%) to (12.0%)     1.1
  2013     46,942        4,938            9.44 to       9.57   (6.1%) to (5.4%)     0.7
    2012     53,368        5,293          10.06 to     10.12   0.6% to 1.2%     0.0
MainStay VP Floating Rate—Initial Class   2014   $ 15,790        1,142      $  10.93 to $  14.29   0.2% to 0.9%     3.9
  2013     16,151        1,176          10.84 to     14.16   3.7% to 4.5%     4.2
  2012     14,933        1,131          10.38 to     13.56   3.8% to 7.2%     4.2
  2011     13,510        1,095          12.07 to     12.65   1.5% to 2.2%     4.3
    2010     12,770        1,053          11.83 to     12.37   7.4% to 8.1%     4.0
MainStay VP Government—Initial Class   2014   $ 18,378        911      $  10.45 to $  24.69   3.9% to 4.6%     3.1
  2013     18,544        959            9.99 to     23.76   (3.1%) to (2.5%)     3.2
  2012     21,880        1,094          10.24 to     24.53   2.4% to 4.0%     3.0
  2011     22,960        1,180          15.90 to     23.77   5.2% to 6.0%     3.3
    2010     23,754        1,302          15.01 to     22.58   4.6% to 5.4%     3.2
MainStay VP Growth Allocation—Initial Class   2014   $ 48,088        2,822      $  16.54 to $  17.33   4.2% to 4.9%     1.3
  2013     43,169        2,654          15.88 to     16.52   29.9% to 30.9%     1.0
  2012     31,447        2,518          12.20 to     12.63   14.7% to 15.5%     1.0
  2011     27,003        2,499          10.62 to     10.93   (3.3%) to (2.6%)     0.9
    2010     30,384        2,733          10.96 to     11.23   14.2% to 15.0%     1.2
MainStay VP High Yield Corporate Bond—Initial Class   2014   $ 130,499        4,042      $  12.78 to $  42.97   1.1% to 1.8%     5.7
  2013     137,276        4,299          12.55 to     42.51   5.9% to 6.6%     5.5
  2012     135,699        4,474          11.77 to     40.15   12.6% to 13.4%     5.8
  2011     122,296        4,532          10.38 to     35.65   3.8% to 6.3%     6.3
    2010     121,880        4,772          21.70 to     33.78   11.9% to 12.7%     5.9
MainStay VP ICAP Select Equity—Initial Class   2014   $ 146,519        6,590      $  15.40 to $  24.55   8.1% to 8.9%     1.4
  2013     143,517        7,007          14.14 to     22.55   29.4% to 30.3%     1.6
  2012     120,343        7,628          10.86 to     17.30   14.8% to 15.6%     2.1
  2011     117,796        8,627            9.39 to     14.97   (6.1%) to (1.4%)     1.4
    2010     125,244        9,012          13.00 to     15.19   17.3% to 18.1%     0.9
MainStay VP Income Builder—Initial Class   2014   $ 65,268        2,299      $  13.69 to $  38.40   7.3% to 8.1%     5.7
  2013     63,797        2,407          12.66 to     35.77   17.6% to 18.4%     4.5
  2012     53,563        2,333          10.70 to     30.43     7.0% to 15.0%     4.2
  2011     50,257        2,501          13.22 to     26.65   3.4% to 4.1%     3.9
    2010     52,163        2,680          12.76 to     25.77   14.0% to 14.8%     3.1
MainStay VP International Equity—Initial Class   2014   $ 45,210        2,053      $  10.76 to $  27.33   (3.3%) to (2.6%)     0.7
  2013     49,146        2,168          11.05 to     28.26   14.3% to 15.1%     1.1
  2012     46,384        2,345            9.60 to     24.72   18.6% to 19.5%     1.8
  2011     42,409        2,553            8.03 to     20.84   (19.7%) to (16.0%)     3.2
    2010     52,905        2,660          15.56 to     24.99   4.2% to 4.9%     3.3
MainStay VP Janus Balanced—Initial Class   2014   $ 137,764        10,128      $  13.49 to $  13.78   7.9% to 8.7%     1.4
  2013     134,848        10,728          12.41 to     12.68   19.3% to 20.2%     1.5
    2012     117,403        11,172          10.33 to     10.55   3.3% to 5.5%     0.0
MainStay VP Large Cap Growth—Initial Class   2014   $ 48,109        2,433      $  14.48 to $  23.69     9.9% to 10.6%     0.0
  2013     45,050        2,532          13.18 to     21.42   35.5% to 36.5%     0.3
  2012     35,975        2,754            9.72 to     15.69   12.3% to 13.1%     0.0
  2011     32,873        2,857            8.66 to     13.87   (7.0%) to (0.3%)     0.0
    2010     32,588        2,832            8.74 to     13.91   15.4% to 16.2%     0.0
Mainstay VP Marketfield—Initial Class   2014   $ 1,163        127      $    9.10 to $    9.14   (9.0%) to (8.6%)     0.0
MainStay VP MFS® Utilities—Initial Class   2014   $ 35,335        2,409      $  14.48 to $  14.77   11.9% to 12.7%     1.8
  2013     26,674        2,045          12.85 to     13.11   19.5% to 20.3%     2.4
    2012     18,365        1,688          10.68 to     10.89   6.8% to 8.9%     0.0
MainStay VP Mid Cap Core—Initial Class   2014   $ 105,581        3,097      $  31.32 to $  36.05   13.6% to 14.4%     0.5
  2013     99,607        3,338          27.58 to     31.52   41.2% to 42.2%     1.0
  2012     73,003        3,479          19.53 to     22.17   16.7% to 17.5%     0.8
  2011     67,217        3,760          16.74 to     18.86   (3.7%) to (3.0%)     0.9
    2010     72,748        3,940          17.37 to     19.44   22.8% to 23.6%     0.4
MainStay VP Moderate Allocation—Initial Class   2014   $ 41,706        2,420      $  12.94 to $  17.72   3.9% to 4.6%     2.3
  2013     37,869        2,297          16.10 to     16.94   18.3% to 19.1%     2.0
  2012     29,575        2,132          10.39 to     14.22     3.9% to 12.6%     1.8
  2011     23,369        1,891          12.17 to     12.63   0.2% to 0.9%     1.8
    2010     24,137        1,962          12.12 to     12.51   12.3% to 13.1%     2.2
MainStay VP Moderate Growth Allocation—Initial Class   2014   $ 66,849        3,814      $  13.69 to $  17.89   3.9% to 4.6%     1.9
  2013     58,341        3,478          13.09 to     17.11   25.0% to 25.9%     1.3
  2012     44,210        3,315          10.40 to     13.58     4.0% to 14.7%     1.2
  2011     37,848        3,246          11.44 to     11.85   (1.9%) to (1.2%)     1.1
    2010     38,097        3,216          11.64 to     11.99   13.5% to 14.3%     1.6
MainStay VP PIMCO Real Return—Initial Class   2014   $ 9,465        967      $    9.66 to $    9.86   1.8% to 2.5%     0.9
  2013     9,673        1,011            9.49 to       9.62   (9.7%) to (9.1%)     1.1
    2012     12,621        1,198          10.46 to     10.58   4.6% to 5.8%     0.0
MainStay VP S&P 500 Index—Initial Class   2014   $ 304,363        10,223      $  19.12 to $  57.09   12.6% to 13.3%     1.4
  2013     284,196        10,730          16.95 to     50.72   31.1% to 32.0%     1.6
  2012     228,576        11,296          12.91 to     38.69   14.9% to 15.7%     1.7
  2011     212,669        12,088          11.21 to     33.69   1.1% to 1.8%     1.7
    2010     227,014        13,037          11.07 to     33.31   13.9% to 14.7%     1.8
MainStay VP T. Rowe Price Equity Income—Initial Class   2014   $ 78,796        5,245      $  14.85 to $  15.15   7.0% to 7.7%     1.4
  2013     77,339        5,532          13.88 to     14.06   29.5% to 30.4%     1.3
    2012     61,677        5,732          10.72 to     10.79   7.2% to 7.9%     0.0
MainStay VP Unconstrained Bond—Initial Class   2014   $ 6,121        540      $  11.19 to $  11.40   1.2% to 1.9%     3.9
  2013     3,240        291          11.06 to     11.19   3.4% to 4.2%     4.8
    2012     1,232        115          10.69 to     10.74   6.9% to 7.4%     10.6

 

F-49


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 6—Financial Highlights (Continued):

 

 

        Net
Assets
   

Units

Outstanding

   

Variable
Accumulation

Unit Value

  (Lowest to Highest)  

 

Total Return1

(Lowest to Highest)

 

Investment

Income

Ratio2

 
 

 

 
MainStay VP U.S. Small Cap—Initial Class   2014   $ 25,661        1,231      $  20.37 to $  21.11   5.8% to 6.6%     0.3
  2013     24,961        1,274          19.24 to     19.80   36.9% to 37.9%     0.7
  2012     18,346        1,290          14.05 to     14.36   12.0% to 12.8%     0.5
  2011     16,594        1,311          12.55 to     12.73   (3.4%) to (2.7%)     0.9
    2010     17,633        1,352          12.99 to     13.09   24.2% to 25.0%     0.1
MainStay VP Van Eck Global Hard Assets—Initial Class   2014   $ 37,010        4,553      $    8.02 to $    8.18   (19.4%) to (18.8%)     0.4
  2013     45,772        4,562            9.95 to     10.08   10.2% to 11.0%     1.1
    2012     44,693        4,932            9.03 to       9.08   (9.7%) to (9.2%)     0.0
Alger Capital Appreciation Portfolio—Class I-2   2014   $ 1,700        46      $  16.95 to $  40.31   13.8% to 13.8%     0.1
  2013     1,360        40          14.90 to     35.44   35.2% to 35.2%     0.3
  2012     1,216        47          11.02 to     26.21   18.3% to 18.3%     0.9
  2011     1,424        64            9.32 to     22.16   (6.8%) to (0.3%)     0.1
    2010     1,282        58          22.22 to     22.22   14.0% to 14.0%     0.4
AllianceBernstein VPS International Value Portfolio—Class A   2014   $             $  10.14 to $  10.14   (6.2%) to (6.2%)     3.6
  2013                     10.82 to     10.82   23.0% to 23.0%     5.7
  2012                       8.79 to       8.79   14.5% to 14.5%     1.8
    2011                       7.68 to       7.68   (23.2%) to (23.2%)     4.8
AllianceBernstein VPS Small/Mid Cap Value Portfolio—Class A   2014   $ 8,837        480      $  17.55 to $  18.91   8.4% to 9.2%     0.7
  2013     7,846        465          16.19 to     17.31   37.1% to 38.1%     0.6
  2012     5,510        450          11.81 to     12.54   17.9% to 18.7%     0.6
  2011     4,812        467          10.01 to     10.56   (9.0%) to (8.4%)     0.5
    2010     4,721        419          11.00 to     11.53   26.0% to 26.9%     0.5
American Century Investments® VP Inflation Protection Fund—Class II   2014   $ 285        19      $  11.52 to $  15.19   3.3% to 3.3%     1.3
  2013     264        18          11.15 to     14.71   (8.5%) to (8.5%)     1.6
  2012     257        16          12.19 to     16.07   7.4% to 7.4%     2.4
  2011     220        15          11.35 to     14.97   11.7% to 13.5%     3.9
    2010     182        14          13.39 to     13.39   5.1% to 5.1%     1.6
American Century Investments® VP International Fund—Class II   2014   $ 1,955        84      $  23.35 to $  23.35   (5.7%) to (5.7%)     1.5
  2013     2,232        90          24.75 to     24.75   22.3% to 22.3%     1.5
  2012     1,800        89          20.24 to     20.24   21.0% to 21.0%     0.7
  2011     1,465        88          16.73 to     16.73   (12.2%) to (12.2%)     1.2
    2010     1,814        96          19.05 to     19.05   13.1% to 13.1%     2.1
American Century Investments® VP Value Fund—Class II   2014   $ 1,961        68      $  28.94 to $  28.94   12.9% to 12.9%     1.4
  2013     1,860        73          25.63 to     25.63   31.5% to 31.5%     1.5
  2012     1,374        70          19.50 to     19.50   14.6% to 14.6%     1.8
  2011     1,196        71          17.01 to     17.01   0.9% to 0.9%     1.9
    2010     1,162        69          16.87 to     16.87   13.0% to 13.0%     2.1
American Funds IS® New World Fund®—Class 2   2014   $ 1,175        127      $    9.23 to $    9.27   (7.7%) to (7.3%)     1.7
BlackRock® Global Allocation V.I. Fund—Class III   2014   $ 8,899        748      $  11.78 to $  12.00   1.2% to 1.9%     2.4
  2013     6,714        575          11.64 to     11.78   13.8% to 14.4%     1.3
    2012     3,518        343          10.23 to     10.29   2.3% to 2.9%     2.2
BlackRock® High Yield V.I. Fund—Class I   2014   $ 577        58      $    9.91 to $    9.95   (0.9%) to (0.5%)     3.1
Columbia Variable Portfolio—Small Cap Value Fund—Class 2   2014   $ 19        1      $  13.95 to $  13.95   3.1% to 3.1%     0.4
  2013     8        1          13.53 to     13.53   34.0% to 34.0%     1.3
    2012     1                 10.10 to     10.10   11.3% to 11.3%     0.3
Delaware VIP® Diversified Income Series—Standard Class   2014   $ 90        8      $  11.86 to $  11.86   5.3% to 5.3%     1.8
  2013     44        4          11.26 to     11.26   (1.3%) to (1.3%)     2.2
  2012     30        3          11.40 to     11.40   7.2% to 7.2%     3.0
    2011     87        8          10.64 to     10.64   6.4% to 6.4%     0.0
Delaware VIP® Emerging Markets Series—Standard Class   2014   $ 1,645        150      $    9.45 to $  11.08   (8.7%) to (8.1%)     0.6
  2013     966        82          10.28 to     12.05   9.4%   to 10.1%     1.1
  2012     70        7            9.33 to     10.94   9.1%   to 14.4%     0.5
    2011     18        2            8.15 to       8.15   (18.5%) to (18.5%)     0.0
Delaware VIP® International Value Equity Series—Standard Class   2014   $ 11        1      $  10.42 to $  10.42   (8.7%) to (8.7%)     1.5
  2013     14        1          11.40 to     11.40   22.8% to 22.8%     0.6
  2012     5        1            9.29 to       9.29   15.2% to 15.2%     1.0
    2011     1                   8.06 to       8.06   (19.4%) to (19.4%)     0.2
Delaware VIP® Small Cap Value Series—Standard Class   2014   $ 4,303        293      $  14.54 to $  15.09   5.1% to 5.9%     0.5
  2013     2,804        201          13.83 to     14.26   32.6% to 33.5%     0.4
  2012     471        45          10.43 to     10.68   4.3%   to 13.9%     0.0
    2011     3                   9.37 to       9.37   (6.3%) to (6.3%)     0.0
Delaware VIP® Value Series—Standard Class   2014   $ 53        3      $  18.30 to $  18.30   14.0% to 14.0%     1.8
  2013     66        4          16.05 to     16.05   33.7% to 33.7%     1.6
  2012     49        4          12.01 to     12.01   14.7% to 14.7%     2.0
    2011     57        5          10.47 to     10.47   4.7% to 4.7%     0.0
Deutsche Small Cap Index VIP—Class A   2014   $ 28        2      $  15.38 to $  15.38   4.7% to 4.7%     1.0
  2013     28        2          14.68 to     14.68   38.6% to 38.6%     1.6
  2012     17        2          10.59 to     10.59   16.3% to 16.3%     0.8
    2011     19        2            9.11 to       9.11   (8.9%) to (8.9%)     0.0
Deutsche Small Mid Cap Value VIP—Class A   2014   $ 4,151        250      $  16.05 to $  16.81   4.8% to 5.5%     0.8
  2013     3,861        245          15.32 to     15.93   34.3% to 35.2%     1.1
  2012     2,553        219          11.41 to     11.78   13.0% to 13.8%     1.1
  2011     1,837        179          10.10 to     10.36   (6.7%) to (6.1%)     1.1
    2010     1,495        136          10.83 to     11.03   22.2% to 23.1%     1.6
DFA VA Global Bond Portfolio   2014   $ 19        2      $  10.54 to $  10.54   2.9% to 2.9%     4.4
  2013     5                 10.25 to     10.25   (0.4%) to (0.4%)     0.6
    2012     2                 10.28 to     10.28   2.8% to 2.8%     2.3
DFA VA International Small Portfolio   2014   $ 41        3      $  12.59 to $  12.59   (5.8%) to (5.8%)     2.5
  2013     60        4          13.36 to     13.36   27.1% to 27.1%     4.3
    2012     6        1          10.51 to     10.51   5.1% to 5.1%     2.8
DFA VA International Value Portfolio   2014   $ 50        4      $  12.27 to $  12.27   (7.2%) to (7.2%)     4.7
  2013     33        2          13.22 to     13.22   21.7% to 21.7%     3.4
    2012     10        1          10.87 to     10.87   8.7% to 8.7%     3.4
DFA VA Short-Term Fixed Portfolio   2014   $ 42        4      $  10.08 to $  10.08   0.1% to 0.1%     0.3
  2013     25        2          10.06 to     10.06   0.3% to 0.3%     0.3
    2012     9        1          10.04 to     10.04   0.4% to 0.4%     0.5
DFA VA U.S. Large Value Portfolio   2014   $ 93        6      $  16.74 to $  16.74   9.1% to 9.1%     2.1
  2013     71        5          15.35 to     15.35   40.8% to 40.8%     1.8
    2012     24        2          10.90 to     10.90   9.0% to 9.0%     2.4
DFA VA U.S. Targeted Value Portfolio   2014   $ 69        4      $  16.29 to $  16.29   3.7% to 3.7%     0.9
  2013     78        5          15.71 to     15.71   44.6% to 44.6%     1.2
    2012     21        2          10.86 to     10.86   8.6% to 8.6%     2.0
Dreyfus IP Technology Growth Portfolio—Initial Shares   2014   $ 18,854        822      $  18.56 to $  26.35   6.1% to 6.8%     0.0
  2013     18,018        842          17.49 to     24.67   31.9% to 32.8%     0.0
  2012     14,480        901          13.26 to     18.58   14.8% to 15.6%     0.0
  2011     13,250        940          11.55 to     16.07   (8.4%) to (7.8%)     0.0
    2010     15,190        996          12.62 to     17.42   29.0% to 29.9%     0.0
Dreyfus VIF Opportunistic Small Cap Portfolio—Initial Shares   2014   $ 2,573        115      $  22.42 to $  22.42   1.6% to 1.6%     0.0
  2013     2,542        115          22.07 to     22.07   48.5% to 48.5%     0.0
  2012     1,637        110          14.86 to     14.86   20.6% to 20.6%     0.0
  2011     1,257        102          12.32 to     12.32   (13.8%) to (13.8%)     0.4
    2010     1,711        120          14.30 to     14.30   31.1% to 31.1%     0.7
Fidelity® VIP Contrafund® Portfolio—Initial Class   2014   $ 228,027        6,659      $  15.73 to $  47.43   11.2% to 11.9%     1.0
  2013     214,535        6,969          14.06 to     42.67   30.4% to 31.3%     1.1
  2012     171,709        7,248          10.71 to     32.73   15.6% to 16.4%     1.3
  2011     162,267        7,899            9.20 to     28.31   (8.0%) to (2.5%)     1.0
    2010     176,618        8,300          17.35 to     29.25   16.4% to 17.2%     1.3
Fidelity® VIP Equity-Income Portfolio—Initial Class   2014   $ 77,772        3,073      $  15.51 to $  31.73   8.0% to 8.7%     2.8
  2013     75,904        3,239          14.26 to     29.39   27.3% to 28.1%     2.6
  2012     59,856        3,241          11.13 to     23.10   16.5% to 17.3%     3.1
  2011     53,886        3,401            9.49 to     19.83   (5.1%) to   1.0%     2.4
    2010     57,383        3,642          13.73 to     19.78   14.3% to 15.1%     1.9
Fidelity® VIP Freedom 2020 Portfolio—Initial Class   2014   $ 436        38      $  11.27 to $  11.41   4.1% to 4.8%     2.3
    2013     124        11          10.83 to     10.88   8.3% to 8.8%     2.0
Fidelity® VIP Freedom 2030 Portfolio—Initial Class   2014   $ 487        42      $  11.67 to $  11.81   4.2% to 5.0%     2.0
    2013     153        14          11.20 to     11.25   12.0% to 12.5%     2.8
Fidelity® VIP Freedom 2040 Portfolio—Initial Class   2014   $ 675        56      $  11.89 to $  12.03   4.2% to 4.9%     1.7
    2013     247        22          11.41 to     11.46   14.1% to 14.6%     1.4
Fidelity® VIP Growth Opportunities Portfolio—Initial Class   2014   $ 255        22      $  11.34 to $  11.39   13.4% to 13.9%     0.4
Fidelity® VIP Growth Portfolio—Initial Class   2014   $ 5,209        264      $  19.72 to $  19.72   11.3% to 11.3%     0.2
  2013     4,811        272          17.72 to     17.72   36.3% to 36.3%     0.3
  2012     3,726        287          13.00 to     13.00   14.7% to 14.7%     0.6
  2011     3,420        302          11.33 to     11.33   0.2% to 0.2%     0.4
    2010     3,486        308          11.31 to     11.31   24.2% to 24.2%     0.3

 

F-50


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 6—Financial Highlights (Continued):

 

        Net
Assets
   

Units

Outstanding

 

Variable
Accumulation

Unit Value

  (Lowest to Highest)  

 

Total Return1

(Lowest to Highest)

 

Investment

Income

Ratio2

 
 

 

 
Fidelity® VIP Index 500 Portfolio—Initial Class   2014   $ 13,300      593   $  16.77 to $  22.47   13.6% to 13.6%     1.6
  2013     12,572      637       14.77 to     19.78   32.2% to 32.2%     1.8
  2012     10,862      727       11.17 to     14.96   15.9% to 15.9%     2.1
  2011     9,306      722         9.63 to     12.91   (3.7%) to   2.0%     2.0
    2010     8,750      692       12.65 to     12.65   15.0% to 15.0%     2.1
Fidelity® VIP Investment Grade Bond Portfolio—Initial Class   2014   $ 1,220      70   $  11.86 to $  17.74   5.8% to 5.8%     2.5
  2013     1,025      63       11.21 to     16.76   (1.8%) to (1.8%)     2.5
  2012     1,000      60       11.41 to     17.06   5.9% to 5.9%     2.4
  2011     1,058      70       10.78 to     16.11   7.3% to 7.8%     4.9
    2010     960      64       15.01 to     15.01   7.8% to 7.8%     3.5
Fidelity® VIP Mid Cap Portfolio—Initial Class   2014   $ 8,039      342   $  12.93 to $  40.32   5.5% to 6.3%     0.3
  2013     5,925      200       12.25 to     37.94   22.5% to 36.2%     0.5
  2012     4,191      152         9.82 to     27.85   14.8% to 14.8%     0.6
  2011     4,090      171         8.55 to     24.25   (14.5%) to (10.6%)     0.2
    2010     5,008      185       27.13 to     27.13   28.8% to 28.8%     0.4
Fidelity® VIP Overseas Portfolio—Initial Class   2014   $ 5,887      289   $  11.54 to $  20.41   (8.1%) to (8.1%)     1.3
  2013     6,653      300       12.56 to     22.20   30.4% to 30.4%     1.4
  2012     5,587      328         9.63 to     17.02   20.7% to 20.7%     2.0
  2011     4,939      350         7.97 to     14.10   (20.3%) to (17.2%)     1.3
    2010     6,346      373       17.02 to     17.02   13.1% to 13.1%     1.5
Invesco V.I. American Value Fund—Series I   2014   $ 1,916      123   $  15.41 to $  16.38   9.0% to 9.8%     0.5
  2013     983      69       14.14 to     14.93   33.3% to 34.3%     0.8
  2012     336      32       10.60 to     11.12     6.0% to 17.3%     0.8
    2011     26      3         9.48 to       9.48   (5.2%) to (5.2%)     1.1
Invesco V.I. Global Real Estate Fund—Series I   2014   $ 38      3   $  13.90 to $  13.90   14.6% to 14.6%     1.5
  2013     35      3       12.12 to     12.12   2.7% to 2.7%     4.1
  2012     34      3       11.80 to     11.80   28.1% to 28.1%     0.9
    2011     10      1         9.21 to       9.21   (7.9%) to (7.9%)     5.9
Invesco V.I. International Growth Fund—Series I   2014   $ 10,416      859   $  11.48 to $  12.68   (0.4%) to (0.3%)     1.6
  2013     8,723      722       11.52 to     12.64   18.2% to 19.0%     1.3
  2012     6,187      609         9.75 to     10.62   14.7% to 15.5%     1.5
  2011     4,082      459         8.50 to       9.19   (8.1%) to (6.7%)     1.4
    2010     3,338      353         9.18 to       9.63   12.1% to 12.9%     2.4
Janus Aspen Enterprise Portfolio—Institutional Shares   2014   $ 532      16   $  16.13 to $  34.57   12.5% to 12.5%     0.2
  2013     522      18       14.34 to     30.73   32.4% to 32.4%     0.5
  2012     493      22       10.83 to     23.21   17.3% to 17.3%     0.0
  2011     986      53         9.23 to     19.79   (7.7%) to (1.4%)     0.0
    2010     841      42       20.07 to     20.07   25.8% to 25.8%     0.1
Janus Aspen Forty Portfolio—Institutional Shares   2014   $ 13      1   $  15.85 to $  15.85   8.7% to 8.7%     0.1
  2013     23      2       14.57 to     14.57   31.2% to 31.2%     0.7
  2012     16      1       11.11 to     11.11   24.2% to 24.2%     0.7
    2011     8      1         8.95 to       8.95   (10.5%) to (10.5%)     0.3
Janus Aspen Global Research Portfolio—Institutional Shares   2014   $ 94,490      5,163   $  14.34 to $  25.73   6.7% to 7.4%     1.1
  2013     94,077      5,508       13.41 to     24.12   27.5% to 28.4%     1.2
  2012     78,464      5,872       10.49 to     18.91   19.2% to 20.1%     0.9
  2011     71,817      6,397         8.78 to     15.86   (14.3%) to (13.7%)     0.6
    2010     90,055      6,886       10.23 to     18.51   15.0% to 15.8%     0.6
LVIP Baron Growth Opportunities Fund—Service Class   2014   $ 9      1   $  17.04 to $  17.04   4.9% to 4.9%     0.2
  2013     10      1       16.25 to     16.25   40.1% to 40.1%     0.4
  2012     6      1       11.60 to     11.60   18.2% to 18.2%     2.2
    2011     —                9.81 to       9.81   (1.9%) to (1.9%)     0.0
MFS® International Value Portfolio—Initial Class   2014   $ 4,431      325   $  13.50 to $  14.51   0.6% to 1.3%     2.0
  2013     2,955      219       13.41 to     14.32   27.0% to 27.9%     1.9
  2012     381      36       10.56 to     11.19     5.6% to 16.2%     0.5
    2011     19      2         9.63 to       9.63   (3.7%) to (3.7%)     1.9
MFS® Investors Trust Series—Initial Class   2014   $ 615      44   $  10.94 to $  23.10     9.4% to 11.0%     1.0
  2013     224      11       20.81 to     20.81   32.1% to 32.1%     1.1
  2012     171      11       15.76 to     15.76   19.2% to 19.2%     1.0
  2011     135      10       13.23 to     13.23   (2.2%) to (2.2%)     0.9
    2010     138      10       13.52 to     13.52   11.1% to 11.1%     1.2
MFS® New Discovery Series—Initial Class   2014   $ 5,283      297   $  13.32 to $  26.42   (7.9%) to (7.3%)     0.0
  2013     5,847      304       14.37 to     28.49   40.5% to 41.5%     0.0
  2012     2,934      175       10.15 to     20.13     3.8% to 21.2%     0.0
  2011     1,857      112         8.37 to     16.60   (16.3%) to (10.3%)     0.0
    2010     2,270      123       18.50 to     18.50   36.3% to 36.3%     0.0
MFS® Research Bond Series—Initial Class   2014   $ 85      7   $  12.02 to $  12.02   5.8% to 5.8%     1.2
  2013     8      1       11.36 to     11.36   (1.0%) to (1.0%)     1.3
    2012     4            11.48 to     11.48   7.4% to 7.4%     2.2
MFS® Research Series—Initial Class   2014   $ 1,009      65   $  14.82 to $  20.52     9.4% to 10.2%     0.8
  2013     795      55       13.54 to     18.62   31.4% to 32.3%     0.3
  2012     600      52       10.31 to     14.08     3.1% to 17.3%     0.6
  2011     123      10       12.00 to     12.00   (0.5%) to (0.5%)     0.9
    2010     148      12       12.06 to     12.06   15.9% to 15.9%     0.9
MFS® Value Series—Initial Class   2014   $ 5        $  16.55 to $  16.55   10.5% to 10.5%     1.6
  2013     3            14.98 to     14.98   35.9% to 35.9%     1.3
  2012     1            11.02 to     11.02   16.3% to 16.3%     1.3
    2011                  9.48 to       9.48   (5.2%) to (5.2%)     1.6
Neuberger Berman AMT Mid Cap Growth Portfolio—Class I   2014   $ 2,843      174   $  13.59 to $  30.04   6.8% to 7.6%     0.0
  2013     2,289      145       12.73 to     27.92   31.7% to 32.6%     0.0
  2012     1,208      88         9.66 to     21.05   (3.4%) to 12.4%     0.0
  2011     607      32         9.47 to     18.73   (5.3%) to 0.5%       0.0
    2010     540      29       18.64 to     18.64   29.1% to 29.1%     0.0
PIMCO VIT Foreign Bond Portfolio (U.S. Dollar-Hedged)—Institutional Class   2014   $ 844      79   $  10.71 to $  10.76   7.1% to 7.6%     1.1
PIMCO VIT Global Bond Portfolio (Unhedged)—Administrative Class   2014   $ 294      18   $  16.08 to $  16.08   2.3% to 2.3%     2.5
  2013     317      20       15.72 to     15.72   (8.5%) to (8.5%)     1.0
  2012     321      19       17.18 to     17.18   6.9% to 6.9%     1.6
  2011     278      17       16.06 to     16.06   7.6% to 7.6%     2.6
    2010     288      19       14.93 to     14.93   11.7% to 11.7%     2.7
PIMCO VIT Low Duration Portfolio—Administrative Class   2014   $ 353      28   $  12.84 to $  12.84   0.9% to 0.9%     1.1
  2013     361      28       12.73 to     12.73   (0.1%) to (0.1%)     1.5
  2012     374      29       12.74 to     12.74   5.9% to 5.9%     1.9
  2011     146      12       12.04 to     12.04   1.1% to 1.1%     1.8
    2010     327      27       11.91 to     11.91   5.3% to 5.3%     1.6
PIMCO VIT Total Return Portfolio—Administrative Class   2014   $ 2,018      122   $  11.66 to $  16.83   4.3% to 4.3%     2.2
  2013     2,049      129       11.18 to     16.14   (2.0%) to (2.0%)     2.2
  2012     3,011      184       11.40 to     16.46   9.6% to 9.6%     2.6
  2011     2,497      171       10.40 to     15.02   3.6% to 4.0%     2.6
    2010     2,101      145       14.50 to     14.50   8.1% to 8.1%     2.4
PIMCO VIT Total Return Portfolio—Institutional Class   2014   $ 559      55   $  10.20 to $  10.24   2.0% to 2.4%     2.2
Royce Micro-Cap Portfolio—Investment Class   2014   $ 16,955      1,045   $  15.64 to $  16.51   (4.3%) to (3.6%)     0.0
  2013     18,040      1,071       16.34 to     17.13   20.1% to 21.0%     0.5
  2012     15,482      1,112       13.60 to     14.16   6.9% to 7.6%     0.0
  2011     14,055      1,084       12.73 to     13.15   (12.7%) to (12.1%)     2.5
    2010     15,256      1,030       14.58 to     14.97   29.1% to 30.0%     2.0
T. Rowe Price Blue Chip Growth Portfolio   2014   $ 40      2   $  17.18 to $  17.18   9.2% to 9.2%     0.0
  2013     40      3       15.74 to     15.74   41.2% to 41.2%     0.0
  2012     25      2       11.15 to     11.15   18.3% to 18.3%     0.1
    2011     15      2         9.43 to       9.43   (5.7%) to (5.7%)     0.0
T. Rowe Price International Stock Portfolio   2014   $ 19      2   $  11.53 to $  11.53   (1.2%) to (1.2%)     0.8
  2013     26      2       11.67 to     11.67   14.1% to 14.1%     1.0
  2012     18      2       10.24 to     10.24   18.4% to 18.4%     0.8
    2011     4              8.64 to       8.64   (13.6%) to (13.6%)     4.9
T. Rowe Price Limited-Term Bond Portfolio   2014   $ 604      43   $  10.50 to $  14.14   0.6% to 0.6%     1.2
  2013     450      33       10.43 to     14.05   0.1% to 0.1%     1.6
  2012     814      59       10.42 to     14.03   2.5% to 2.5%     2.0
  2011     812      61       10.17 to     13.70   1.6% to 1.7%     2.4
    2010     792      59       13.48 to     13.48   3.1% to 3.1%     2.8
T. Rowe Price New America Growth Portfolio   2014   $ 3        $  15.87 to $  15.87   9.3% to 9.3%     0.0
  2013     6            14.52 to     14.52   38.0% to 38.0%     0.0
  2012     5            10.52 to     10.52   13.1% to 13.1%     0.8
    2011                  9.30 to       9.30   (7.0%) to (7.0%)     0.3

 

F-51


NYLIAC VUL Separate Account-I

Notes to Financial Statements (Continued)

NOTE 6—Financial Highlights (Continued):

 

        Net
Assets
   

Units

Outstanding

 

Variable
Accumulation

Unit Value

  (Lowest to Highest)  

 

Total Return1

(Lowest to Highest)

 

Investment

Income

Ratio2

 
 

 

 
The Merger Fund VL   2014   $ 37      3   $  10.74 to $  10.74   1.4% to 1.4%     1.1
  2013     39      4       10.60 to     10.60   3.9% to 3.9%     0.3
  2012     21      2       10.20 to     10.20   2.5% to 2.5%     0.0
    2011     44      4         9.95 to       9.95   (0.5%) to (0.5%)     8.5
UIF Emerging Markets Debt Portfolio—Class I   2014   $ 580      25   $  23.00 to $  23.00   2.9% to 2.9%     5.6
  2013     781      35       22.34 to     22.34   (8.7%) to (8.7%)     4.3
  2012     1,098      45       24.48 to     24.48   18.0% to 18.0%     3.0
  2011     1,134      55       20.76 to     20.76   7.0% to 7.0%     3.3
    2010     831      43       19.39 to     19.39   9.7% to 9.7%     4.1
UIF U.S. Real Estate Portfolio—Class I   2014   $ 19,165      1,197   $  14.48 to $  36.92   28.8% to 29.7%     1.4
  2013     12,109      970       11.24 to     28.46   1.3% to 2.1%     1.1
  2012     10,608      844       11.09 to     27.89   15.0% to 15.8%     0.8
  2011     7,986      713         9.64 to     24.07   0.1% to 5.9%     0.8
    2010     6,549      606         9.16 to     22.73   29.1% to 30.0%     1.7
Van Eck VIP Multi-Manager Alternatives Fund—Initial Class   2014   $ 2,427      227   $  10.19 to $  11.49   (1.8%) to (1.1%)     0.0
  2013     2,201      203       10.30 to     11.61   4.3% to 5.0%     0.0
  2012     1,056      97         9.80 to     11.05   (0.5%) to 1.3%       0.0
  2011     1,136      105         9.67 to     10.91   (3.3%) to (2.3%)     0.9
    2010     1,234      111       11.16 to     11.16   5.0% to 5.0%     0.0
Victory VIF Diversified Stock Fund—Class A   2014   $ 2        $  15.27 to $  15.27   10.2% to 10.2%     0.8
  2013     9      1       13.86 to     13.86   33.9% to 33.9%     0.7
  2012     5            10.35 to     10.35   16.3% to 16.3%     0.5
    2011     26      3         8.90 to       8.90   (11.0%) to (11.0%)     0.7

Not all investment divisions are available under all policies.

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

Expenses as a percent of net assets are .05%—1.00%, excluding expenses of the underlying funds, deductions from premiums, deductions from cash value and surrender 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 an Investment Division from the underlying 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. The recognition of investment income by the Investment Division is affected by the timing of the declaration of dividends by the underlying Fund in which the Investment Division invests. Annualized percentages are shown for the Investment Income Ratio for all Investment Divisions in all periods.

 

F-52


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

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

and the Variable Universal Life Separate Account-I 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 Variable Universal Life Separate Account-I as of December 31, 2014, the results of each of its operations for the year ended, the changes in 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 investments at December 31, 2014 by correspondence with the transfer agents, provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 18, 2015

 

F-53


 

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

CONSOLIDATED FINANCIAL STATEMENTS

(GAAP Basis)

December 31, 2014 and 2013


Table of Contents

 

      Page
Number
 

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 Flow

     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

     19   

Note 5 — Recent Accounting Pronouncements

     21   

Note 6 — Investments

     25   

Note 7 — Derivative Instruments and Risk Management

     32   

Note 8 — Separate Accounts

     38   

Note 9 — Fair Value Measurements

     38   

Note 10 — Investment Income and Investment Gains and Losses

     59   

Note 11 — Related Party Transactions

     66   

Note 12 — Policyholders’ Liabilities

     70   

Note 13 — Deferred Policy Acquisition Costs and Sales Inducements

     75   

Note 14 — Reinsurance

     76   

Note 15 — Commitments and Contingencies

     78   

Note 16 — Income Taxes

     80   

Note 17 — Debt

     82   

Note 18 — Supplemental Cash Flow Information

     82   

Note 19 — Statutory Financial Information

     83   

Note 20 — Subsequent Events

     83   

Independent Auditor’s Report

     84   

 

2


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

     December 31,  
     2014      2013  
     (in millions)  

Assets

     

Fixed maturities, at fair value:

     

Available-for-sale (includes securities pledged as collateral that can be sold or repledged of $537 in 2014 and $489 in 2013)

   $ 75,653       $ 71,543   

Trading

     1,197         497   

Equity securities, at fair value:

     

Available-for-sale

     35         112   

Trading

     757         447   

Mortgage loans, net of allowances

     10,927         9,765   

Policy loans

     869         858   

Securities purchased under agreements to resell

     133         101   

Investments in affiliates

     2,287         2,288   

Other investments

     1,219         1,438   
  

 

 

    

 

 

 

Total investments

     93,077         87,049   

Cash and cash equivalents

     710         594   

Deferred policy acquisition costs

     3,041         2,847   

Interest in annuity contracts

     6,260         6,114   

Amounts recoverable from reinsurer:

     

Affiliated

     4,410         6,877   

Unaffiliated

     1,546         1,390   

Other assets

     1,505         1,357   

Separate account assets

     28,965         26,434   
  

 

 

    

 

 

 

Total assets

   $ 139,514       $ 132,662   
  

 

 

    

 

 

 

Liabilities

     

Policyholders’ account balances

   $ 66,876       $ 65,391   

Future policy benefits

     16,688         14,069   

Policy claims

     347         339   

Obligations under structured settlement agreements

     6,260         6,114   

Amounts payable to reinsurer:

     

Affiliated

     4,370         6,837   

Unaffiliated

     52         48   

Other liabilities

     3,173         2,730   

Separate account liabilities

     28,965         26,434   
  

 

 

    

 

 

 

Total liabilities

     126,731         121,962   
  

 

 

    

 

 

 

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

     2,064         963   

Retained earnings

     6,766         5,784   
  

 

 

    

 

 

 

Total stockholder’s equity

     12,783         10,700   
  

 

 

    

 

 

 

Total liabilities and stockholder’s equity

   $ 139,514       $ 132,662   
  

 

 

    

 

 

 

 

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,  
     2014     2013     2012  
     (in millions)  

Revenues

      

Premiums

   $ 3,123      $ 3,384      $ 2,816   

Fees-universal life and annuity policies

     1,017        889        885   

Net investment income

     3,683        3,612        3,611   

Net investment gains (losses):

      

Other-than-temporary impairments on fixed maturities

     (30     (45     (63

Other-than-temporary impairments on fixed maturities recognized in accumulated other comprehensive income

     1        11        18   

All other net investment gains (losses)

     467        (65     75   
  

 

 

   

 

 

   

 

 

 

Total net investment gains (losses)

     438        (99     30   

Net revenue from reinsurance

     86        71        85   

Other income

     100        94        68   
  

 

 

   

 

 

   

 

 

 

Total revenues

     8,447        7,951        7,495   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Interest credited to policyholders’ account balances

     2,199        1,847        2,055   

Increase in liabilities for future policy benefits

     2,451        2,718        2,199   

Policyholder benefits

     1,341        1,164        973   

Operating expenses

     1,129        1,363        1,416   
  

 

 

   

 

 

   

 

 

 

Total expenses

     7,120        7,092        6,643   
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     1,327        859        852   

Income tax expense

     345        193        240   
  

 

 

   

 

 

   

 

 

 

Net income

   $ 982      $ 666      $ 612   
  

 

 

   

 

 

   

 

 

 

 

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,  
     2014     2013     2012  
     (in millions)  

Net income

   $ 982      $ 666      $ 612   
  

 

 

   

 

 

   

 

 

 

Other comprehensive (loss) gain income, net of tax

      

Foreign currency translation adjustment:

     (1     1          

Less: reclassification adjustment for currency translation gains included in net income

                     
  

 

 

   

 

 

   

 

 

 

Foreign currency translation adjustment, net

     (1     1          
  

 

 

   

 

 

   

 

 

 

Net unrealized investment gain (losses):

      

Net unrealized investment gains (losses) arising during the period

     1,175        (1,999     1,004   

Less: reclassification adjustment for net unrealized investment gains included in net income

     73        63        86   
  

 

 

   

 

 

   

 

 

 

Net unrealized investment gains (losses), net

     1,102        (2,062     918   
  

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

     1,101        (2,061     918   
  

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 2,083      $ (1,395   $ 1,530   
  

 

 

   

 

 

   

 

 

 

 

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, 2014, 2013 and 2012

(in millions)

 

                Accumulated Other
Comprehensive Income
             
    Capital
Stock
    Additional
Paid In
Capital
    Foreign
Currency
Translation
Adjustment
    Net
Unrealized
Investment
Gains (Losses)
    Net Unrealized
Gains (Losses)
on Other-Than
Temporarily
Impaired Fixed
Maturity
Investments
    Retained
Earnings
    Total
Stockholder’s
Equity
 

Balance at January 1, 2012

  $ 25      $ 3,928      $      $ 2,161      $ (55   $ 4,506      $ 10,565   

Net income

                                       612        612   

Other comprehensive income, net of tax

                         872        46               918   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2012

  $ 25      $ 3,928      $      $ 3,033      $ (9   $ 5,118      $ 12,095   

Net income

                                       666        666   

Other comprehensive income, net of tax

                  1        (2,072     10               (2,061
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2013

  $ 25      $ 3,928      $ 1      $ 961      $ 1      $ 5,784      $ 10,700   

Net income

                                       982        982   

Other comprehensive (loss) income, net of tax

                  (1     1,081        21               1,101   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2014

  $ 25      $ 3,928      $      $ 2,042      $ 22      $ 6,766      $ 12,783   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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 FLOW

 

     Year Ended December 31,  
     2014     2013     2012  
     (in millions)  

Cash Flows from Operating Activities:

      

Net income

   $ 982      $ 666      $ 612   

Adjustments to reconcile net income to net cash provided by operating activities:

      

Depreciation and amortization

     (17     (4     (8

Net capitalization of deferred policy acquisition costs

     (314     (44     127   

Universal life and annuity fees

     (743     (718     (677

Interest credited to policyholders’ account balances

     2,199        1,847        2,055   

Capitalized interest and dividends reinvested

     (228     (207     (192

Net investment (gains) losses

     (438     99        (30

Equity in earnings of limited partnerships

     33        22        23   

Deferred income tax expense

     127        50        61   

Net revenue from intercompany reinsurance

     (1     (1     (1

Net change in unearned revenue liability

     60        140        32   

Changes in:

      

Other assets and other liabilities

     (111     53        25   

Book overdrafts

     20        14          

Reinsurance receivables and payables

     4        (59     (10

Policy claims

     8        69        (12

Future policy benefits

     2,463        2,685        2,265   
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     4,044        4,612        4,270   
  

 

 

   

 

 

   

 

 

 

Cash Flows from Investing Activities:

      

Proceeds from:

      

Sale of available-for-sale fixed maturities

     2,474        3,979        3,752   

Maturity and repayment of available-for-sale fixed maturities

     7,829        9,329        8,683   

Sale of equity securities

     78        34        128   

Repayment of mortgage loans

     1,309        1,167        816   

Sale of other investments

     1,997        2,134        1,969   

Sale of trading securities

     679        280        39   

Maturity and repayment of trading securities

     48        61        31   

Cost of:

      

Available-for-sale fixed maturities acquired

     (12,296     (16,219     (13,407

Equity securities acquired

     (2            (58

Mortgage loans acquired

     (2,460     (2,431     (2,149

Acquisition of other investments

     (2,045     (1,962     (3,005

Acquisition of trading securities

     (1,753     (1,013     (112

Securities purchased under agreements to resell

     (32     (42     31   

Cash collateral (paid) received on derivatives

     (4     7          

Policy loans

     (6     12        (32
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (4,184     (4,664     (3,314
  

 

 

   

 

 

   

 

 

 

Cash Flows from Financing Activities:

      

Policyholders’ account balances:

      

Deposits

     7,735        6,116        4,763   

Withdrawals

     (6,030     (4,325     (4,370

Net transfers to the separate accounts

     (1,761     (1,518     (1,145

Increase in loaned securities

     50        39          

Securities sold under agreements to repurchase

            (76     (38

Net paydowns from debt

     (1     (4     (2

Change in bank overdrafts

                   33   

Cash collateral received (paid) on derivatives

     265        (215     (82
  

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     258        17        (841
  

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (2     (4     (2
  

 

 

   

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     116        (39     113   

Cash and cash equivalents, beginning of year

     594        633        520   
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of year

   $ 710      $ 594      $ 633   
  

 

 

   

 

 

   

 

 

 

 

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, 2014, 2013 AND 2012

NOTE 1 — NATURE OF OPERATIONS

New York Life Insurance and Annuity Corporation (the “Company”), domiciled in the State of Delaware, is a direct, wholly owned subsidiary of New York Life Insurance Company (“New York Life”). The Company’s primary business operations are its Insurance and Agency and Investment Groups. The Company offers a wide variety of interest sensitive and variable life insurance and annuity products to a large cross section of the insurance market. The Company markets its products in all 50 of the United States, and the District of Columbia, 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 with majority owned and controlled subsidiaries, as well as a variable interest entity in which the Company is considered the primary beneficiary. All intercompany transactions have been eliminated in consolidation. Certain amounts in prior years have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income or equity as previously reported.

The Delaware State Insurance Department (“the Department”) 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 in the accompanying Consolidated Statements of Operations. 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. In the event collectability of interest is uncertain, accrual of interest income will cease and income will be recorded when and if received.

 

8


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Fixed maturity and equity trading securities are reported at fair value and include invested assets that support certain of the Company’s insurance liabilities. The changes in the fair value of all trading securities are included in Net investment gains or losses in the accompanying Consolidated Statements of Operations. Cash flows from acquiring and disposing of trading securities that support the Company’s insurance liabilities are classified in Cash flows from investing activities in the Consolidated Statements of Cash Flow. All other cash flows for trading securities are classified in Cash flows from operating activities in the Consolidated Statements of Cash Flow.

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, in the accompanying Consolidated Statements of Financial Position. Unrealized gains and losses from fixed maturity investments classified as trading are reflected in Net investment gains or losses in the accompanying Consolidated Statements of Operations.

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. For mortgage-backed and asset-backed securities, 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 in the accompanying Consolidated Statements of Operations. 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, when the fair value is below amortized cost and there are negative changes in estimated future cash flows, are deemed other-than-temporary impaired securities.

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.

 

9


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 and 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 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, in the accompanying Consolidated Statements of Financial Position. Unrealized gains and losses from investments in equity securities classified as trading are reflected in Net investment gains or losses in the accompanying Consolidated Statements of Operations.

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 in the accompanying Consolidated Statements of Operations. 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.

Mortgage loans on real estate are carried at unpaid principal balances, net of discounts or premiums, deferred origination fee income, and valuation allowances, and are collateralized. Specific valuation allowances are established for the excess carrying value of the mortgage loan over the estimated fair value of the collateral 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 is updated triennially unless a more current appraisal is warranted. 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 takes into account loan-to-value ratios (“LTV”) of the portfolio, 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 in the accompanying Consolidated Statements of Operations.

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

 

10


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 loan has investment income due and accrued that is 90 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 is 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, 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 valuation allowance.

Policy loans are stated at the aggregate balance due. A valuation allowance is established for policy loan balances, including capitalized interest, that exceeds the related policy’s cash surrender value.

Investment in Affiliates consists of the Company’s investment in the New York Life Short Term Fund (“STIF”) and a revolving loan agreement with Madison Capital Funding LLC (“MCF”). For further discussion, refer to Note 6 — Investments.

Other investments consist primarily of direct investments in limited partnerships and limited liability companies, derivatives (see discussion on derivative instruments below), short-term investments, real estate and senior secured commercial loans. Refer to Note 6 — Investments for details of Other investments by component. 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.

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 of accounting. For limited partnerships accounted for under the equity method of accounting, unrealized gains and losses are recorded in Net investment income in the accompanying Consolidated Statements of Operations. 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 in the accompanying Consolidated Statements of Financial Position.

Real estate held for the production of income and home office properties 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 in the accompanying Consolidated Statements of Operations. 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 in the accompanying Consolidated Statements of Financial Position.

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

 

11


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 in the accompanying Consolidated Statements of Operations.

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.

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

The authoritative guidance provides a fair value option election that allows companies to irrevocably elect fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities. Unrealized gains and losses on certain financial assets for which the fair value option has been elected are reported in Net investment gains or losses in the accompanying Consolidated Statements of Operations. The decision to elect the fair value option is determined on an instrument by instrument basis, must be applied to an entire instrument and is irrevocable once elected. Refer to Note 9 — Fair Value Measurements for more information on the fair value option.

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

Derivative Instruments

Derivatives are recorded at fair value as assets, within Other investments or as liabilities, within Other liabilities, in the accompanying Consolidated Statements of Financial Position, 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 in the accompanying Consolidated Statements of Operations.

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 is 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.

 

12


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 in the accompanying Consolidated Statements of Financial Position. The Company also posts collateral for derivatives that are in a net liability position, which is included in Other assets in the accompanying Consolidated Statements of Financial Position. 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 OCI 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 or Net investment income in the accompanying Consolidated Statements of Operations. Any ineffectiveness is immediately recognized in earnings and included in Net investment gains or losses in the accompanying Consolidated Statements of Operations.

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 OCI. 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 in the accompanying Consolidated Statements of Operations. Any ineffectiveness is immediately recognized in earnings and included as Net investment gains or losses in the accompanying Consolidated Statements of Operations.

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 in the accompanying Consolidated Statements of Financial Position 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 on the Consolidated Statements of Financial Position 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.

 

13


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Variable Interest Entities (“VIEs”)

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.

This authoritative guidance is deferred indefinitely for certain entities that have the attributes of investment companies, with the exception of securitizations, asset-backed financings, collateralized structures and former qualifying SPEs. In addition, entities are not eligible for the deferral if any obligation to fund losses or guarantee performance exists. In accordance with the deferral provisions, the Company is the primary beneficiary and is required to consolidate the VIE if it stands to absorb a majority of the VIE’s expected losses or to receive a majority of the VIE’s expected residual returns, or both.

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, 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 in the accompanying Consolidated Statements of Financial Position. 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 in the accompanying Consolidated Statements of Financial Position.

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. 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 in the accompanying Consolidated Statements of Financial Position.

 

14


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Deferred Policy Acquisition Costs

DAC consists primarily of incremental direct costs of contract acquisition that are incurred in transactions with employees, including career agents and independent third-parties as well as the portion of employee compensation costs related to underwriting, policy issuance and processing, medical inspection and contract selling for successfully negotiated contracts. These costs have been deferred and recorded as an asset in the accompanying Consolidated Statements of Financial Position.

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 in the accompanying Consolidated Statements of Operations. 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 in the accompanying Consolidated Statements of Financial Position.

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 in the accompanying Consolidated Statements of Financial Position.

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.

 

15


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Intangible Assets

The Company holds an intangible asset with a finite life which is amortized over its useful life. Intangible assets with finite useful lives are tested for impairment when facts and circumstances indicate that the carrying amount may not be recoverable, and an impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted cash flows attributable to the asset. The amount of the impairment loss to be recorded is calculated by the excess of the asset’s carrying value over its fair value.

Fair value is generally determined using a discounted cash flow analysis with assumptions that a market participant would use.

All intangible assets are reported in Other assets in the accompanying Consolidated Statements of Financial Position.

Policyholders’ Account Balances

The Company’s liability for Policyholders’ account balances 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.

Future Policy Benefits

The Company’s liability for Future policy benefits is primarily 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 in the accompanying Consolidated Statements of Operations. 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 and claim adjustment expenses. Unpaid claims and claim adjustment expenses 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 and is included in Other liabilities in the accompanying Consolidated Statements of Financial Position. Refer to Note 9 — Fair Value Measurements for discussion on the fair value of debt.

 

16


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 customers, 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, and receivables from affiliates. Other liabilities primarily consist of net deferred tax liabilities, clearing and suspense liabilities, collateral received on securities loaned, employee and agent benefits, and payables to affiliates.

Fair Value Measurements

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

Recognition of Insurance Income and Related Expenses

Premiums from annuity policies with life contingencies and from whole and term life policies 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 (as discussed in 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 (as discussed in 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 the accompanying Consolidated Statements of Operations. 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

 

17


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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, as discussed in Note 14 — Reinsurance. This net revenue adjustment excludes ceded universal life fees and ceded policyholder benefits, which are included on these respective lines in the accompanying Consolidated Statements of Operations.

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 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 in the accompanying Consolidated Statements of Financial Position 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 in the accompanying Consolidated Statements of Operations.

 

18


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

NOTE 4 — BUSINESS RISKS AND UNCERTAINTIES

In periods of extreme volatility and disruption in the securities and credit markets and under certain interest rate scenarios, the Company could be subject to disintermediation risk and/or reduction in net interest spread or profit margins.

The Company’s investment portfolio consists principally of fixed income securities as well as mortgage loans, policy loans, limited partnerships, preferred and common stocks, senior secured commercial loans and equity real estate. The fair value of the Company’s investments varies depending on economic and market conditions and the interest rate environment. Furthermore, with respect to investments in mortgage loans, mortgage-backed securities and other securities subject to prepayment and/or call risk, significant changes in prevailing interest rates and/or geographic conditions may adversely affect the timing and amount of cash flows on these investments, as well as their related values. In addition, the amortization of market premium and accretion of market discount for mortgage-backed securities is based on historical experience and estimates of future payment experience on the underlying mortgage loans. Actual prepayment timing will differ from original estimates and may result in material adjustments to asset values and amortization or accretion recorded in future periods.

Certain of these investments lack liquidity, such as privately placed fixed income securities, equity real estate and other limited partnership interests. The Company also holds certain investments in asset classes that are liquid but may experience significant market fluctuations, such as mortgage-backed and other asset-backed securities. If the Company were to require significant amounts of cash on short notice in excess of cash on hand and the Company’s portfolio of liquid investments, the Company could have difficulty selling these investments in a timely manner, be forced to sell them for less than the Company otherwise would have been able to realize, or both.

In periods of high or increasing interest rates, life insurance policy loans and surrenders and withdrawals may increase as policyholders seek investments with higher perceived returns. This could result in cash outflows requiring the Company to sell invested assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which could cause the Company to suffer realized investment losses. In addition, when interest rates rise, the Company may face competitive pressure to increase crediting rates on certain insurance and annuity contracts, and such changes may occur more quickly than corresponding changes to the rates earned on the Company’s general account investments.

During periods of low or declining interest rates, the Company is contractually obligated to credit a fixed minimum rate of interest on certain of the Company’s life insurance and annuity policies. Should yields on new investments decline to levels below these guaranteed minimum rates for a long enough period, the Company may be required to credit interest to policyholders at a higher rate than the rate of return the Company earns on the Company’s portfolio of investments supporting those products, thus generating losses. Although management of the Company employs a number of asset/liability management strategies to minimize the effects of interest rate volatility, no guarantee can be given that it will be successful in managing the effects of such volatility.

The Company establishes and carries reserves to pay future policyholder benefits and claims. The process of calculating reserve amounts for an insurance organization involves the use of a number of estimates and assumptions including those related to mortality (the relative incidence of death in a given time or place), morbidity (the incidence rate of a disease or medical condition) and interest rates (the rates expected to be paid or received on financial instruments, including insurance or investment contracts). Since the Company cannot precisely determine the amount or timing of actual future benefits and claims, actual results could differ significantly from those assumed. Deviations from one or more of these estimates and assumptions could have a material adverse effect on the Company’s consolidated results of operations or financial position.

The Company sets prices for many of its insurance and annuity products based upon expected claims and payment patterns, using assumptions for mortality, morbidity, persistency (how long a contract stays in force)

 

19


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

and interest rates. In addition to the potential effect of natural or man-made disasters, significant changes in mortality could emerge gradually over time, due to changes in the natural environment, the health habits of the insured population, effectiveness of treatment for disease or disability, or other factors. In addition, the Company could fail to accurately provide for changes in other pricing assumptions, including changes in interest and inflation rates. Significant negative deviations in actual experience from the Company’s pricing assumptions could have a material adverse effect on the profitability of its products. The Company’s earnings are significantly influenced by the claims paid under its insurance contracts and will vary from period to period depending upon the amount of claims incurred. There is only limited predictability of claims experience within any given month or year. The Company’s future experience may not match its pricing assumptions or its past results. As a result, the Company’s results of operations and financial position could be materially adversely affected.

Issuers or borrowers whose securities or loans the Company holds, customers, trading counterparties, counterparties under swaps and other derivative contracts, reinsurers, clearing agents, exchanges, clearing houses and other financial intermediaries and guarantors may default on their obligations to the Company due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud or other reasons. In addition, the underlying collateral supporting the Company’s structured securities, including mortgage-backed securities, may deteriorate or default causing these structured securities to incur losses.

Weak equity market performance may adversely affect sales of variable products, cause potential purchasers of the Company’s products to refrain from new or additional investments, and may cause current customers to surrender or redeem their current products and investments.

Revenues of the Company’s variable products are, to a large extent, based on fees related to the value of assets under management (except for its Elite Annuity product, where future revenue is based on adjusted premium payments). Consequently, poor equity market performance reduces fee revenues. The level of assets under management could also be negatively affected by withdrawals or redemptions.

The Company issues certain variable products with various types of guaranteed minimum benefit features. The Company establishes reserves for the expected payments resulting from these features. The Company bears the risk that payments may be higher than expected as a result of significant, sustained downturns in the stock market. The Company also bears the risk that additional reserves may be required if partial surrender activity increases significantly for some annuity products during the period when account values are less than guaranteed amounts.

The risk-based capital (“RBC”) ratio is the primary measure by which regulators evaluate the capital adequacy of the Company. RBC is determined by statutory rules that consider risks related to the type and quality of invested assets, insurance-related risks associated with the Company’s products, interest rate risk and general business risks. Disruptions in the capital markets could increase equity and credit losses and reduce the Company’s statutory surplus and RBC ratio. To the extent the Company’s statutory capital resources are deemed to be insufficient to maintain a particular rating by one or more rating agencies, the Company may seek to improve its capital position, including through operational changes and potentially seeking capital from New York Life.

The Company faces significant competition.

The Company faces strong competition in its Insurance and Agency and Investment Group businesses. The Company’s ability to compete is based on a number of factors, including product features, investment performance, service, price, distribution capabilities, scale, commission structure, name recognition and financial strength ratings.

New York Life’s career agency force is the primary means by which it distributes life insurance products. In order to continue increasing life insurance sales, the Company must retain existing productive career agents and attract additional productive career agents.

Rating agencies assign the Company financial strength/claims paying ability ratings, based on their evaluations of the Company’s ability to meet its financial obligations. These ratings indicate a rating agency’s

 

20


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

view of an insurance company’s ability to meet its obligations to its insured. In certain of the Company’s markets, ratings are important competitive factors. Rating organizations continue to review the financial performance and condition of insurers, including the Company. A significant downgrade in the Company’s ratings could materially and adversely affect its competitive position in the life insurance market and increase its cost of funds. In addition, downgrades of the sovereign credit rating of the United States of America would likely result in a corresponding downgrade of the financial strength rating of the Company by certain rating agencies, which could have an adverse effect on the Company’s results of operations.

Regulatory developments in the markets in which the Company operates could affect the Company’s business.

Although the federal government does not directly regulate the business of insurance, federal legislation and administrative policies in several areas, including pension regulation, financial services regulation, derivatives and federal taxation, can significantly and adversely affect the insurance industry and the Company. There are a number of current or potential regulatory measures that may affect the insurance industry. The Company is unable to predict whether any changes will be made, whether any administrative or legislative proposals will be adopted in the future, or the effect, if any, such proposals would have on the Company.

The attractiveness to the Company’s customers of many of its products is due, in part, to favorable tax treatment. Current federal income tax laws generally permit the tax-deferred accumulation of earnings on the premiums paid by the holders of annuities and life insurance products. Taxes, if any, are payable generally on income attributable to a distribution under the contract for the year in which the distribution is made. Death benefits under life insurance contracts are received free of federal income tax. Changes to the favorable tax treatment may reduce the attractiveness of the Company’s products to its customers.

A computer system failure or security breach could disrupt the Company’s business, damage its reputation and adversely impact its profitability.

The Company relies on computer systems to conduct business, including customer service, marketing and sales activities, customer relationship management and producing financial statements. While the Company has policies, procedures, automation and backup plans and facilities designed to prevent or limit the effect of failure, its computer systems may be vulnerable to disruptions or breaches as the result of natural disasters, man-made disasters, criminal activity, pandemics, or other events beyond its control. The failure of the Company’s computer systems for any reason could disrupt its operations, result in the loss of customer business and adversely impact its profitability.

The Company retains confidential information on its computer systems, including customer information and proprietary business information. Any compromise of the security of the Company’s computer systems that results in the disclosure of personally identifiable customer information could damage the Company’s reputation, expose the Company to litigation and regulatory action, increase regulatory scrutiny, and require it to incur significant technical, legal and other expenses.

NOTE 5 — RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance that changes the criteria for reporting discontinued operations and introduces new disclosures. Under this revised guidance, the disposal of a component or group of components of an entity should be reported as a discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Disposals of equity method investments, or those reported as held-for-sale, will be eligible for presentation as a discontinued operation if they meet the new definition. The new guidance is effective

 

21


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

prospectively to new disposals and new classifications of disposal groups as held for sale that occurs on or after December 15, 2014. Early adoption is permitted for new disposals or new classifications as held for sale that have not been reported in financial statements previously issued or available for issuance. The Company adopted this guidance effective January 1, 2014. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations or financial statement disclosures.

In December 2013, the FASB issued guidance establishing a single definition of a public entity for use in financial accounting and reporting guidance. The definition of a public business entity is currently used in considering the scope of new financial guidance and will identify whether the guidance applies to public business entities. The new definition applies to authoritative guidance issued after December 2013. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations, or financial statement disclosures.

In July 2013, the FASB issued updated guidance regarding the presentation of unrecognized tax benefits when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. This guidance became effective for annual reporting periods that begin after December 15, 2013, and was applied prospectively. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations, or financial statement disclosures.

In July 2013, the FASB issued new guidance regarding derivatives. The guidance permits the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) to be used as a U.S. benchmark interest rate for hedge accounting, in addition to the United States Treasury rate and London Inter-Bank Offered Rate (“LIBOR”). The guidance also removes the restriction on using different benchmark rates for similar hedges. The guidance became effective for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013 and was applied prospectively. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations, or financial statement disclosures.

In June 2013, the FASB issued updated guidance clarifying the characteristics of an investment company and requiring new disclosures. Under the guidance, all entities regulated under the Investment Company Act of 1940 automatically qualify as investment companies, while all other entities need to consider both the fundamental and typical characteristics of an investment company in determining whether they qualify as investment companies. The guidance became effective for interim or annual reporting periods that begin after December 15, 2013, and was applied prospectively. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations, or financial statement disclosures.

In March 2013, the FASB issued updated guidance regarding the recognition in net income of the cumulative translation adjustment upon the sale or loss of control of a business or group of assets residing in a foreign subsidiary, or a loss of control of a foreign investment. The guidance became effective for the first interim or annual reporting period beginning after December 15, 2013 and was applied prospectively. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations, or financial statement disclosures.

In February 2013, the FASB issued new guidance regarding joint and several liabilities. The amendments require an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. In addition, the amendments require an entity to disclose the nature and amount of the obligation, as well as other information about the obligation. This guidance became effective for interim or annual reporting periods that began after December 15, 2013 and was applied prospectively. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations, or financial statement disclosures.

 

22


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

In February 2013, the FASB issued updated guidance regarding the presentation of comprehensive income. The updated guidance requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income, but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. The guidance became effective for the first interim or annual reporting period beginning after December 15, 2012 and was applied prospectively. The Company’s adoption of this guidance did not have a material effect on the Company’s consolidated financial position or results of operations. The disclosures required by this guidance are included in Note 10 — Investment Income and Investment Gains and Losses.

In December 2011 and January 2013, the FASB issued updated guidance and enhanced disclosure requirements for financial instruments and derivative instruments that are either offset in accordance with existing guidance for right of setoff or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the financial statement. The FASB also clarified the scope of the new GAAP offsetting guidance, which only applies to derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with GAAP guidance or subject to a master netting arrangement or similar agreement. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the accompanying Consolidated Statements of Financial Position and instruments and transactions subject to an agreement similar to a master netting arrangement. The guidance became effective for annual reporting periods beginning on or after January 1, 2013 and was applied retrospectively for all comparative periods presented. The Company’s adoption of this guidance did not have an impact on the Company’s consolidated financial position or results of operations but resulted in additional disclosures related to derivatives included in Note 7 — Derivative Instruments and Risk Management, and securities purchased under agreements to resell included in Note 15 — Commitments and Contingencies.

In June 2011, the FASB issued updated guidance regarding the presentation of comprehensive income. The updated guidance eliminates the option to present components of OCI as part of the Consolidated Statements of Stockholder’s Equity. Under the updated guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of OCI either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The updated guidance does not change the items that are reported in AOCI or when an item of AOCI must be reclassified to net income. The Company opted to present net income and other comprehensive income in two separate consecutive statements. The Company adopted this guidance effective January 1, 2012. This guidance impacted the financial statement presentation but did not have an impact on the Company’s consolidated financial position or results of operations.

In October 2010, the FASB issued guidance to address diversity in practice regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral. Under the new guidance, acquisition costs are to include only those costs that are directly related to the acquisition or renewal of insurance contracts by applying a model similar to the accounting for loan origination costs. While the adoption of this amended guidance changes the timing of when certain costs are reflected in the Company’s results of operations, it had no effect on the total acquisition costs to be recognized over time and had no impact on the Company’s cash flows. Effective January 1, 2012, the Company adopted this guidance retrospectively.

Future Adoption of New Accounting Pronouncements

In February 2015, the FASB issued updated guidance that changes the rules regarding consolidation. The pronouncement is intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures, and removes the indefinite

 

23


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

deferral for certain investment funds. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. The Company is currently evaluating the impact of the guidance on the Company’s consolidated financial position, results of operations and financial statement disclosures.

In June 2014, the FASB issued an accounting standard that changes the accounting for repurchase-to-maturity transactions and repurchase financing arrangements. The new guidance requires that repurchase-to maturity transactions and repurchase financing arrangements be accounted for as secured borrowings and provides for enhanced disclosures, including the nature of collateral pledged and the time to maturity. The amendments are effective for interim and annual reporting periods beginning after December 15, 2014. Earlier adoption is not permitted. Certain interim period disclosures for repurchase agreements and securities lending transactions are not required until the second quarter of 2015. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In June 2014, the FASB issued an accounting standard that clarifies the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments are effective for interim and annual reporting periods beginning after December 15, 2015. Earlier adoption is permitted. The standard may be applied prospectively to all awards granted or modified after the effective date; or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In May 2014, the FASB issued updated guidance on accounting for revenue recognition, which supersedes most existing revenue recognition guidance. 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. Revenue recognition for insurance contracts is explicitly scoped out of the guidance. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2016, and must be applied using one of two retrospective application methods. Early adoption is not permitted. The Company will adopt this guidance on January 1, 2017. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In January 2014, the FASB issued new guidance to clarify that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. This new guidance is effective for annual periods beginning after December 15, 2014 and should be adopted using either a modified retrospective transition method or a prospective transition method. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In January 2014, the FASB issued new guidance to permit 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 recognize the net investment performance in Income tax expense in the accompanying Consolidated Statements

 

24


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

of Operations. This new guidance is effective for annual periods beginning after December 15, 2014 and should be applied retrospectively. Retrospective adoption of this guidance will result in the restatement of all years presented with a decrease in retained earnings of approximately $20 million at January  1, 2014.

NOTE 6 — INVESTMENTS

Fixed Maturities

The amortized cost and estimated fair value of fixed maturities at December 31, 2014 and 2013, 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.

 

     2014      2013  

Available-for-sale

   Amortized
Cost
     Fair
Value
     Amortized
Cost
     Fair
Value
 

Due in one year or less

   $ 3,396       $ 3,448       $ 2,575       $ 2,625   

Due after one year through five years

     13,814         14,561         13,946         14,813   

Due after five years through ten years

     18,321         18,917         16,891         17,370   

Due after ten years

     10,489         11,716         9,783         9,905   

Mortgage-backed and asset-backed securities:

           

U.S. agency mortgage-backed and asset-backed securities

     14,581         15,485         15,466         15,792   

Non-agency mortgage-backed securities

     6,564         6,802         6,868         7,027   

Non-agency asset-backed securities

     4,670         4,724         4,026         4,011   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale

   $ 71,835       $ 75,653       $ 69,555       $ 71,543   
  

 

 

    

 

 

    

 

 

    

 

 

 

At December 31, 2014 and 2013, the distribution of gross unrealized gains and losses on investments in fixed maturities were as follows (in millions):

 

     2014  

Available-for-sale

   Amortized
Cost
     Unrealized
Gains
     Unrealized
Losses
     Fair
Value
     OTTI  in
AOCI(1)
 

U.S. Treasury

   $ 828       $ 86       $ 2       $ 912       $   

U.S. government corporations and agencies

     1,154         151         2         1,303           

U.S. agency mortgage-backed and asset-backed securities

     14,581         1,008         104         15,485           

Foreign governments

     471         60                 531           

U.S. corporate

     32,232         2,107         188         34,151           

Foreign corporate

     11,335         477         67         11,745           

Non-agency residential mortgage-backed securities

     1,628         76         27         1,677         (10

Non-agency commercial mortgage-backed securities

     4,936         196         7         5,125           

Non-agency asset-backed securities(2)

     4,670         80         26         4,724         (2

Redeemable preferred securities

                                       
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale

   $ 71,835       $ 4,241       $ 423       $ 75,653       $ (12
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

25


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

    2013  

Available-for-sale

  Amortized
Cost
    Unrealized
Gains
    Unrealized
Losses
    Fair Value     OTTI  in
AOCI(1)
 

U.S. Treasury

  $ 862      $ 26      $ 11      $ 877      $ (1

U.S. government corporations and agencies

    1,399        83        13        1,469          

U.S. agency mortgage-backed and asset-backed securities

    15,466        727        401        15,792          

Foreign governments

    577        53        1        629          

U.S. corporate

    29,513        1,595        501        30,607          

Foreign corporate

    10,844        447        160        11,131          

Non-agency residential mortgage-backed securities

    2,062        70        59        2,073        (27

Non-agency commercial mortgage-backed securities

    4,806        207        59        4,954          

Non-agency asset-backed securities(2)

    4,026        23        38        4,011        (3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale

  $ 69,555      $ 3,231      $ 1,243      $ 71,543      $ (31
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Represents the amount of OTTI losses in AOCI, which were not included in earnings pursuant to authoritative guidance. The amount excludes $46 million and $20 million for the years ended December 31, 2014 and 2013, 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, 2014 and 2013, the Company had outstanding contractual obligations to acquire additional private placement securities amounting to $644 million and $877 million, respectively.

The Company had no investments in fixed maturities that were non-income producing for the last 12 months at December 31, 2014 and 2013, respectively.

Equity Securities

At December 31, 2014 and 2013, 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
 

2014

   $ 20       $ 16       $ 1       $ 35   

2013

   $ 79       $ 34       $ 1       $ 112   

Mortgage Loans

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

At December 31, 2014 and 2013, contractual commitments to extend credit under mortgage loan documents amounted to $564 million and $374 million, respectively, at fixed and floating interest rates ranging from 1.73% to 6.41% in 2014 and from 1.94% to 6.50% in 2013. These commitments are diversified by property type and geographic region.

 

26


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

At December 31, 2014 and 2013, the distribution of the mortgage loan portfolio by property type and geographic region was as follows (in millions):

 

     2014     2013  
     Amount      % of
Total
    Amount      % of
Total
 

Property Type:

          

Office buildings

   $ 3,563         32.5   $ 3,032         31.0

Apartment buildings

     3,328         30.4        2,858         29.2   

Retail facilities

     2,790         25.5        2,364         24.1   

Industrial

     978         9.0        1,198         12.2   

Residential

     114         1.1        162         1.7   

Hotel/Motel

     172         1.5        176         1.8   

Other

     6                3           
  

 

 

    

 

 

   

 

 

    

 

 

 

Total mortgage loans

   $ 10,951         100.0   $ 9,793         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Allowance for credit losses

   $ (24      $ (28   
  

 

 

      

 

 

    

Total net mortgage loans

   $ 10,927         $ 9,765      
  

 

 

      

 

 

    
     2014     2013  
     Amount      % of
Total
    Amount      % of
Total
 

Geographic Region:

          

South Atlantic

   $ 2,868         26.2   $ 2,866         29.3

Central

     2,471         22.6        2,136         21.9   

Middle Atlantic

     2,324         21.2        2,179         22.3   

Pacific

     2,311         21.1        2,229         22.8   

New England

     867         7.9        315         3.2   

Other

     110         1.0        68         0.5   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total mortgage loans

   $ 10,951         100.0   $ 9,793         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Allowance for credit losses

   $ (24      $ (28   
  

 

 

      

 

 

    

Total net mortgage loans

   $ 10,927         $ 9,765      
  

 

 

      

 

 

    

The Company monitors the aging of its mortgage loans receivable on a monthly basis to determine delinquencies. At December 31, 2014 and 2013, the Company had $3 million and $4 million, respectively, of recorded investment gross of the allowance for credit losses in residential mortgage loans that were past due greater than 90 days. There were no investments in mortgage loans that were past due less than 90 days at December 31, 2014 and 2013.

As discussed in Note 3 — Significant Accounting Policies, 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.

 

27


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The activity in the mortgage loan specific and general reserves for the years ended December 31, 2014 and 2013 is summarized below (in millions):

 

     2014  

Allowance for credit losses:

   Residential     Commercial     Total  

Beginning balance

   $ 4      $ 24      $ 28   

Recoveries

     (2     (2     (4
  

 

 

   

 

 

   

 

 

 

Ending balance

   $ 2      $ 22      $ 24   
  

 

 

   

 

 

   

 

 

 

Ending Balance:

      

Collectively evaluated for impairment (general)

   $ 2      $ 22      $ 24   

Mortgage Loans:

      

Ending balance (recorded investment, gross of allowance for credit losses):

      

Collectively evaluated for impairment (general)

   $ 110      $ 10,837      $ 10,947   

Individually evaluated for impairment (specific)

   $ 4      $      $ 4   
     2013  

Allowance for credit losses:

   Residential     Commercial     Total  

Beginning balance

   $ 6      $ 29      $ 35   

Direct write-downs

     (1            (1

Provision for credit losses

     (1     (5     (6
  

 

 

   

 

 

   

 

 

 

Ending balance

   $ 4      $ 24      $ 28   
  

 

 

   

 

 

   

 

 

 

Ending Balance:

      

Collectively evaluated for impairment (general)

   $ 2      $ 23      $ 25   

Individually evaluated for impairment (specific)

   $ 2      $ 1      $ 3   

Mortgage Loans:

      

Ending balance (recorded investment, gross of allowance for credit losses):

      

Collectively evaluated for impairment (general)

   $ 154      $ 9,631      $ 9,785   

Individually evaluated for impairment (specific)

   $ 8      $      $ 8   

For the year ended December 31, 2012, direct write-downs were $6 million and recoveries were $3 million.

 

28


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

As discussed in Note 3 — Significant Accounting Policies, 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, 2014 and 2013, LTVs on the Company’s mortgage loans, based upon the recorded investment gross of allowance for credit losses, were as follows (in millions):

 

     2014  

LTV Ratio

   Office
Buildings
     Retail
Facilities
     Apartment
Buildings
     Industrial      Residential      Hotel/
Motel
     Other      Total  

Above 95%

   $       $       $       $       $ 1       $       $       $ 1   

91% to 95%

                                                               

81% to 90%

     68         182                 3         3                         256   

71% to 80%

     70         94         357         55         15         19                 610   

Below 70%

     3,425         2,514         2,971         920         95         153         6         10,084   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,563       $ 2,790       $ 3,328       $ 978       $ 114       $ 172       $ 6       $ 10,951   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     2013  

LTV Ratio

   Office
Buildings
     Retail
Facilities
     Apartment
Buildings
     Industrial      Residential      Hotel/
Motel
     Other      Total  

Above 95%

   $       $       $       $ 3       $ 1       $       $       $ 4   

91% to 95%

                                                               

81% to 90%

     96         35         7         115         4                         257   

71% to 80%

     119         144         392         156         20         18                 849   

Below 70%

     2,817         2,185         2,459         924         137         158         3         8,683   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,032       $ 2,364       $ 2,858       $ 1,198       $ 162       $ 176       $ 3       $ 9,793   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Impaired mortgage loans were $5 million and $8 million at December 31, 2014 and 2013, respectively. At December 31, 2014 and 2013, the Company did not have any impaired loans without a related allowance.

Investments in mortgage loans that have been non-income producing for the last 12 months totaled $2 million and $3 million at December 31, 2014 and 2013, respectively.

Investments in Affiliates

 

     2014      2013  

STIF

   $ 246       $ 399   

MCF revolving loan agreement

     2,041         1,889   
  

 

 

    

 

 

 

Total investments in affiliates

   $ 2,287       $ 2,288   
  

 

 

    

 

 

 

The STIF was formed by New York Life to improve short-term returns through greater flexibility to choose attractive maturities and enhanced portfolio diversification. The STIF is a pooled fund managed by New York Life Investment Management LLC (“NYLIM”), an indirect wholly owned subsidiary of New York Life, where all participants are subsidiaries of New York Life.

The MCF revolving loan agreement represents a revolving loan agreement the Company entered into with MCF. Refer to Note 11 — Related Party Transactions for further discussion.

 

29


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Other Investments

The components of other investments at December 31, 2014 and 2013 were as follows (in millions):

 

     2014      2013  

Limited partnerships and Limited liability companies

   $ 666       $ 694   

Senior secured commercial loans

     153         124   

Derivatives

     197         200   

Real estate

     51         51   

Short-term investments

     24         56   

Other invested assets

     128         313   
  

 

 

    

 

 

 

Total other investments

   $ 1,219       $ 1,438   
  

 

 

    

 

 

 

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 $154 million and $126 million at December 31, 2014 and 2013, respectively. The loss reserve was $1 million and $2 million for the years ended December 31, 2014 and 2013, respectively. 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 $442 million and $403 million at December 31, 2014 and 2013, respectively.

There was no accumulated depreciation on real estate for the years ended December 31, 2014 or 2013. There was no depreciation expense for the years ended December 31, 2014, 2013, or 2012.

There were no investments in real estate that have been non-income producing for the last 12 months at December 31, 2014. At December 31, 2013, there was less than $1 million in investments in real estate that have been non-income producing for the last 12 months.

Variable Interest Entities

Consolidated VIEs

At December 31, 2014 and 2013, the Company included assets of $46 million in the accompanying Consolidated Statements of Financial Position, as a result of consolidating a VIE for which it was determined to be the primary beneficiary. The Company performed a qualitative analysis to determine if the Company 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 of or the right to receive benefits from the entity that could be potentially significant to the VIE. In reviewing the transaction documents including trust agreements, limited partnership agreements and purchase agreements, the Company determined that they are the primary beneficiary of one structured investment.

This VIE consists of a trust established for purchasing receivables from the U.S. Department of Energy related to energy savings performance contracts and issuing certificates representing the right to those receivables. The Company has a 98.66% interest in this VIE; however, the creditors do not have recourse to the Company in excess of the assets contained within the VIE.

 

30


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following table reflects the carrying amount and statement of financial position classification of the assets and liabilities of the consolidated VIE at December 31, 2014 and 2013 (in millions):

 

     2014      2013  

Cash

   $       $   

Other investments*

     46         46   
  

 

 

    

 

 

 

Total assets

   $ 46       $ 46   
  

 

 

    

 

 

 

Other liabilities

     1         4   
  

 

 

    

 

 

 

Total liabilities

   $ 1       $ 4   
  

 

 

    

 

 

 

 

* Included in Limited partnerships/Limited liability companies.

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 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 in the accompanying Consolidated Statements of Financial Position as Fixed maturities, at fair value — Available-for-sale and Fixed maturities, at fair value — Trading. The maximum exposure to loss associated with these investments was $28,208 million and $27,370 million at December 31, 2014 and 2013, 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 in the accompanying Consolidated Statements of Financial Position and its maximum exposure to loss associated with these entities was $666 million and $694 million at December 31, 2014 and 2013, 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

At December 31, 2014 and 2013, assets with a carrying value of $4 million were on deposit with governmental authorities or trustees as required by certain state insurance laws and are included in Fixed maturities, at fair value — Available-for-sale in the accompanying Consolidated Statements of Financial Position. Refer to Note 15 — Commitments and Contingencies for additional discussion on assets pledged as collateral.

 

31


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

NOTE 7 — DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

The Company uses derivative instruments to manage interest rate, currency, equity and credit risk. These derivative instruments include foreign currency forwards, interest rate and equity futures, interest rate and equity options, and interest rate, credit default 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 affected 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.

The following table presents recognized derivative instruments that are subject to enforceable master netting agreements at December 31, 2014 and 2013 (in millions):

 

    2014  
    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

  $ 197      $      $ 197      $ (73   $ (110   $ (10   $ 4   

Liabilities

  $ (89   $      $ (89   $ 73      $ 15      $      $ (1
    2013  
    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

  $ 200      $      $ 200      $ (130   $ (63   $ (2   $ 5   

Liabilities

  $ (388   $      $ (388   $ 130      $ 230      $      $ (28

 

(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, in the accompanying Consolidated Statements of Financial Position.

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.

 

32


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 there under. Cash collateral is invested in short-term investments. If the credit contingent features had been triggered at December 31, 2014 and 2013, the Company estimates that it would have had to post additional collateral of $0 million and $10 million, respectively, for a one notch downgrade in the Company’s credit rating and would have had to post additional collateral of $2 million and $28 million, respectively, 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.

 

33


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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, 2014 and 2013 (in millions).

 

            2014      2013  
            Fair Value(1)      Fair Value(1)  
      Primary
Risk
Exposure
     Notional
Amount(2)
     Asset      Liability      Notional
Amount(2)
     Asset      Liability  

Derivatives designated as hedging:

  

                 

Cash flow hedges:

  

                 

Foreign currency swaps

     Currency       $ 149       $ 9       $       $ 181       $ *       $ 7   

Interest rate swaps

     Interest         36         8                 37         7           
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives designated

        185         17                 218         7         7   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivatives not designated as hedging:

                    

Corridor options

     Interest         8,910         1                 10,525         *           

Equity options

     Equity         779         54                 648         40           

Equity swaps

     Equity         39         4                 29         3           

Foreign currency swaps

     Currency         1,490         62         30         851         11         46   

Foreign currency forwards

     Currency         30         2                 23         *         1   

Futures

     Interest         1                                           

Interest rate caps

     Interest         14,722         2                 17,262         6           

Interest rate swaps

     Interest         3,661         44         59         3,625         96         334   

Swaptions

     Interest         7,359         11                 14,660         36           

Credit default swaps:

                    

Buy protection

     Credit                                                   

Sell protection

     Credit                                 1                   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives not designated

        36,991         180         89         47,624         192         381   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives

      $ 37,176       $ 197       $ 89       $ 47,842       $ 199       $ 388   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* Amounts are less than $1 million.

 

(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, in the accompanying Consolidated Statements of Financial Position. 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

 

34


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 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.

Credit Risk Management

The Company enters into credit default swaps (“CDS”) both to buy protection from and sell protection to a counterparty in the event of a default of a single name referenced obligation or a referenced pool of assets.

 

35


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Cash Flow Hedges

The following table presents the effects of derivatives in cash flow hedging relationships, for the years ended December 31, 2014, 2013 and 2012 (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
 

For the year ended 12/31/2014:

      

Foreign currency swaps

   $ 12      $ (4   $ 1   

Interest rate swaps

     1               1   
  

 

 

   

 

 

   

 

 

 

Total

   $ 13      $ (4   $ 2   
  

 

 

   

 

 

   

 

 

 

For the year ended 12/31/2013:

      

Foreign currency swaps

   $ 8      $      $   

Interest rate swaps

     (3            1   
  

 

 

   

 

 

   

 

 

 

Total

   $ 5      $      $ 1   
  

 

 

   

 

 

   

 

 

 

For the year ended 12/31/2012:

      

Foreign currency swaps

   $ (4   $      $ (1

Interest rate swaps

                   1   
  

 

 

   

 

 

   

 

 

 

Total

   $ (4   $      $   
  

 

 

   

 

 

   

 

 

 

 

(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 2014, 2013 and 2012, 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.

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, 2014, 2013 and 2012.

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

 

     2014      2013      2012  

Balance, beginning of year

   $ (3    $ (7    $ (3

Gains (losses) deferred in OCI on the effective portion of cash flow hedges

     13         5         (4

Losses (gains) — reclassified to net income

     3         (1        
  

 

 

    

 

 

    

 

 

 

Balance, end of year

   $ 13       $ (3    $ (7
  

 

 

    

 

 

    

 

 

 

 

36


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

At December 31, 2014, gains of $2 million on derivatives in AOCI are 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 in the accompanying Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012 (in millions):

 

     Gain (Loss)
Recognized in Income
 

Derivative type:

   2014     2013     2012  

Corridor options

   $ (1   $ *      $ (3

Equity options

     (10     (52     (23

Equity swaps

     3        5        1   

Foreign currency swaps

     74        (22     (6

Foreign currency forwards

     3        (1     *   

Futures

     (1            *   

Interest rate caps

     (6     2        (13

Interest rate swaps

     246        (183     (30

Swaptions

     (25     3        (36

Credit default swaps:

      

Buy protection

            *        (1

Sell protection

            *        *   
  

 

 

   

 

 

   

 

 

 

Total

   $ 283      $ (248   $ (111
  

 

 

   

 

 

   

 

 

 

 

* Recognized loss is less than $1 million.

Credit Derivatives Written

The Company enters into CDS both to buy protection from, and sell protection to counterparties in the event of default of a single name reference obligation. At December 31, 2014, all of the underlying reference obligations of the CDS for which the Company sells protection, are investment grade. The single name CDS contracts, for which the Company sells protection, mature within two years. The maximum amount the Company would be required to pay under swaps for which credit protection was sold, assuming all reference obligations default at a total loss without recoveries, would be $0 million and $1 million at December 31, 2014 and 2013, respectively. The market value of swaps for credit protection sold was $0 million and less than $1 million at December 31, 2014 and 2013, respectively.

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, 2014 and 2013, there were no embedded derivatives that could not be separated from their host contracts.

 

37


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following table presents the fair value of the Company’s embedded derivatives in host contracts at December 31, 2014 and 2013 (in millions):

 

    

Statements of Financial Position Line Item

  Fair Value  
      2014      2013  

Embedded derivatives in asset host contracts:

      

Other(1)

  Amounts recoverable from reinsurers   $ *       $ 1   

Embedded derivatives in liability host contracts:

      

Guaranteed minimum accumulation benefits(1)

  Policyholders’ account balances   $ 181       $ 69   

 

* Fair value is less than $1 million.

 

(1) 

For further information on these embedded derivatives refer to Note 9 — Fair Value Measurements.

The following table presents the changes in fair value related to embedded derivatives in host contracts for the years ended December 31, 2014, 2013 and 2012 (in millions):

 

     2014      2013      2012  

Net revenue from reinsurance

   $ (1    $ (13    $ (1

Interest credited to policyholders’ account balances

   $ 112       $ (362    $ (87

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 $27,033 million and $24,686 million at December 31, 2014 and 2013, respectively. The assets of these separate accounts, which are carried at fair value, represent investments in shares of the New York Life sponsored MainStay VP Funds Trust and other non-proprietary funds.

Separate Accounts Not Registered with the SEC

The Company also maintains separate accounts, which are not registered with the SEC, with assets of $1,932 million and $1,748 million at December 31, 2014 and 2013, respectively. The assets in these separate accounts are comprised 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”).

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 authoritative guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

 

38


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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; 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. 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 that go through this formal price challenge process.

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

 

39


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following tables represent the balances of assets and liabilities measured at fair value on a recurring basis at December 31, 2014 and 2013 (in millions):

 

    2014  
    Quoted Prices
in Active
Markets for
Identical Assets
(Level  1)
    Significant
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
    Total  

Fixed maturities — available-for-sale:

       

U.S. Treasury

  $      $ 912      $      $ 912   

U.S. government corporations and agencies

           1,279        24        1,303   

U.S. agency mortgage-backed and asset-backed securities

           15,458        27        15,485   

Foreign governments

           523        8        531   

U.S. corporate

           33,885        266        34,151   

Foreign corporate

           11,704        41        11,745   

Non-agency residential mortgage-backed securities

           1,661        16        1,677   

Non-agency commercial mortgage-backed securities

           4,930        195        5,125   

Non-agency asset-backed securities

           3,907        817        4,724   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities — available-for-sale

           74,259        1,394        75,653   
 

 

 

   

 

 

   

 

 

   

 

 

 

Fixed maturities — trading:

       

U.S agency mortgage-backed and asset-backed securities

           4               4   

U.S. corporate

           60               60   

Foreign corporate

           1,030               1,030   

Non-agency residential mortgage-backed securities

           11               11   

Non-agency commercial mortgage-backed securities

           48        2        50   

Non-agency asset-backed securities

           37        5        42   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities — trading

           1,190        7        1,197   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities — available-for-sale:

            

Common stock

    30               2        32   

Non-redeemable preferred stock

           1        2        3   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total equity securities — available-for-sale

    30        1        4        35   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities — trading:

            

Common stock

    726                      726   

Mutual funds

    31                      31   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total equity securities — trading

    757                      757   
 

 

 

   

 

 

   

 

 

   

 

 

 

Derivative assets

           193        4        197   

Securities purchased under agreements to resell

           133               133   

Other invested assets

           14               14   

Cash equivalents

           682               682   

Short-term investments

           24               24   

Separate account assets

    28,508        198        259        28,965   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets accounted for at fair value on a recurring basis

  $ 29,295      $ 76,694      $ 1,668      $ 107,657   
 

 

 

   

 

 

   

 

 

   

 

 

 

Policyholders’ account balances(1)

  $      $      $ 181      $ 181   

Derivative liabilities

           89               89   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities accounted for at fair value on a recurring basis(2)

  $      $ 89      $ 181      $ 270   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Policyholders’ account balances represent embedded derivatives bifurcated from host contracts.

 

(2) 

Separate account liabilities are not included above, as they are reported at contract value in the accompanying Consolidated Statements of Financial Position in accordance with the Company’s policy (refer to Note 3 — Significant Accounting Policies).

 

40


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

    2013  
    Quoted Prices
in Active
Markets for
Identical Assets
(Level  1)
    Significant
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
    Total  

Fixed maturities — available-for-sale:

       

U.S. Treasury

  $      $ 877      $      $ 877   

U.S. government corporations and agencies

           1,445        24        1,469   

U.S. agency mortgage-backed and asset-backed securities

           15,681        111        15,792   

Foreign governments

           621        8        629   

U.S. corporate

           30,358        249        30,607   

Foreign corporate

           11,100        31        11,131   

Non-agency residential mortgage-backed securities

           2,015        58        2,073   

Non-agency commercial mortgage-backed securities

           4,821        133        4,954   

Non-agency asset-backed securities

           2,970        1,041        4,011   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities — available-for-sale

           69,888        1,655        71,543   
 

 

 

   

 

 

   

 

 

   

 

 

 

Fixed maturities — trading:

       

U.S agency mortgage-backed and asset-backed securities

           4               4   

U.S. corporate

           69               69   

Foreign corporate

           311               311   

Non-agency residential mortgage-backed securities

           18               18   

Non-agency commercial mortgage-backed securities

           24               24   

Non-agency asset-backed securities

           65        6        71   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities — trading

           491        6        497   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities — available-for-sale:

       

Common stock

    109               2        111   

Non-redeemable preferred stock

           1               1   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total equity securities — available-for-sale

    109        1        2        112   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities — trading:

       

Common stock

    435               1        436   

Mutual funds

    11                      11   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total equity securities — trading

    446               1        447   
 

 

 

   

 

 

   

 

 

   

 

 

 

Derivative assets

           196        3        199   

Securities purchased under agreements to resell

           101               101   

Other invested assets

           14               14   

Cash equivalents

           475               475   

Short-term investments

           56               56   

Amounts recoverable from reinsurers

                  1        1   

Separate account assets

    25,974        216        244        26,434   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets accounted for at fair value on a recurring basis

  $ 26,529      $ 71,438      $ 1,912      $ 99,879   
 

 

 

   

 

 

   

 

 

   

 

 

 

Policyholders’ account balances(1)

  $      $      $ 69      $ 69   

Derivative liabilities

           388               388   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities accounted for at fair value on a recurring basis(2)

  $      $ 388      $ 69      $ 457   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Policyholders’ account balances represent embedded derivatives bifurcated from host contracts.

 

(2) 

Separate account liabilities are not included above, as they are reported at contract value in the accompanying Consolidated Statements of Financial Position in accordance with the Company’s policy (refer to Note 3 — Significant Accounting Policies).

 

41


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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 trading securities

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. The spreads derived from each matrix are adjusted for liquidity. The liquidity premium is usually derived from observable market transactions.

Certain private placement securities that cannot be priced using the matrix-based pricing methodology 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 based upon observable market transactions, while the maturity and rating adjustments are based upon data obtained from Bloomberg. These securities are classified as Level 2.

For some of the private placement securities priced using the matrix-based pricing methodology or the discount cash flow model, the liquidity adjustments may not be based on market data, but rather, calculated internally. If the impact of the liquidity adjustment, which usually requires the most judgment, is not significant to the overall value of the security, the security is still classified as Level 2. If it is deemed to be significantly unobservable, the security is classified as Level 3.

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.

Derivative assets and liabilities

The fair value of derivative instruments is generally derived using valuation models, except for derivatives that are either exchange-traded, or the fair value is derived using broker quotations. Where valuation models are

 

42


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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.

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. Money market funds are classified as Level 1, because their value is based on unadjusted quoted prices in active markets that are readily and regularly available. All the other instruments are classified as Level 2 although their fair value is based on observable inputs, they are generally not traded in active markets. The prices are either obtained from a pricing vendor, or amortized cost is used as the best estimate of fair value.

Short term investments

For certain 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.

 

43


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The separate accounts also invest in limited partnerships and hedge funds. These investments are valued based on the latest net asset value (NAV). When the hedge fund investment can be redeemed at NAV, at the measurement date, or in the near-term (generally 90 days or less) it is classified as Level 2.

The following tables provide further information about the Level 2 hedge funds in which the separate accounts invest in (in millions):

 

          2014

Category of
Investment

  

Investment
Strategy

   Fair Value
Determined
Using NAV
     Unfunded
Commitments
     Redemption Frequency    Redemption
Notice Period

Hedge fund

   Multi-strategy    $ 197               Quarterly,
Monthly
   90 days or

less

 

          2013

Category of
Investment

  

Investment
Strategy

   Fair Value
Determined
Using NAV
     Unfunded
Commitments
     Redemption Frequency    Redemption
Notice Period

Hedge fund

   Multi-strategy    $ 216               Quarterly,
Monthly
   90 days or
less

Limited Partnership and hedge fund investments that are restricted with respect to transfer or withdrawal of greater than 90 days are classified as Level 3. The following tables provide further information about these investments (in millions):

 

          2014

Category of
Investment

   Investment
Strategy
   Fair Value
Determined
Using NAV
     Unfunded
Commitments
     Redemption Frequency    Redemption
Notice Period

Hedge fund

   Multi-strategy    $ 259               Annual, Semi-annual,
Quarterly
   More than
90 days

 

          2013

Category of
Investment

   Investment
Strategy
   Fair Value
Determined
Using NAV
     Unfunded
Commitments
     Redemption Frequency    Redemption
Notice Period

Hedge fund

   Multi-strategy    $ 244               Annual, Semi-annual,
Quarterly
   More than
90 days

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

 

44


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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.

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, 2014 and 2013 (in millions):

 

     2014  
     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

             27         27   

Foreign governments

             8         8   

U.S. corporate

     41         225         266   

Foreign corporate

             41         41   

Non-agency residential mortgage-backed securities

             16         16   

Non-agency commercial mortgage-backed securities

     83         112         195   

Non-agency asset-backed securities

     91         726         817   
  

 

 

    

 

 

    

 

 

 

Total fixed maturities — available-for-sale

     215         1,179         1,394   
  

 

 

    

 

 

    

 

 

 

Fixed maturities — trading:

        

Non-agency commercial mortgage-backed securities

             2         2   

Non-agency asset-backed securities

             5         5   
  

 

 

    

 

 

    

 

 

 

Total fixed maturities — trading

             7         7   
  

 

 

    

 

 

    

 

 

 

Equity securities:

        

Common stock

     2                 2   

Non-redeemable preferred stock

     2                 2   
  

 

 

    

 

 

    

 

 

 

Total equity securities

     4                 4   
  

 

 

    

 

 

    

 

 

 

Derivative assets

             4         4   

Separate account assets

             259         259   
  

 

 

    

 

 

    

 

 

 

Total assets accounted for at fair value on a recurring basis

   $ 219       $ 1,449       $ 1,668   
  

 

 

    

 

 

    

 

 

 

Policyholders’ account balances

   $ 181       $       $ 181   
  

 

 

    

 

 

    

 

 

 

Total liabilities accounted for at fair value on a recurring basis

   $ 181       $       $ 181   
  

 

 

    

 

 

    

 

 

 

 

(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.

 

45


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     2013  
     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

     1         110         111   

Foreign governments

             8         8   

U.S. corporate

     36         213         249   

Foreign corporate

             31         31   

Non-agency residential mortgage-backed securities

             58         58   

Non-agency commercial mortgage-backed securities

     78         55         133   

Non-agency asset-backed securities

     85         956         1,041   
  

 

 

    

 

 

    

 

 

 

Total fixed maturities — available-for-sale

     200         1,455         1,655   
  

 

 

    

 

 

    

 

 

 

Fixed maturities — trading:

        

Non-agency asset-backed securities

             6         6   
  

 

 

    

 

 

    

 

 

 

Total fixed maturities — trading

             6         6   
  

 

 

    

 

 

    

 

 

 

Equity securities:

        

Common stock

     2         1         3   
  

 

 

    

 

 

    

 

 

 

Total equity securities

     2         1         3   
  

 

 

    

 

 

    

 

 

 

Derivative assets

             3         3   

Amounts recoverable from reinsurance

     1                 1   

Separate account assets

             244         244   
  

 

 

    

 

 

    

 

 

 

Total assets accounted for at fair value on a recurring basis

   $ 203       $ 1,709       $ 1,912   
  

 

 

    

 

 

    

 

 

 

Policyholders’ account balances

   $ 69       $       $ 69   
  

 

 

    

 

 

    

 

 

 

Total liabilities accounted for at fair value on a recurring basis

   $ 69       $       $ 69   
  

 

 

    

 

 

    

 

 

 

 

(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.

 

46


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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, 2014 and 2013 (in millions):

 

    2014
    Fair Value     Valuation Techniques     Unobservable Input  

Range
(Weighted Average)

Assets:

       

U.S. corporate

  $ 41        Discounted Cash Flow      Discount Rate   2.0% – 7.4%(4.5%)

Non-agency asset-backed securities

  $ 91        Discounted Cash Flow      Discount Rate   4.8% – 7.0%(3.1%)

Non-agency commercial mortgage-backed securities

  $ 83        Discounted Cash Flow      Discount Rate   3.0% – 12.0%(1.6%)

Liabilities:

       

Policyholders’ account balances

  $ 181        Discounted Cash Flow      Discount Rate   0.5% – 9.4%
      Equity Returns   0.7% – 5.2%
      Equity Volatility Curve   18.4% – 43.9%
      Lapse Rate   1.5% – 21.0%
      Mortality Rate   0.1% – 38.9%
      Utilization Rate   10.0% – 100%
      Withdrawal Rate   3.30%

 

    2013
    Fair Value     Valuation Techniques     Unobservable Input  

Range
(Weighted Average)

Assets:

       

U.S. corporate

  $ 36        Discounted Cash Flow      Discount Rate   2.7% – 7.1%(5.5%)

Non-agency asset-backed securities

  $ 85        Discounted Cash Flow      Discount Rate   4.7% – 7.4%(6.7%)

Non-agency commercial mortgage-backed securities

  $ 78        Discounted Cash Flow      Discount Rate   4.1% – 8.8%(2.8%)

Liabilities:

       

Policyholders’ account balances

  $ 69        Discounted Cash Flow      Discount Rate   0.3% – 6.8%
      Equity Returns   0.3% – 10.1%
      Equity Volatility Curve   16.5% – 57.9%
      Lapse Rate   0.5% – 20.0%
      Mortality Rate   0.1% to 38.9%
      Utilization Rate   10.0% – 100%
      Withdrawal Rate   3.3%

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.

 

47


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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.

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.

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, 2014 and 2013.

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.

 

48


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

During the years ended December 31, 2014 and 2013, the Company transferred $56 million and $91 million, respectively, of securities into Level 3 consisting of fixed maturities available-for-sale securities and separate account assets in 2014 and 2013. 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 $512 million and $258 million during the years ended December 31, 2014, and 2013, 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 2014 and 2013.

 

49


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following tables present the changes in fair value of all Level 3 assets and liabilities for the years ended December 31, 2014, 2013 and 2012 (in millions):

 

    U.S .
Government
Corporations
and Agencies
    U.S .
Agency
Mortgage-
Backed
and Asset-
Backed
    Foreign
Governments
    U.S.
Corporate
    Foreign
Corporate
    Non-
Agency
Residential
Mortgage-
Backed
Securities
 

Fair Value, December 31, 2011

  $ 6      $ 84      $ 10      $ 210      $ 128      $ 189   

Total gains or (losses) (realized and unrealized):

  

         

Included in earnings

           

Net investment losses

                         (3     (2       

Net revenue from reinsurance

                                       (1

Other comprehensive income

    1               1        4               1   

Purchases

    40        1               38        1          

Sales

                         (12     (2       

Settlements

           (7            (48     (3     (89

Transfers into Level 3(1)

                  (1     21                 

Transfers out of Level 3(1)

    (7     (42            (41     (97     (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2012

  $ 40      $ 36      $ 10      $ 169      $ 25      $ 99   

Total gains or (losses) (realized and unrealized):

  

         

Included in earnings

           

Net investment (losses) gains

                                (3     1   

Other comprehensive (loss) income

    (1     (5     (1     (4     4        (2

Purchases

           103               130        11          

Sales

           (10            (27     (5       

Settlements

           (4     (1     (24     (1     (42

Transfers into Level 3(1)

           7               59               2   

Transfers out of Level 3(1)

    (15     (16            (54              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2013

  $ 24      $ 111      $ 8      $ 249      $ 31      $ 58   

Total gains or (losses) (realized and unrealized):

  

         

Included in earnings

           

Net investment gains

                         1               2   

Other comprehensive loss

                         (1     (1     (1

Purchases

           10               71        12          

Sales

           (50            (8              

Settlements

                         (37     (2     (43

Transfers into Level 3(1)

                         45        1          

Transfers out of Level 3(1)

           (44            (54              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2014

  $ 24      $ 27      $ 8      $ 266      $ 41      $ 16   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

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

 

50


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

    Non-
Agency
Commercial
Mortgage-
Backed
Securities
    Non-
Agency
Asset-
Backed
Securities
    Other
Fixed
Maturities
Securities
    Total
Fixed
Maturities-
Available-
for-Sale
    Non-
Agency
Commercial
Mortgage-
Backed
Securities
    Non-
Agency
Asset-
Backed
Securities
 

Fair Value, December 31, 2011

  $      $ 508      $      $ 1,135      $      $ 17   

Total gains or (losses) (realized and unrealized):

           

Included in earnings

           

Net investment gains (losses)

           2        2        (1              

Net investment income(1)

           3               3                 

Net revenue from reinsurance

                         (1              

Other comprehensive income (loss)

           14        (3     18                 

Purchases

           491        3        574               1   

Sales

           (11     (2     (27            (17

Settlements

           (82            (229              

Transfers into Level 3(2)

    2        73               95                 

Transfers out of Level 3(2)

           (244            (432              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2012

  $ 2      $ 754      $      $ 1,135      $      $ 1   

Total gains or (losses) (realized and unrealized):

           

Included in earnings

           

Net investment (losses) gains

    (1     (2            (5            6   

Net investment income(1)

           2               2                 

Other comprehensive loss

    (4     (9            (22              

Purchases

    143        620               1,007                 

Sales

           (2            (44              

Settlements

    (6     (162            (240            (1

Transfers into Level 3(2)

    1                      69                 

Transfers out of Level 3(2)

    (2     (160            (247              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2013

  $ 133      $ 1,041      $      $ 1,655      $      $ 6   

Total gains or (losses) (realized and unrealized):

           

Included in earnings

           

Net investment gains (losses)

           1               4               (2

Net investment income(1)

           1               1                 

Other comprehensive income

    5        21               23                 

Purchases

    58        321               472        2          

Sales

           (8            (66              

Settlements

    (2     (154            (238              

Transfers into Level 3(2)

           9               55                 

Transfers out of Level 3(2)

    1        (415            (512              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2014

  $ 195      $ 817      $      $ 1,394      $ 2      $ 4   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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.

 

51


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     Total
Fixed
Maturities-
Trading
    Common
Stock-
Available-
for-Sale
    Common
Stock-
Trading
    Non-
Redeemable
Preferred
Stock
    Total
Equity
Securities
 

Fair Value, December 31, 2011

   $ 17      $ 2      $ 2      $ 3      $ 7   

Total gains or (losses) (realized and unrealized):

          

Included in earnings

          

Other comprehensive income

            2                      2   

Purchases

     1                               

Sales

     (17                            

Settlements

                          (3     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2012

   $ 1      $ 4      $ 2      $      $ 6   

Total gains or (losses) (realized and unrealized):

          

Included in earnings

          

Net investment gains (losses)

     6        1        (1              

Other comprehensive loss

            (1                   (1

Sales

            (2                   (2

Settlements

     (1                            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2013

   $ 6      $ 2      $ 1      $      $ 3   

Total gains or (losses) (realized and unrealized):

          

Included in earnings

          

Net investment losses

     (2            (1            (1

Purchases

     2                      2        2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2014

   $ 6      $ 2      $      $ 2      $ 4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

52


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     Derivatives      Other
Invested
Assets
    Amounts
Recoverable
from
Reinsurers
    Separate
Account
Assets
    Total
Assets
 

Fair Value, December 31, 2011

   $       $      $ 15      $ 150      $ 1,324   

Total gains or (losses) (realized and unrealized):

           

Included in earnings

           

Net investment gains (losses)

     1         1               (14     (13

Net investment income(1)

                                  3   

Net revenue from reinsurance

                                  (1

Other comprehensive (loss) income

                    (1            19   

Purchases

                           27        602   

Sales

                           (31     (75

Settlements

                                  (232

Transfers into Level 3(2)

             10               70        175   

Transfers (out of) Level 3(2)

                           (24     (456
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2012

   $ 1       $ 11      $ 14      $ 178      $ 1,346   

Total gains or (losses) (realized and unrealized):

           

Included in earnings

           

Net investment gains

     2                       19        22   

Net investment income(1)

                                  2   

Other comprehensive loss

                    (13            (36

Purchases

                           31        1,038   

Sales

                           (6     (52

Settlements

                                  (241

Transfers into Level 3(2)

                           22        91   

Transfers (out of) Level 3(2)

             (11                   (258
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2013

   $ 3       $      $ 1      $ 244      $ 1,912   

Total gains or (losses) (realized and unrealized):

           

Included in earnings

           

Net investment gains

     1                       15        17   

Net investment income(1)

                           2        3   

Other comprehensive (loss) income

                    (1            22   

Purchases

                           5        481   

Sales

                           (7     (73

Settlements

                                  (238

Transfers into Level 3(2)

                           1        56   

Transfers (out of) Level 3(2)

                                  (512
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Fair Value, December 31, 2014

   $ 4       $      $      $ 260      $ 1,668   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(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.

 

53


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     Policyholders’
Account
Balances
    Total
Liabilities
 

Fair Value, December 31, 2011

   $ 470      $ 470   

Total gains or (losses) (realized and unrealized):

    

Included in earnings

    

Interest credited to policyholders’ account balances

     (87     (87

Purchases

     22        22   
  

 

 

   

 

 

 

Fair Value, December 31, 2012

   $ 405      $ 405   

Total gains or (losses) (realized and unrealized):

    

Included in earnings

    

Interest credited to policyholders’ account balances

     (362     (362

Purchases

     26        26   
  

 

 

   

 

 

 

Fair Value, December 31, 2013

   $ 69      $ 69   

Total gains (realized and unrealized):

    

Included in earnings

    

Interest credited to policyholders’ account balances

     80        80   

Purchases

     32        32   
  

 

 

   

 

 

 

Fair Value, December 31, 2014

   $ 181      $ 181   
  

 

 

   

 

 

 

The following tables include the unrealized gains or losses for the years ended December 31, 2014, 2013 and 2012 by category for Level 3 assets still held at December 31, 2014, 2013 and 2012, respectively (in millions):

 

     2014  
     U.S.
Government
Corporation
and Agencies
     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   $   

Other comprehensive gains/(losses)

             1         (1     1        2        5   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total change in unrealized gains (losses)

   $       $ 1       $ (1   $      $ 1      $ 5   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

54


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     Non-
Agency
Asset-
Backed
Securities
     Total Fixed
Maturities-
Available-
for-Sale
    Non-
Agency
Asset-
Back
Securities
    Total
Fixed
Maturities-
Trading
    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   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

There were no unrealized or realized gains or losses recorded for Level 3 liabilities held at December 31, 2014.

 

     2013  
     U.S.
Government
Corporation
and Agencies
    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

Other comprehensive losses

     (1     (5     (1     (4     (1     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total change in unrealized losses

   $ (1   $ (5   $ (1   $ (4   $ (1   $ (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     Non-
Agency
Asset-
Backed
Securities
    Total
Fixed
Maturities-
Available-
for-Sale
    Non-
Agency
Asset-
Back
Securities
     Total
Fixed
Maturities-
Trading
     Total
Assets
 

Earnings:

            

Total gains (losses) (realized/unrealized)

            

Included in earnings:

            

Net investment (losses) gains

   $ (1   $ (2   $ 5       $ 5       $ 3   

Net investment income

     1        1                        1   

Other comprehensive losses

     (9     (24                     (24
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total change in unrealized (losses) gains

   $ (9   $ (25   $ 5       $ 5       $ (20
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

55


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

There were no unrealized or realized gains or losses recorded for Level 3 liabilities held at December 31, 2013.

 

     2012  
     U.S. Agency
Mortgage-
Backed and
Asset-
Backed
Securities
     Foreign
Corporate
     U.S.
Corporate
    Non-
Agency
Residential
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 losses

   $       $       $      $      $ (1   $ (1

Net investment income

                     (1     (1     3        1   

Other comprehensive gains

     1         1         5        1        14        22   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total change in unrealized gains

   $ 1       $ 1       $ 4             $ 16      $ 22   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

     Common
Stock
     Total
Equity
Securities
     Amounts
Recoverable
From
Reinsurers
    Separate
Account
Assets
    Total
Assets
 

Earnings:

            

Total gains (losses) (realized/unrealized)

            

Included in earnings:

            

Net investment losses

   $       $       $      $ (13   $ (14

Net investment income

     2         2                       3   

Net revenue from reinsurance

                     (1            (1

Other comprehensive gains

     1         1                       23   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total change in unrealized gains (losses)

   $ 3       $ 3       $ (1   $ (13   $ 11   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

     2012  
     Policyholders’
Account
Balance
    Total
Liabilities(1)
 

Earnings:

    

Total (gains) losses (realized/unrealized)

    

Included in earnings:

    

Interest credited to policyholders’

   $ (71   $ (71
  

 

 

   

 

 

 

Total change in unrealized gains

   $ (71   $ (71
  

 

 

   

 

 

 

 

(1) 

The net investment gains (losses) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on the Company’s net income. Separate account liabilities are not included above, as they are reported at contract value in the accompanying Consolidated Statements of Financial Position in accordance with the Company’s policy (refer to Note 3 — Significant Accounting Policies).

 

56


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 end and still held at December 31, 2014 and 2013 (in millions):

 

     2014  
     Carrying Value
Prior to
Impairment
     Estimated Fair
Value After
Impairment
     Net Investment
Losses
 

Mortgage loans

   $ 4       $ 3       $ (1

 

     2013  
     Carrying Value
Prior to
Impairment
     Estimated Fair
Value After
Impairment
     Net Investment
Losses
 

Mortgage loans

   $ 5       $ 3       $ (2

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.

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, 2014 and 2013 are presented below (in millions):

 

     2014  
     Carrying
Value
     Estimated Fair Value  
         Level 1      Level 2      Level 3      Total  

Assets

              

Mortgage loans

   $ 10,924       $       $       $ 11,630       $ 11,630   

Senior secured commercial loans

     153                         159         159   

Cash and cash equivalents

     28         28                         28   

Other invested assets

     91                 16         91         107   

Liabilities

              

Policyholders’ account balances — investment contracts

   $ 36,176       $       $ 64       $ 36,035       $ 36,099   

Debt

     1                 1                 1   

Collateral received on securities lending and repurchase agreements

     550                 550                 550   

Collateral received on derivative transactions

     114                 114                 114   

 

57


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     2013  
     Carrying
Value
     Estimated Fair Value  
         Level 1      Level 2      Level 3      Total  

Assets

              

Mortgage loans

   $ 9,762       $       $       $ 10,106       $ 10,106   

Senior secured commercial loans

     124                         130         130   

Cash and cash equivalents

     119         119                         119   

Other invested assets

     299                 231         69         300   

Liabilities

              

Policyholders’ account balances — investment contracts

   $ 36,288       $       $ 87       $ 35,955       $ 36,042   

Debt

     2                 3                 3   

Collateral received on securities lending and repurchase agreements

     500                 500                 500   

Collateral received on derivative transactions

     68                 68                 68   

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.

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

This includes collateral posted on derivative transactions and third party loans. 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.

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

 

58


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

calculations based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. Level 2 liabilities primarily consist of continued interest accounts.

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.

NOTE 10 — INVESTMENT INCOME AND INVESTMENT GAINS AND LOSSES

The components of Net investment income for the years ended December 31, 2014, 2013 and 2012 were as follows (in millions):

 

     2014      2013      2012  

Fixed maturities

   $ 3,138       $ 3,083       $ 3,141   

Equity securities

     23         13         8   

Mortgage loans

     486         458         422   

Policy loans

     59         59         59   

Other investments

     86         98         75   
  

 

 

    

 

 

    

 

 

 

Gross investment income

     3,792         3,711         3,705   

Investment expenses

     (109      (99      (94
  

 

 

    

 

 

    

 

 

 

Net investment income

   $ 3,683       $ 3,612       $ 3,611   
  

 

 

    

 

 

    

 

 

 

For the years ended December 31, 2014, 2013 and 2012, Net investment gains or losses were as follows (in millions):

 

     2014      2013      2012  

Fixed maturities

        

Total OTTI losses

   $ (30    $ (45    $ (63

Portion of OTTI losses recognized in OCI

     1         11         18   
  

 

 

    

 

 

    

 

 

 

Net OTTI losses on fixed maturities recognized in earnings

     (29      (34      (45

All other gains

     170         144         181   
  

 

 

    

 

 

    

 

 

 

Fixed maturities, net

     141         110         136   

Equity securities

     11         44         10   

Mortgage loans

     4         6         1   

Derivative instruments

     279         (247      (110

Other

     3         (12      (7
  

 

 

    

 

 

    

 

 

 

Net investment gains (losses)

   $ 438       $ (99    $ 30   
  

 

 

    

 

 

    

 

 

 

 

59


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The net investment (losses) gains on trading securities (both fixed maturities and equity securities) amounted to $(17) million, $55 million and $12 million for the years ended December 31, 2014, 2013 and 2012, respectively. Trading gains and losses are included in Net investment gains or losses in the accompanying Consolidated Statements of Operation.

Realized gains on sales of available-for-sale fixed maturities were $187 million, $164 million and $192 million for the years ended December 31, 2014, 2013 and 2012, respectively; and realized losses were $12 million, $36 million and $16 million, respectively. Realized gains on sales of available-for-sale equity securities were $65 million, $22 million and $19 million for the years ended December 31, 2014, 2013 and 2012, respectively; and realized losses were $46 million, $18 million and $12 million, respectively.

Losses from OTTI on equity securities (included in net investment gains or losses on equity securities above) were $1 million, less than $1 million and $3 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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, 2014 and 2013 (in millions):

 

     2014  
     Less than 12 Months      Greater than
12 Months
     Total  
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 

Fixed maturities

                 

U.S. Treasury

   $ 120       $       $ 115       $ 2       $ 235       $ 2   

U.S. government corporations and agencies

     22                 79         2         101         2   

U.S. agency mortgage-backed and asset-backed securities

     287         8         2,416         96         2,703         104   

Foreign governments

     10                 1                 11           

U.S. corporate

     3,668         105         1,840         83         5,508         188   

Foreign corporate

     1,184         40         947         27         2,131         67   

Non-agency residential mortgage-backed securities

     152         2         419         25         571         27   

Non-agency commercial mortgage-backed securities

     335         2         273         5         608         7   

Non-agency asset-backed securities

     1,114         13         687         13         1,801         26   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total fixed maturities

     6,892         170         6,777         253         13,669         423   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Equity securities

                 

Common stock

     3         1                         3         1   

Preferred stock

                     1                 1           
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     3         1         1                 4         1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 6,895       $ 171       $ 6,778       $ 253       $ 13,673       $ 424   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

60


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     2013  
     Less than 12 Months      Greater than
12 Months
     Total  
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 

Fixed maturities

                 

U.S. Treasury

   $ 326       $ 11       $       $       $ 326       $ 11   

U.S. government corporations and agencies

     260         13         2                 262         13   

U.S. agency mortgage-backed and asset-backed securities

     4,136         345         349         56         4,485         401   

Foreign governments

     28         1         5                 33         1   

U.S. corporate

     8,137         459         297         42         8,434         501   

Foreign corporate

     3,080         156         46         4         3,126         160   

Non-agency residential mortgage-backed securities

     383         15         554         44         937         59   

Non-agency commercial mortgage-backed securities

     1,519         51         87         8         1,606         59   

Non-agency asset-backed securities

     1,256         21         169         17         1,425         38   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total fixed maturities

     19,125         1,072         1,509         171         20,634         1,243   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Equity securities

                 

Common stock

     4         *         *         *         4         *   

Preferred stock

                     1         1         1         1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     4                 1         1         5         1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 19,129       $ 1,072       $ 1,510       $ 172       $ 20,639       $ 1,244   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* Unrealized losses are less than $1 million.

At December 31, 2014, the unrealized loss amount consisted of approximately 1,859 different fixed maturities and 9 equity securities.

At December 31, 2014, unrealized losses on investment grade fixed maturities were $296 million or 70% 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 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 $127 million or 30% of the Company’s total fixed maturities’ unrealized losses at December 31, 2014.

The amount of gross unrealized losses for fixed maturities where the fair value had declined by 20% or more of amortized cost totaled $48 million. The amount of time that each of these securities has continuously been 20% or more below the amortized cost consist of $22 million for 6 months or less, $1 million for greater than 6 months through 12 months and $25 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.

 

61


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 in the accompanying Consolidated Statements of Operations.

The components of Net unrealized investment gains or losses reported in AOCI at December 31, 2014, 2013 and 2012 are as follows (in millions):

 

     2014      2013      2012  

Fixed maturites, available-for-sale-all other

   $ 3,784       $ 2,042       $ 6,123   

Fixed maturities on which an OTTI loss has been recognized

     34         (11      (31
  

 

 

    

 

 

    

 

 

 

Total fixed maturities

     3,818         2,031         6,092   

Equity securities, available-for-sale

     15         33         19   

Derivatives designated as cash flow hedges

     13         (3      (7

Other investments

     2         1         3   
  

 

 

    

 

 

    

 

 

 

Subtotal

     3,848         2,062         6,107   

Amounts recognized for:

        

DAC

     (727      (607      (1,383

Other assets (sales inducements)

     (17      (18      (32

Policyholders’ account balances and future policy benefits

     70         42         (41

Deferred taxes

     (1,110      (517      (1,627
  

 

 

    

 

 

    

 

 

 

Net unrealized gains on investments

   $ 2,064       $ 962       $ 3,024   
  

 

 

    

 

 

    

 

 

 

 

62


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The net unrealized gains or losses for the years ended December 31, 2014, 2013 and 2012, 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 or 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)
    Accumulated
Other
Comprehensive
Income (Loss)
Related to Net
Unrealized
Investment

Gains (Losses)
 

Balance, December 31, 2011

  $ (139   $ 56      $ 1      $ (3   $ 30      $ (55

Net investment gains (losses) on investments arising during the period

    113                             (39     74   

Reclassification adjustment for (gains) losses included in net income

    4                             (1     3   

Reclassification adjustment for OTTI losses excluded from net income(1)

    (9                          3        (6

Impact of net unrealized investment (gains) losses on deferred policy acquisition costs and sales inducements

           (38     (1            12        (27

Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits

                         2        *        2   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, December 31, 2012

  $ (31   $ 18      $      $ (1   $ 5      $ (9

Net investment gains (losses) on investments arising during the period

    21                             (7     14   

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 deferred policy acquisition costs and sales inducements

           (5                   1        (4

Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits

                                         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 deferred policy acquisition costs and sales 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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* 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.

 

63


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

All other net unrealized investment gains or 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)
    Accumulated
Other
Comprehensive
Income (Loss)
Related to Net
Unrealized
Investment

Gains (Losses)
 

Balance, December 31, 2011

  $ 4,842      $ (1,280   $ (29   $ (209   $ (1,163   $ 2,161   

Net investment gains (losses) on investments arising during the period

    1,425                             (499     926   

Reclassification adjustment for (gains) losses included in net income

    (138                          49        (89

Reclassification adjustment for OTTI losses excluded from net income(2)

    9                             (3     6   

Impact of net unrealized investment (gains) losses on deferred policy acquisition costs and sales inducements

           (121     (3            43        (81

Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits

                         169        (59     110   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, December 31, 2012

  $ 6,138      $ (1,401   $ (32   $ (40   $ (1,632   $ 3,033   

Net investment gains (losses) on investments arising during the period

    (3,968                          1,388        (2,580

Reclassification adjustment for (gains) losses included in net income

    (99                          35        (64

Reclassification adjustment for OTTI losses excluded from net income(2)

    2                             (1     1   

Impact of net unrealized investment (gains) losses on deferred policy acquisition costs and sales inducements

           781        14               (278     517   

Impact of net unrealized investment (gains) losses on policyholders’ account balances and future policy benefits

                         83        (29     54   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 deferred policy acquisition costs and sales 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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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.

 

64


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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):

 

     2014      2013  

Balance at beginning of year

   $ 177       $ 184   

Additions:

     

Credit loss impairments recognized in the current period on securities previously not impaired

     3         2   

Additional credit loss impairments recognized in the current period on securities previously impaired

     12         17   

Reductions:

     

Credit loss impairments previously recognized on securities which matured, paid down, prepaid or sold during the period

     (17      (26
  

 

 

    

 

 

 

Balance at end of year

   $ 175       $ 177   
  

 

 

    

 

 

 

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

 

     Foreign Currency
Translation
Adjustments
     Net Unrealized
Investment Gains
(Losses)(1) (2)
     Total AOCI  

Balance, December 31, 2011

   $       $ 2,106       $ 2,106   

Change in OCI before reclassifications

             1,004         1,004   

Less: Amounts reclassified from AOCI

             (86      (86
  

 

 

    

 

 

    

 

 

 

Net OCI

             918         918   
  

 

 

    

 

 

    

 

 

 

Balance, December 31, 2012

   $       $ 3,024       $ 3,024   

Change in OCI before reclassifications

     1         (1,999      (1,998

Less: Amounts reclassified from AOCI

             (63      (63
  

 

 

    

 

 

    

 

 

 

Net OCI

     1         (2,062      (2,061
  

 

 

    

 

 

    

 

 

 

Balance, December 31, 2013

   $ 1       $ 962       $ 963   

Change in OCI before reclassifications

     (1      1,228         1,227   

Less: Amounts reclassified from AOCI

             (126      (126
  

 

 

    

 

 

    

 

 

 

Net OCI

     (1      1,102         1,101   
  

 

 

    

 

 

    

 

 

 

Balance, December 31, 2014

   $       $ 2,064       $ 2,064   
  

 

 

    

 

 

    

 

 

 

 

(1) 

All amounts are net of tax and DAC.

 

(2) 

Includes cash flow hedges. Refer to Note 7 — Derivative Instruments and Risk Management for information on cash flow hedges. Refer to Note 10 — Investment Income and Investment Gains and Losses (above) for additional information regarding unrealized investment gains or losses, including the split between amounts related to fixed maturities on which an other-than-temporary impairment loss has been recognized, and all other unrealized investment gains or losses.

 

65


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The amounts reclassified out of AOCI(1) for the years ended December 31, 2014, 2013 and 2012 were as follows (in millions):

 

      2014     2013     2012    

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

Currency swaps

     1                    Net investment gains (losses)

Currency swaps

                   (1   Net investment income

(Gains)/losses on available-for-sale securities:

        

Impairment losses

     (1     1        4      Net investment gains (losses)

All other

     (167     (100     (138   Net investment gains (losses)
  

 

 

   

 

 

   

 

 

   
     (166     (98     (134   Total before tax
     (40     (35     (48   Income tax expense
  

 

 

   

 

 

   

 

 

   

Total reclassifications for the period

   $ (126   $ (63   $ (86   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 $813 million, $764 million and $750 million for the years ended December 31, 2014, 2013 and 2012, respectively, and were reflected in Operating expenses and Net investment income in the accompanying Consolidated Statements of Operations.

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”)). 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 participation agreement for the REO

 

66


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Ownership Interest contains the same parri passu structure as the participation agreements for the mortgage loans as it relates to the applicable ownership interest.

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, 2014, 2013 and 2012, the total cost for these services amounted to $100 million, $91 million and $84 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 in the accompanying Consolidated Statements of Operations.

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 $35 million, $31 million and $26 million for the years ended December 31, 2014, 2013 and 2012, respectively, and was included in Fee-universal life and annuity policies in the accompanying Consolidated Statements of Operations.

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 $26 million and $62 million for the years ended December 31, 2014 and 2013, 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, 2014, 2013 and 2012, the Company received service fees of $36 million, $30 million and $23 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, 2014 and 2013, the Company incurred commission expense to Securities’ registered representatives of $150 million, $130 million and $110 million, respectively.

On July 8, 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, 2014, 2013 and 2012, the Company incurred an expense of $47 million, $41 million and $37 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 $21 million, $39 million and $15 million for the years ended December 31, 2014, 2013 and 2012, respectively, and was included in Other income in the accompanying Consolidated Statements of Operations.

New York Life Capital Corporation (“NYLCC”), a wholly owned subsidiary of NYLIFE LLC, has a credit agreement with the Company dated December 23, 2004, as amended, whereby NYLCC has agreed to make loans

 

67


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

to the Company in an amount up to, but not exceeding, $490 million from the issuance of commercial paper. At December 31, 2014, 2013 and 2012, the Company had no outstanding loan balance to NYLCC. During 2014, 2013 and 2012, 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 2014, 2013 and 2012, 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 2014, 2013 and 2012, the credit facility was not used, no interest was paid and there was no outstanding balance due.

On April 30, 2010, the Company entered into a revolving loan agreement with MCF, a wholly owned subsidiary of NYL Investments (as amended from time to time, the “MCF Loan Agreement”), under which the Company may provide 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, may not exceed 2.75% of the Company’s statutory cash and invested assets as stated on the Company’s most recent quarterly statement. All outstanding advances made to MCF under the MCF Loan Agreement, together with unpaid interest or accrued return thereon will be due in full on July 1, 2025. At December 31, 2014 and 2013, the outstanding balance of loans to MCF under the MCF Loan Agreement was $2,041 million and $1,889 million, respectively. These loans are reported in Investments in affiliates in the accompanying Consolidated Statements of Financial Position. During 2014, 2013 and 2012, the Company received interest payments from MCF totaling $94 million, $85 million and $62 million, respectively, which were included in Net investment income in the accompanying Consolidated Statements of Operations.

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 2014 and 2013, the Company did not purchase any new loans. At December 31, 2014, the Company held loans with an outstanding balance of $17 million and has commitments to fund additional amounts on these existing loans of $5 million. At December 31, 2013, the Company held loans with an outstanding balance of $31 million and had commitments to fund additional amounts on these existing loans of $10 million. These loans were reported in Other investments in the accompanying Consolidated Statements of Financial Position.

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%. At December 31, 2014 and 2013, the carrying value of the Interest in annuity contracts and the Obligations under structured settlement agreements in the accompanying Consolidated Statements of Financial Position amounted to $6,260 million and $6,114 million, respectively. The Company has directed New York Life to make the payments under the annuity contracts directly to the payees under the structured settlement agreements.

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 2014. 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, 2014 and 2013, the policyholder reserves related to these contracts amounted to $162 million and $163 million, respectively, and were included in Future policy benefits in the accompanying Consolidated Statements of Financial Position.

 

68


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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, 2014 and 2013, the policyholder reserves balances for these policies amounted to $3,511 million and $3,325 million, respectively, and were included in Policyholders’ account balances and Separate account liabilities in the accompanying Consolidated Statements of Financial Position.

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, 2014 and 2013, the policyholder reserve balances for these policies amounted to $356 million and $339 million, respectively, and were included in Policyholders’ account balances and Separate account liabilities in the accompanying Consolidated Statements of Financial Position.

In connection with the 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 LLC. In 2012, closing costs in connection with this purchase amounted to $3 million and was included in Net investment income in the accompanying Consolidated Statements of Operations. The mortgage loan is interest-only throughout the term and all outstanding principal shall be due and payable on August 10, 2022. Interest earned for the years ended December 31, 2014, 2013 and 2012 amounted to $3 million, $3 million and $1 million, respectively.

In connection with a $150 million acquisition of a leased fee interest 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 will govern, in part, each entity’s interest in the property. Interest earned for the years ended December 31, 2014, 2013 and 2012 amounted to $3 million, $3 million and $2 million, respectively.

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.

Effective July 1, 2002, the Company transferred its Taiwan branch insurance book of business to New York Life Insurance Taiwan Corporation (“Taiwan Corporation”), which is accounted for as a long-duration coinsurance transaction. Taiwan Corporation was sold on December 31, 2013. Refer to Note 14 — Reinsurance for more details.

At December 31, 2014 and 2013, the Company recorded amounts payable to parent and affiliates of $242 million and $229 million, respectively, and is included in Other liabilities in the accompanying Consolidated Statements of Financial Position. At December 31, 2014 and 2013, the Company recorded amounts due from parent and affiliates of $59 million and $46 million, respectively, and is included in Other assets in the accompanying Consolidated Statements of Financial Position. The terms of the underlying agreements generally require that these amounts be settled in cash within 90 days.

 

69


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

NOTE 12 — POLICYHOLDERS’ LIABILITIES

Policyholders’ Account Balances

Policyholders’ account balances at December 31, 2014 and 2013 were as follows (in millions):

 

     2014      2013  

Deferred annuities

   $ 39,002       $ 38,846   

Universal life contracts

     26,184         25,047   

Other

     1,690         1,498   
  

 

 

    

 

 

 

Total policyholders’ account balances

   $ 66,876       $ 65,391   
  

 

 

    

 

 

 

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, 2014:

 

Product

  

Interest Rate

  

Withdrawal/Surrender Charges

Deferred annuities

   0.20% to 8.00%    Surrender charges 0% to 10% for up to 10 years

Universal life contracts

   1.80% 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

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

Future Policy Benefits

Future policy benefits at December 31, 2014 and 2013 were as follows (in millions):

 

     2014      2013  

Life insurance:

     

Taiwan business — 100% coinsured

   $ 1,205       $ 1,049   

Other life

     235         174   
  

 

 

    

 

 

 

Total life insurance

     1,440         1,223   

Individual and group payout annuities

     15,171         12,797   

Other contract liabilities

     77         49   
  

 

 

    

 

 

 

Total future policy benefits

   $ 16,688       $ 14,069   
  

 

 

    

 

 

 

The 2014 increase in life insurance future policy benefits includes a $25 million out of period adjustment related to out dated assumptions on certain claims-type reserves. The Company concluded it was appropriate to record the adjustment through the 2014 increase in liabilities for Future policy benefits and that the adjustment is not material to the financial statements for all years presented.

 

70


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following table highlights the key assumptions generally utilized in the calculation of future policy benefit reserves at December 31, 2014:

 

Product

  

Mortality

  

Interest Rate

  

Estimation Method

Individual and group payout annuities

   Based upon best estimates at time of policy issuance with PAD    0.05% 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, 2014 and 2013, 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”).

Annuity Contracts — GMDB, EBB, GMAB, GFIB and GLWB

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.

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.

 

71


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following tables provide the account value, net amount at risk and average attained age of contract holders at December 31, 2014 and 2013 for GMDBs, GMABs, EBBs and GFIBs ($ in millions):

 

     2014  
     Return of Net Deposits      Ratchet      Income  
     In the Event of
Death
(GMDB)
     Accumulation at
Specified Date
(GMAB)
     Additional Death
Benefits
(EBB)
     In the Event of
Death
(GMDB)
     Accumulation at
Specified Date
(GFIB)
 

Account value

   $ 15,202       $ 6,619       $ 62       $ 11,182       $ 221   

Net amount at risk

   $ 34       $ 50       $ 7       $ 180       $ 1   

Average attained age of contract holders

     58         58         66         63         58   

 

     2013  
     Return of Net Deposits      Ratchet      Income  
     In the Event of
Death
(GMDB)
     Accumulation at
Specified Date
(GMAB)
     Additional Death
Benefits
(EBB)
     In the Event of
Death
(GMDB)
     Accumulation at
Specified Date
(GFIB)
 

Account value

   $ 12,698       $ 5,766       $ 76       $ 11,570       $ 149   

Net amount at risk

   $ 26       $ 19       $ 7       $ 160       $   

Average attained age of contract holders

     58         58         65         63         58   

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

 

     GMDB      GMAB      EBB      GFIB      Total  

Balance at December 31, 2012

   $ 32       $ 405       $ 1       $ *       $ 438   

Incurred guarantee benefits

     14         (336                      (322

Paid guarantee benefits

     (4                              (4
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at December 31, 2013

     42         69         1         *         112   

Incurred guarantee benefits

     27         112                         139   

Paid guarantee benefits

     (3                      3           
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at December 31, 2014

   $ 66       $ 181       $ 1         3       $ 251   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

* Amounts less than $1 million

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 in the accompanying Consolidated Statements of Operations (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 liability, with a related charge or credit recorded to Increase in liabilities for future policy benefits in the accompanying Consolidated Statements of Operations, if actual experience or other evidence suggests that earlier assumptions should be revised.

 

72


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following assumptions and methodology were used to determine the GMDB liability at December 31, 2014 and 2013, respectively:

 

   

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

 

   

Mean investment performance assumptions ranged from 0.66% to 11.29% for 2014 and 4.48% to 7.33% for 2013.

 

   

Volatility assumption ranged from 1.21% to 31.23% for 2014 and from 13.11% to 14.21% for 2013.

 

   

Mortality was assumed to be 100.5% of an internally developed mortality table for both 2014 and 2013.

 

   

Lapse rates vary by contract type and duration and ranged from 1.00% to 32.00%, with an average of 5.25% for 2014 and from 0.5% to 31.73%, with an average of 5.31% for 2013.

 

   

Discount rates ranged from 4.29% to 7.61% for 2014 and 2013.

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 in the accompanying Consolidated Statements of Operations, 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, 2014 and 2013, respectively:

 

   

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

 

   

Mean investment performance assumption ranged from 0.66% to 11.29% for 2014, and 0.11% to 9.99% for 2013.

 

   

Volatility assumption ranged from 1.21% to 31.23% for 2014, and from 0.04% to 31.28% for 2013.

 

   

Mortality assumption used to project future claims is the Company’s GLI 12(15) Mortality Table in 2014.

 

   

Lapse rates vary by contract type and duration and range from 1.50% to 21.00%, with an average of 1.60% for 2014, and from 1.00% to 20.00%, with an average of 1.00% for 2013.

 

   

Discount rates ranged from 4.29% to 6.64% for 2014 and 2013.

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 in the accompanying Consolidated Statements of Operations, 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, 2014:

 

   

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

 

   

Mortality was assumed to be 100% of the Company’s GLI 12(15) Mortality Table.

 

   

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

 

   

Discount rates ranged from 2.36% to 4.31%.

 

73


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The following table presents the aggregate fair value of assets at December 31, 2014 and 2013, 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):

 

     2014  
     GMDB      GMAB      GFIB      EBB      GLWB      Total  

Separate account:

                 

Equity

   $ 13,098       $ 3,582       $ 133       $ 33       $       $ 16,846   

Fixed income

     5,238         1,467         67         13                 6,785   

Balanced

     4,294         1,241         13         9                 5,557   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total separate account

     22,630         6,290         213         55                 29,188   

General account

     3,754         329         8         7         14         4,112   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 26,384       $ 6,619       $ 221       $ 62       $ 14       $ 33,300   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     2013  
     GMDB      GMAB      GFIB      EBB      Total  

Separate account:

              

Equity

   $ 11,728       $ 3,072       $ 87       $ 30       $ 14,917   

Fixed income

     4,884         1,242         40         12         6,178   

Balanced

     3,936         1,168         8         8         5,120   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total separate account

     20,548         5,482         135         50         26,215   

General account

     3,720         284         14         6         4,024   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 24,268       $ 5,766       $ 149       $ 56       $ 30,239   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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 Future policy benefits in the accompanying Consolidated Statements of Financial Position was $132 million, $98 million and $80 million at December 31, 2014, 2013 and 2012, respectively.

 

74


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

NOTE 13 — DEFERRED POLICY ACQUISITION COSTS AND SALES INDUCEMENTS

Deferred Policy Acquisition Costs

The following is an analysis of DAC for the years ended December 31, 2014, 2013 and 2012 (in millions):

 

     2014     2013     2012  

Balance at beginning of year

   $ 2,847      $ 2,027      $ 2,313   

Current year additions

     468        426        351   

Amortization — current year

     (533     (394     (523

Amortization — impact of assumption and experience unlocking(1)

     90        13        45   

Amortization — impact of extending the useful life(2)

     289                 
  

 

 

   

 

 

   

 

 

 

Balance at end of year before related adjustments

     3,161        2,072        2,186   

Adjustment for changes in unrealized net investment gains

     (120     775        (159
  

 

 

   

 

 

   

 

 

 

Balance at end of year

   $ 3,041      $ 2,847      $ 2,027   
  

 

 

   

 

 

   

 

 

 

 

(1)

In the table above, the positive impact of assumption and experience unlocking on amortization includes $3 million, $(36) million and $7 million of out of period adjustments that (increased) reduced amortization for the years ended December 31, 2014, 2013 and 2012, respectively. The 2013 adjustment for changes in unrealized net investment gains or losses is net of an out of period adjustment of $(145) million related to a prior period adjustment to DAC through AOCI. The Company has evaluated these out of period adjustments and concluded that individually and collectively they are not material to the financial statements for all years presented.

 

(2)

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.

Sales Inducements

The following is an analysis of deferred sales inducements included in Other assets in the accompanying Consolidated Statements of Financial Position for the years ended December 31, 2014, 2013 and 2012 (in millions):

 

     2014      2013      2012  

Balance at beginning of year

   $ 549       $ 530       $ 457   

Current year additions

     117         106         159   

Amortization — current year

     (44      (137      (92

Amortization — Impact of assumption and experience unlocking

     12         36         10   
  

 

 

    

 

 

    

 

 

 

Balance at end of year before related adjustments

     634         535         534   

Adjustment for changes in unrealized net investment gains

             14         (4
  

 

 

    

 

 

    

 

 

 

Balance at end of year

   $ 634       $ 549       $ 530   
  

 

 

    

 

 

    

 

 

 

 

75


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

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 certain products. For the policies reinsured, the Company typically retains between 10% and 60% of each risk, with a minimum size policy ceded of $1 million for joint life and no minimum size for single life. Most of the reinsured business is on an automatic basis. 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.

On July 1, 2002, the Company transferred all of the liabilities and assets of its Taiwan Branch to Taiwan Corporation, an indirect subsidiary of New York Life, that was sold to Yuanta Financials Holding Co., Ltd. (“Yuanta”) on December 31, 2013. Taiwan Corporation is liable for all policyholder obligations on its balance sheet, including policies issued prior to July 2002, when Taiwan Corporation was a branch of the Company. As part of the sale agreement, Yuanta has guaranteed Taiwan Corporation’s obligation with respect to these policyholder obligations. 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.

The effect of this reinsurance agreement with Taiwan Corporation/ Yuanta for the years ended December 31, 2014, 2013 and 2012 was as follows (in millions):

 

     2014(1)      2013      2012  

Amounts recoverable from reinsurer(2)

   $ 1,205       $ 1,049       $ 1,027   

Premiums ceded

   $ 74       $ 65       $ 66   

Benefits ceded

   $ 46       $ 50       $ 28   

 

 

(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 30, 2014. Premiums ceded and benefits ceded represent balances for the nine months ended September 30, 2014 plus an estimate for the three months ended December 31, 2014.

 

(2) 

The Company recorded policyholder liabilities of $1,205 million, $1,049 million, and $1,027 million at December 31, 2014, 2013, and 2012, 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, described above, 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, 2014, 2013 and 2012, $1 million of the deferred gain was amortized and is included in the Net revenue from reinsurance in the accompanying Consolidated Statements of Operations.

 

76


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The effect of this reinsurance agreement with New York Life for the years ended December 31, 2014, 2013 and 2012 was as follows (in millions):

 

     2014      2013      2012  

Fees-universal life policies ceded

   $ 241       $ 246       $ 252   

Net revenue from reinsurance

   $ 85       $ 70       $ 85   

Policyholders’ benefits ceded

   $ 151       $ 160       $ 161   

Amounts recoverable from reinsurer

   $ 4,364       $ 6,833       $ 6,634   

Amounts payable to reinsurer

   $ 4,366       $ 6,833       $ 6,622   

Other liabilities (deferred gain, net of amortization)

   $ 13       $ 14       $ 15   

In 2014, the Company determined it had overstated the Amounts recoverable from reinsurer — affiliated and the Amounts payable to reinsurer — affiliated by $2,305 million in the accompanying Consolidated Statement of Financial Position at December 31, 2013. The overstatement did not have an impact on the Company’s equity or net income and did not affect the Company’s Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Stockholder’s Equity or Consolidated Statements of Cash Flows and did not materially impact total assets or total liabilities. The Amounts recoverable from reinsurer — affiliated and the Amounts payable to reinsurer — affiliated were corrected in 2014.

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 $19 million, $18 million and $14 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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. Four reinsurance companies account for approximately 81% and 83% of the reinsurance ceded to non-affiliates at December 31, 2014 and 2013, respectively.

The effects of all reinsurance for the years ended December 31, 2014, 2013 and 2012 were as follows (in millions):

 

     2014      2013      2012  

Premiums:

        

Direct

   $ 3,198       $ 3,449       $ 2,882   

Assumed

     3         3         3   

Ceded

     (78      (68      (69
  

 

 

    

 

 

    

 

 

 

Net premiums

   $ 3,123       $ 3,384       $ 2,816   
  

 

 

    

 

 

    

 

 

 

Fees-universal life and annuity policies ceded

   $ 601       $ 586       $ 583   

Net revenue from reinsurance

   $ 86       $ 71       $ 85   

Policyholders’ benefits ceded

   $ 520       $ 571       $ 515   

Increase in ceded liabilities for future policy benefits

   $ 12       $ 26       $ 13   

Other liabilities (deferred gain, net of amortization)

   $ 13       $ 14       $ 15   

 

77


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

NOTE 15 — COMMITMENTS AND CONTINGENCIES

Litigation

The Company is a defendant in individual and/or alleged class action suits arising from its agency sales force, insurance (including variable contracts registered under the federal securities law), investment, retail securities and/or other operations, including actions involving retail sales practices. Most of these actions seek substantial or unspecified compensatory and punitive damages. The Company is also from time to time involved in various governmental, administrative and investigative proceedings and inquiries.

Notwithstanding the uncertain nature of litigation and regulatory inquiries, the outcome of which cannot be predicted, the Company believes that, after provisions made in the 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 $4 million and $9 million, which have been accrued in Other liabilities in the accompanying Consolidated Statements of Financial Position at December 31, 2014 and 2013, respectively. The Company expects to recover $23 million and $24 million at December 31, 2014 and 2013, respectively, of premium offsets reflected in Other assets on the accompanying Consolidated Statements of Financial Position.

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.

Loaned Securities and Repurchase Agreements

At December 31, 2014 and 2013, $537 million and $489 million, respectively, of the Company’s fixed maturities were on loan to others. Such assets reflect the extent of the Company’s involvement in securities lending, not the Company’s risk of loss. At December 31, 2014 and 2013, the Company recorded cash collateral received under these agreements of $550 million and $500 million, respectively, and established a corresponding liability for the same amount, which is included in Other liabilities in the accompanying Consolidated Statements of Financial Position. The Company did not hold collateral in the form of securities at December 31, 2014 and 2013.

 

78


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The Company had agreements to purchase and resell securities totaling $133 million and $101 million at an average coupon rate of 0.06% and 0.01% at December 31, 2014 and 2013, respectively, which are included in Securities purchased under agreements to resell in the accompanying Consolidated Statements of Financial Position.

At December 31, 2014 and 2013, the Company had no agreements outstanding to sell and repurchase securities.

The following tables represent recognized repurchase agreements and securities lending transactions that are subject to an enforceable master netting agreement or similar agreement for the years ended December 31, 2014 and 2013 (in millions):

 

     2014  
      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
    Net Amount  

Offsetting of financial assets:

             

Securities purchased under agreement to resell

   $ 133       $       $ 133       $ (133   $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 133       $       $ 133       $ (133   $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

     2013  
      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
    Net Amount  

Offsetting of financial assets:

             

Securities purchased under agreement to resell

   $ 101       $       $ 101       $ (101 )(1)    $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 101       $       $ 101       $ (101   $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(1) 

The actual collateral that is held by the custodian is $103 million, which was capped at the amount recorded in the Consolidated Statements of Financial Position in accordance with the authoritative guidance.

 

     2014  
      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
    Net Amount  

Offsetting of financial liabilities:

             

Securities entered into a security lending agreement

   $ 550       $       $ 550       $ (550 )(1)    $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

   $ 550       $       $ 550       $ (550   $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

79


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

     2013  
      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
    Net
Amount
 

Offsetting of financial liabilities:

             

Securities entered into a security lending agreement

   $ 500       $       $ 500       $ (500 )(2)    $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

   $ 500       $       $ 500       $ (500   $   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(1) 

The amount represents the cash collateral received. The securities lent, which remain on the Consolidated Statements of Financial Position, have a fair value of $537 million.

 

(2) 

The amount represents the cash collateral received. The securities lent, which remain on the Consolidated Statements of Financial Position, have a fair value of $489 million.

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

A summary of the components of the total Income tax expense for the years ended December 31, 2014, 2013 and 2012, included in the accompanying Consolidated Statements of Operations, are as follows (in millions):

 

     2014      2013      2012  

Current:

        

Federal

   $ 212       $ 132       $ 174   

State and local

     5         11         5   

Foreign

     1         1           
  

 

 

    

 

 

    

 

 

 
     218         144         179   

Deferred:

        

Federal

     127         49         61   
  

 

 

    

 

 

    

 

 

 

Income tax expense

   $ 345       $ 193       $ 240   
  

 

 

    

 

 

    

 

 

 

Pursuant to the tax allocation agreement discussed in Note 3 — Significant Accounting Policies, the Company recorded a net income tax receivable from New York Life of $52 million and $73 million at December 31, 2014 and 2013, respectively, which is included in Other assets in the accompanying Consolidated Statements of Financial Position.

 

80


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The Company’s actual income tax expense for the years ended December 31, 2014, 2013 and 2012 differs from the expected amount computed by applying the U.S. statutory federal income tax rate of 35% for the following reasons ($ in millions):

 

     2014     2013     2012  

Statutory federal income tax expense

   $ 465         35.0   $ 301         35.0   $ 298         35.0

Tax exempt income

     (63      (4.2     (36      (4.3     (18      (2.1

Audit liability

     (3      (0.8     3         0.4        1         0.1   

Investment credits

     (55      (4.1     (50      (5.8     (44      (5.2

Tax settlements

             0.0        (30      (3.5             0.0   

Other

     1         0.1        5         0.7        3         0.4   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Actual income tax expense

   $ 345         26.0   $ 193         22.5   $ 240         28.2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

The Company recognized a tax benefit in 2013 of $30 million related to the settlement with the Appeals Office of the Internal Revenue Service (“IRS”) of issues for the 2002-2004 tax years.

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 in the accompanying Consolidated Statements of Financial Position at December 31, 2014 and 2013 are as follows (in millions):

 

     2014      2013  

Deferred tax assets:

     

Future policy benefits

   $ 822       $ 770   

Employee and agents benefits

     56         69   

Other

             19   
  

 

 

    

 

 

 

Gross deferred tax assets

     878         858   
  

 

 

    

 

 

 

Deferred tax liabilities:

     

DAC

     690         683   

Investments

     1,350         656   

Other

     225         187   
  

 

 

    

 

 

 

Gross deferred tax liabilities

     2,265         1,526   
  

 

 

    

 

 

 

Net deferred tax liability

   $ 1,387       $ 668   
  

 

 

    

 

 

 

The Company does not have net operating or capital loss carryforwards.

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 2007. In 2012, the IRS began its examination of tax years 2008 through 2010. 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.

 

81


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

A reconciliation of the beginning and ending amount of unrecognized tax benefits at December 31, 2014, 2013 and 2012 are as follows (in millions):

 

     2014      2013      2012  

Beginning of period balance

   $ 71       $ 71       $ 71   

Additions for tax positions of prior year

     23         3           

Additions for tax positions of current year

     5                   

Settlements with tax authorities

             (3        
  

 

 

    

 

 

    

 

 

 

End of period balance

   $ 99       $ 71       $ 71   
  

 

 

    

 

 

    

 

 

 

The Company had unrecognized tax benefits that, if recognized, would impact the effective tax rate by $32 million, $5 million and $2 million at December 31, 2014, 2013 and 2012, respectively. Total interest expense associated with the liability for unrecognized tax benefits was less than $1 million for December 31, 2014 and $2 million for the years ended December 31, 2013 and 2012, and is included in Income tax expense in the accompanying Consolidated Statements of Operations. The Company accrued interest associated with the liability for unrecognized tax benefits of $13 million, $13 million and $9 million at December 31, 2014, 2013 and 2012, respectively, and is included in Other liabilities in the accompanying Consolidated Statements of Financial Position. The less than $1 million increase from December 31, 2013 in accrued interest associated with the liability for unrecognized tax benefits is the result of an increase of less than $1 million of interest expense. The $4 million increase from December 31, 2012 is the result of an increase of $3 million of interest expense and a $1 million increase resulting from settlements 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 carrying amount of the note was $1 million and $2 million at December 31, 2014 and 2013, respectively.

Non-Recourse Debt

At December 31, 2014 and 2013, 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 and $1 million, respectively. Refer to Note 6 – Investments for a discussion on VIEs.

NOTE 18 — SUPPLEMENTAL CASH FLOW INFORMATION

Income taxes paid were $198 million, $276 million and $233 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Total interest paid was $9 million, $12 million and $17 million for the years ended December 31, 2014, 2013 and 2012, respectively.

 

82


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Non-cash transactions

The Company’s non-cash investing transactions were less than $1 million for the years ended December 31, 2014 and 2013.

The Company’s non-cash investing transactions were $3 million, related to non-cash acquisitions of foreclosed property and non-redeemable preferred stock, at December 31, 2012.

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. The Company has one permitted practice related to certain separate account assets that are valued at book value instead of market value.

A reconciliation of the Company’s statutory capital and surplus at December 31, 2014 and 2013 between practices prescribed or permitted by the Department and NAIC SAP is shown below (in millions):

 

     2014      2013  

Statutory capital and surplus, Delaware basis

   $ 7,669       $ 6,748   

State prescribed or permitted practices:

     

Presenting guaranteed and variable universal life separate accounts at book value

     290         108   
  

 

 

    

 

 

 

Statutory capital and surplus, NAIC SAP

   $ 7,959       $ 6,856   
  

 

 

    

 

 

 

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, 2014 or 2013. As of December 31, 2014, the amount of available and accumulated funds derived from earned surplus from which the Company can pay dividends is $3,716 million. The maximum amount of dividends that may be paid in 2014 without prior approval is $728 million.

NOTE 20 — SUBSEQUENT EVENTS

On February 18, 2015, the Company became a member of the Federal Home Loan Bank (“FHLB”) of Pittsburgh with a purchase of $25 million membership stock. The Company has not posted any collateral or made any borrowings as of the date the financial statements were available to be issued. The Company’s ability to borrow is only limited by the eligible collateral posted to the FHLB of Pittsburgh.

Other than the matter noted above, as of March 12, 2015, 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.

 

83


LOGO

Independent Auditor’s Report

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 statement of financial position as of December 31, 2014 and 2013, and the related consolidated statement of operations, of comprehensive income, of stockholder’s equity and of cash flows for each of the three years in the period ended December 31, 2014.

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.

Auditor’s 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 at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in accordance with accounting principles generally accepted in the United States of America.

 

LOGO

 

84


 

LOGO

Emphasis of Matter

As disclosed in Note 11 to the consolidated financial statements, the Company has significant transactions with New York Life Insurance Company 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.

 

LOGO

New York, New York

March 12, 2015

 

85


 

 

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(NYLIAC) NI070


PART C. OTHER INFORMATION

ITEM 26. EXHIBITS

 

  Board of Directors Resolution
(a)   Resolution of the Board of Directors of NYLIAC establishing 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 Registrant’s Post-Effective Amendment No. 4 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.
(b)   Custodian Agreements. Not applicable.
(c)   Underwriting Contracts.
(c)(1)   Distribution Agreement between NYLIFE Securities Inc. and NYLIAC — Previously filed as Exhibit (3)(a) to Post-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC MFA Separate Account-I (File No. 002-86084), re-filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (3)(a)(1) 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.
(c)(2)   Distribution Agreement between NYLIFE Distributors Inc. and NYLIAC — Previously filed as Exhibit (3)(b) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-4 for NYLIAC Variable Annuity Separate Account-III (File No. 033-87382), filed 4/18/96 and incorporated herein by reference.
(c)(3)   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.
(c)(4)   Amendment to Distribution and Underwriting Agreement, dated March 6, 2015, 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)(4) to Post-Effective Amendment No. 25 on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(d)   Contracts.
(d)(1)   Variable Universal Life Provider policy form (303-31) — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (d)(1) to the Initial Registration Statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-102674), filed 1/23/03 and incorporated herein by reference.
(d)(2)   Variable Universal Life Provider policy form with ACSV (303-30) — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (d)(2) to the Initial Registration Statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-102674), filed 1/23/03 and incorporated herein by reference.
(d)(3)   Variable Universal Life Provider Term Insurance Rider (303-651) — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (d)(3) to the Initial Registration Statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-102674), filed 1/23/03 and incorporated herein by reference.
(d)(4)   Variable Universal Life Provider Life Extension Rider (303-650) — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (d)(4) to the Initial Registration Statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-102674), filed 1/23/03 and incorporated herein by reference.
(d)(5)   Monthly Deduction Waiver Rider — Previously filed in accordance with Regulation S-T, 17 CFR 232. 102(e) as Exhibit (5)(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. 333-79309), filed 7/23/99 and incorporated herein by reference.
(d)(6)   Guaranteed Insurability Rider — Previously filed in accordance with Regulation S-T, 17 CFR 232. 102(e) as Exhibit (5)(g) to Pre-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC Variable Universal Life Separate Account - I (File No. 333-79309), filed 7/23/99 and incorporated herein by reference.
(d)(7)   Living Benefits Rider — Previously filed in accordance with Regulation S-T, 17 CFR 232. 102(e) as Exhibit (5)(h) to Pre-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC Variable Universal Life Separate Account - I (File No. 333-79309), filed 7/23/99 and incorporated herein by reference.
(d)(8)   Insurance Exchange Rider — Previously filed in accordance with Regulation S-T, 17 CFR 232. 102(e) as Exhibit (5)(i) to Pre-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC Variable Universal Life Separate Account - I (File No. 333-79309), filed 7/23/99 and incorporated herein by reference.
(d)(9)   Spouse’s Paid-Up Insurance Purchase Option Rider — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (5)(j) to Pre-Effective Amendment No. 1 to the registration statement on Form S-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 7/23/99 and incorporated herein by reference.
(d)(10)   Modification of Policy Loan Value Provision Endorsement — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (d)(10) to Post-Effective Amendment No. 1 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-102674), filed 4/12/04 and incorporated herein by reference.
(d)(11)   Upromise Account Rider — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (d)(14) to Registrant’s Post-Effective Amendment No. 11 to the Registration Statement on Form N-6 (File No. 333-79309), filed 9/13/05 and incorporated herein by reference.
(e)   Applications.
(e)(1)   Form of Application — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 1.(10) 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.
(f)   Depositor’s Certificate of Incorporation and By-Laws.
(f)(1)   Certificate of Incorporation of NYLIAC — Previously filed as Exhibit (6)(a) to the registration statement on Form S-6 for NYLIAC MFA Separate Account-I (File No. 002-86083), 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.
(f)(1)(a)   Amended and Restated Certificate of Incorporation of NYLIAC — 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 4/12/13 and incorporated herein by reference.
(f)(2)   By-Laws of NYLIAC — Previously filed as Exhibit (6)(b) to the registration statement on Form S-6 for NYLIAC MFA Separate Account-I (File No. 002-86083), 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.

 

C-1


(f)(2)(a)   Amendments to By-Laws of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (6)(b)(2) 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.
(f)(2)(b)   Amended and Restated By-Laws of NYLIAC — 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 4/12/13 and incorporated herein by reference.
(g)   Reinsurance Contracts.
  Not applicable.
(h)   Participation Agreements.
(h)(1)   Stock Sale Agreement between NYLIAC and MainStay VP Series Fund, Inc. (formerly New York Life MFA Series Fund, Inc.) — Previously filed as Exhibit (9) to Registrant’s Pre-Effective Amendment No. 1 on Form S-6, refiled as Exhibit 1.(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.
(h)(2)   Participation Agreement among Acacia Capital Corporation, Calvert Asset Management Company, Inc. and NYLIAC, as amended — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 1.(9)(b)(1) 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.
(h)(3)   Participation Agreement among The Alger American Fund, Fred Alger and Company, Incorporated and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 1.(9)(b)(2) 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.
(h)(4)   Participation Agreement between Janus Aspen Series and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 1.(9)(b)(3) 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.
(h)(5)   Participation Agreement among Morgan Stanley Universal Funds, Inc., Morgan Stanley Asset Management Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 1.(9)(b)(4) 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.
(h)(6)   Amended and Restated Participation Agreement among Variable Insurance Products Funds, Fidelity Distributors Corporation and NYLIAC, as amended, dated November 23, 2009 — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(f) to Post-Effective Amendment No. 24 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-I (File No. 033-53342), filed 4/13/10 and incorporated herein by reference.
(h)(7)   Form of Participation Agreement among T. Rowe Price Equity Series, Inc., T. Rowe Price Associates, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(h) 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.
(h)(8)   Form of Participation Agreement among Dreyfus Investment Portfolios, The Dreyfus Corporation, Dreyfus Service Corporation and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102 (e) as Exhibit (9)(r) 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.
(h)(9)   Form of Substitution Agreement among NYLIAC, MainStay Management LLC, and New York Life Investment Management LLC — Previously filed in accordance with Regulation S-T, 17 CFR 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.
(h)(10)   Amendment dated 9/27/02 to Stock Sale Agreement dated 6/4/93 between NYLIAC and MainStay VP Series Fund, Inc. — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(n) to Post-Effective Amendment No. 19 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.
(h)(11)   Form of Participation Agreement among Van Eck Worldwide Insurance Trust, Van Eck Associates Corporation and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(i) 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.
(h)(12)   Form of Participation Agreement among Royce Capital Fund, Royce & Associates, LLC and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (h)(19) to Post-Effective Amendment No. 10 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-48300), filed 6/25/04 and incorporated herein by reference.
(h)(13)   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 accordnace 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.
(h)(14)   Form of Participation Agreement among MFS Variable Insurance Trust, Massachusetts Financial Services Company and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(j) 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 5/20/03 and incorporated herein by reference.
(h)(15)   Form of Participation Agreement by and among AIM Variable Insurance Funds, AIM Distributors, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (h)(22) to Post-Effective Amendment No. 13 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-48300), filed 9/15/05 and incorporated herein by reference.
(h)(16)   Form of Participation Agreement, dated May 1, 2007, among New York Life Insurance and Annuity Corporation, AllianceBernstein L.P. and AllianceBernstein Investments, Inc. — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (h)(26) to Post-Effective Amendment No. 17 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-48300), filed 4/18/07 and incorporated herein by reference.
(h)(17)   Form of Participation Agreement, dated May 1, 2007, among New York Life Insurance and Annuity Corporation, DWS Variable Series I, DWS Variable Series II, and DWS Investments VIT Funds, DWS Scudder Distributors, Inc. and Deutsche Investment Management Americas Inc. — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (h)(27) to Post- Effective Amendment No. 17 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-48300), filed 4/18/07 and incorporated herein by reference.
(h)(18)   Form of Participation Agreement among NYLIAC, PIMCO Variable Insurance Trust and PIMCO Advisors Distributors LLC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (h)(17) to Post-Effective Amendment No. 9 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-48300), filed 4/14/04 and incorporated herein by reference.
(h)(19)   Form of Fund Participation Agreement, dated March 25, 2011, and effective as of May 1, 2011, between BlackRock Variable Series Funds, Inc., BlackRock Investments, LLC, and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 8(b)(b) to Post-Effective Amendment No. 25 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-I (File No. 033-53342), filed 4/14/11 and incorporated herein by reference.
(h)(20)   Form of Fund Participation Agreement among Neuberger Berman Advisers Management Trust, Neuberger Berman Management Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (9)(q) 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.
(h)(21)   Form of Fund Participation Agreement, dated August 14, 2006, among New York Life Insurance and Annuity Corporation, Delaware VIP Trust, Delaware Management Company, and Delaware Distributors, L.P. — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (h)(25) to Post-Effective Amendment No. 16 to the registration statement 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.
(i)   Administrative Contracts.
(i)(1)   Service Agreement between Fred Alger Management, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(1) to Post-Effective Amendment No. 6 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 1/21/03 and incorporated herein by reference.
(i)(2)   Administrative Services Agreement between Dreyfus Corporation and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(2) to Post-Effective Amendment No. 6 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 1/21/03 and incorporated herein by reference.
(i)(3)   Administrative Services Agreement between Janus Capital Corporation and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(3) to Post-Effective Amendment No. 6 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 1/21/03 and incorporated herein by reference.
(i)(4)   Services Agreement between New York Life Investment Management LLC and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(4) to Post-Effective Amendment No. 6 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 1/21/03 and incorporated herein by reference.
(i)(5)   Administrative Services Agreement between T. Rowe Price Associates, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(5) to Post-Effective Amendment No. 6 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 1/21/03 and incorporated herein by reference.
(i)(6)   Service Agreement between Fidelity Investments Institutional Operations Company, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(6) to Post-Effective Amendment No. 6 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 1/21/03 and incorporated herein by reference.
(i)(7)   Administrative Services Agreement by and between Royce & Associates, LLC and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(u) to Post-Effective Amendment No. 19 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-I (File No. 033-53342), filed 4/12/05 and incorporated herein by reference.
(i)(8)   Form of Administrative and Shareholder Services Letter of Agreement dated 1/15/98 between Van Eck Worldwide Insurance Trust and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(9) to Post-Effective Amendment No. 11 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 9/13/05 and incorporated herein by reference.
(i)(9)   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.
(i)(10)   Administrative Service Agreement between Morgan Stanley & Co. Incorporated and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(15) to Pre-Effective Amendment No. 1 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account - I (File No. 333-147707), filed on 4/14/08 and incorporated herein by reference.
(i)(11)   Administrative Services Agreement between Massachusetts Financial Services Company and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(8) to Post-Effective Amendment No. 3 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-57210), filed 2/12/03 and incorporated herein by reference.
(i)(12)   Form of Service Agreement by and between AIM Advisors, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(18) to Post-Effective Amendment No. 13 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account - I (File No. 333-48300), filed 9/15/05 and incorporated herein by reference.
(i)(13)   Form of Administrative Services Agreement, dated May 1, 2007, among New York Life Insurance and Annuity Corporation, AllianceBernstein L.P. and AllianceBernstein Investments, Inc. — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(23) to Post-Effective Amendment No. 17 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account - I (File No. 333-48300), filed 4/18/07 and incorporated herein by reference.
(i)(14)   Administrative Services Letter of Agreement, dated May 1, 2007, between Deutsche Investment Management Americas, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(14) to Pre-Effective Amendment No. 1 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-147707), filed 4/14/08 and incorporated herein by reference.
(i)(15)   Services Agreement between PIMCO Variable Insurance Trust and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(13) to Post-Effective Amendment No. 10 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-57210), filed 4/13/05 and incorporated herein by reference.
(i)(16)   Form of Administrative Services Agreement, dated March 25, 2011, and effective as of May 1, 2011, between BlackRock Advisors, LLC and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit 8(a)(a) to Post-Effective Amendment No. 25 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-I (File No. 033-53342), filed 4/14/11 and incorporated herein by reference.
(i)(17)   Form of Distribution and Administrative Services Agreement, Class S Shares, between Neuberger Berman Management, Inc. and NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (8)(w) to Post-Effective Amendment No. 19 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account-III (File No. 033-87382), filed 5/14/03 and incorporated herein by reference.
(i)(18)   Amended and Restated Administrative Services Agreement between New York Life Investment Management LLC and NYLIAC, dated February 17, 2012 — Previously filed in accordance with Regulation S-T 17 CFR 232.102(e) as Exhibit (8)(c)(c) to Post-Effective Amendment No. 26 to the registration statement on Form N-4 for NYLIAC Variable Annuity Separate Account – I (File No. 033-53342), filed 4/11/12 and incorporated herein by reference.
(i)(19)   Form of Service Agreement, dated May 1, 2007, between Delaware Distributors, L.P. and New York Life Insurance and Annuity Corporation — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (i)(22) to Post-Effective Amendment No. 17 to the registration statement on Form N-6 for NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I (File No. 333-48300), filed 4/18/07 and incorporated herein by reference.
(j)   Other Material Contracts.
(j)(1)   Powers of Attorney for Andrew F. Amenn, Corporate Vice President and Controller of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(1) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(2)   Powers of Attorney for Christopher T. Ashe, Director and Senior Vice President of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(2) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(3)   Powers of Attorney for David G. Bedard, Director and Senior Vice President of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(3) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(4)   Powers of Attorney for Christopher O. Blunt, Director, Executive Vice President and Co-President of Insurance and Agency Group of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(4) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(5)   Powers of Attorney for David Cruz, Director and Senior Vice President of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(5) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(6)   Powers of Attorney for John T. Fleurant, Director, Executive Vice President and Chief Financial Officer of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(6) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(7)   Powers of Attorney for Robert M. Gardner, Director and Vice President of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(7) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(8)   Powers of Attorney for John Y. Kim, Director, Executive Vice President and President of Investments Group of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(8) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(9)   Powers of Attorney for Theodore A. Mathas, Director, Chairman and President of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(9) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(10)   Powers of Attorney for Mark W. Pfaff, Director, Executive Vice President and Co-President of Insurance and Agency Group of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(10) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(11)   Powers of Attorney for Arthur H. Seter, Director, Senior Vice President and Chief Investment Officer of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(11) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(12)   Powers of Attorney for Joel M. Steinberg, Director, Senior Vice President, Chief Risk Officer and Chief Actuary of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(12) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.
(j)(13)   Powers of Attorney for Susan A. Thrope, Director of NYLIAC — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (j)(13) to Post-Effective Amendment No. 25 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account-I (File No. 333-79309), filed 4/14/2015 and incorporated herein by reference.

 

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(k)    Legal Opinion.
   Opinion and consent of Thomas F. English, Esq. — Filed herewith.
(l)    Actuarial Opinion.
   Opinion and consent of Karin A. Bombard, Actuary — Filed herewith.
(m)    Calculation.
   Sample Calculation of Illustrations — Filed herewith.
(n)    Other Opinions.
(n)    Consent of PricewaterhouseCoopers LLP — Filed herewith.
(o)    Omitted Financial Statements.
   Not applicable.
(p)    Initial Capital Agreements.
   Not applicable
(q)    Redeemability Exemption.
   Memorandum Describing NYLIAC’s Issuance, Transfer and Redemption Procedures for Policies Pursuant to Rule 6e-3(T)(b)(12)(iii) — Previously filed in accordance with Regulation S-T, 17 CFR 232.102(e) as Exhibit (q) to Post-Effective Amendment No. 23 to the registration statement on Form N-6 for NYLIAC Variable Universal Life Separate Account - I (File No. 333-79309), filed 4/17/13 and incorporated herein by reference.

 

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ITEM 27. 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:

Mathas, Theodore A.

   Chairman & President

Ashe, Christopher T.

   Director & Senior Vice President

Bedard, David G.

   Director & Senior Vice President

Blunt, Christopher O.

   Director, Executive Vice President & Co-President Insurance & Agency Group

Cruz, David

   Director & Senior Vice President

Fleurant, John T.

   Director, Executive Vice President & Chief Financial Officer

Gardner, Robert M.

   Director & Vice President

Kim, John Y.

   Director, Vice Chairman & President Investments Group

Pfaff, Mark W.

   Director, Executive Vice President & Co-President Insurance & Agency Group

Seter, Arthur H.

   Director, Senior Vice President & Chief Investment Officer

Steinberg, Joel M.

   Director, Senior Vice President, Chief Risk Officer & Chief Actuary

Thrope, Susan A.

   Director

Badler, Sara L.

   Senior Vice President & Legal Officer

Banaszek, Annamaria

   Senior Vice President

Bennett, Joseph M.

   Senior Vice President

Berlin, Scott L.

   Senior Vice President

Castellani, David J.

   Senior Vice President

Cole, Thomas

   Senior Vice President

Del Secolo, Michael

   Senior Vice President & Chief Technology Officer

DeSanto, Craig L.

   Senior Vice President & Actuary

DiMella, Robert A.

   Senior Vice President

English, Thomas F.

   Senior Vice President & Chief Legal Officer

Fisher, Stephen P.

   Senior Vice President

Girard, Thomas J.

   Senior Vice President

Glover, Troy E.

   Senior Vice President

Grove, Matthew M.

   Senior Vice President

Hebron, Robert J.

   Senior Vice President

Hendry, Thomas A.

   Senior Vice President & Treasurer

Loffredo, John M.

   Senior Vice President

Malloy, Anthony R.

   Senior Vice President

McDermott, Gail A.

   Senior Vice President

McInerney, Barbara J.

   Senior Vice President & Chief Compliance Officer

Ok, Francis

   Senior Vice President

Oleske, Michael M.

   Senior Vice President & Chief Tax Counsel

Paternoster, Susan L.

   Senior Vice President

Pell, Gideon A.

   Senior Vice President

Phlegar, Jeffrey S.

   Senior Vice President

Roberts, Dan C.

   Senior Vice President

Rocchi, Gerard A.

   Senior Vice President

Senser, Jerrold K.

   Senior Vice President

Shively, George S.

   Senior Vice President & Legal Officer

Talgo, Mark W.

   Senior Vice President

Yoon, Jae

   Senior Vice President

Ascione, Mitchell P.

   Vice President

Attias, Steven

   Vice President & Chief Information Security Officer

Bain, Karen A.

   Vice President - Tax

Baker, Lee C.

   Vice President

Bartlett, Judy R.

   Vice President & Associate Legal Officer

Barton, Jacqueline M.

   Vice President

Bonvouloir, John

   Vice President

Brill, Elizabeth

   Vice President & Actuary

Carbone, Jeanne M.

   Vice President

Carey, Christopher H.

   Vice President

Casanova, Ramon A.

   Vice President & Actuary

Chen, Roger

   Vice President

Cohen, Louis N.

   Vice President

Cristallo, James J.

   Vice President & Actuary

Cunningham, Paul K.

   Vice President

DeToro, Karen J.

   Vice President

Dial, Robert H.

   Vice President

Diaz, Mayra L.

   Vice President

Donnelly, Kathleen A.

   Vice President

Donohue, Robert

   Vice President & Assistant Treasurer

Dubrow, Michael G.

   Vice President

Feinstein, Jonathan

   Vice President

Ferguson, Robert E.

   Vice President

Ferraro, Anthony

   Vice President & Actuary

Fitzgerald, Edward J.

   Vice President

Fong, Michael

   Vice President & Actuary

Frawley, Stephanie A.

   Vice President

Furlong, Brian

   Vice President

Gangemi, Thomas J.

   Vice President

Goldstein, Ross M.

   Vice President

Grecco, Nicholas

   Vice President

Hamrick, Jane L.

   Vice President & Actuary

Heller, Thomas S.

   Vice President

Hoffman, Eric S.

   Vice President

Huang, Dylan W.

   Vice President & Actuary

Hynes, Joseph E.

   Vice President

Hynes, Robert J.

   Vice President

Karmen, Robert

   Vice President & Associate Legal Officer

Killian, Jeffrey

   Vice President

Kimble, Michael

   Vice President

Koltisko, Joseph D.

   Vice President

Kraus, Linda M.

   Vice President

Kravitz, Jodi L.

   Vice President & Actuary

Kuan, Melissa

   Vice President

Lackey, Michael P.

   Vice President

Lamp, Karen J.

   Vice President & Associate Legal Officer

Leber, Richard B.

   Vice President, Associate Legal Officer & Assistant Secretary

Lenz, Scott L.

   Vice President & Associate Tax Counsel

Loutrel, Brian C.

   Vice President & Chief Privacy Officer

Lynn, Eric J.

   Vice President & Actuary

Marinaccio, Ralph S.

   Vice President

McGee, Conner

   Vice President

McGinnis, Timothy M.

   Vice President

McNamara, Stephen J.

   Vice President & Actuary

Moffitt, Eric A.

   Vice President

Morris, Ryan J.

   Vice President & Actuary

Mosquera, Jaime

   Vice President & Actuary

Multer, Corey B.

   Vice President

Murphy, Marijo F.

   Vice President

Nachman, Charles E.

   Vice President

Navarro, Kathleen

   Vice President

Pasyanos, Nicholas

   Vice President & Actuary

Perry, Valerie L.

   Vice President - Underwriting

Petty, Mike

   Vice President

Quartararo, Paul

   Vice President & Chief Medical Officer

Rubin, Janis C.

   Vice President

Rzad, Amaury J.

   Vice President

Schwartz, Richard C.

   Vice President & Actuary

Seewald, Scott R.

   Vice President

Shannon, Joseph J.

   Vice President

Silber, Irwin

   Vice President & Actuary

Smith, Kevin M.

   Vice President

Sorg, Thomas C.

   Vice President

Starr, Andrew P.

   Vice President

Suryapranata, Monica

   Vice President & Actuary

Swanson, Matthew T.

   Vice President

Tate, William P.

   Vice President

Tillotson, Sandra G.

   Vice President

Troeller, Thomas J.

   Vice President & Actuary

Verastegui, Victor A.

   Vice President

Wagenseil, Taylor

   Vice President

Wagner, Robin M.

   Vice President

Walsh, Richard M.

   Vice President

Weinstein, Scott W.

   Vice President

Wildin, Michellen

   Vice President

Wion, Matthew D.

   Vice President & Actuary

Yashnyk, Michael A.

   Vice President

Zeng, Paul

   Vice President & Actuary

Bidwell, Anna Louise

   Associate Legal Officer & Secretary

Amenn, Andrew F.

   Corporate Vice President & Controller

 

C-4


ITEM 28. 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

ICAP Funds Inc.

  Maryland  

The MainStay Funds (1)

  Massachusetts  

MainStay VP Funds Trust (1)(2)

  Maryland  

MainStay Funds Trust

  Delaware  

New York Life Insurance and Annuity Corporation

  Delaware  

Pacific Square Investments LLC

  Delaware  

29 Park Investments No. 2 Limited

  Cayman Islands  

NYLIFE LLC

  Delaware  

Eagle Strategies LLC

  Delaware  

 

(1) Registered investment company as to which New York Life (“NYL”) 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 NYL and is included for informational purposes only.
(2) 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.
(+) 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.

 

C-5


Name    Jurisdiction of
Organization
   Percent of Voting
Securities Owned

(NYLIFE LLC subsidiaries cont.)

     

New York Life Capital Corporation

   Delaware   

NYL Management Limited

   United Kingdom   

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   

New York Life Trust Company

   New York   

NYL Executive Benefits LLC

   Delaware   

(NYLIFE LLC subsidiaries cont.)

     

NYLIFE Securities LLC

   Delaware   

NYLINK Insurance Agency Incorporated

   Delaware   

 

C-6


Name

  Jurisdiction of
Organization
  Percent of
Voting
Securities
Owned
 

Biris Holdings LLC

  Delaware  

NYL Investors LLC

  Delaware  

NYL Investors (U.K.) Limited

  United Kingdom  

NYL Real Assets LLC

  Delaware  

NYL Emerging Manager LLC

  Delaware  

NYL Wind Investments LLC

  Delaware  

New York Life Short Term Fund1

  New York  

NYLIFE Insurance Company of Arizona

  Arizona  

29 Park Investments No. 1 Limited

  Cayman Islands  

New York Life Insurance and Annuity Corporation

  Delaware  

Pacific Square Investments LLC

  Delaware  

29 Park Investments No. 2 Limited

  Cayman Islands  

New York Life Enterprises LLC

  Delaware  

SEAF Sichuan SME Investment Fund LLC

  Delaware     39.98

New York Life International Holdings Limited

  Mauritius     8 %2 

New York Life International India Fund (Mauritius) LLC

  Mauritius     92.97

NYL Cayman Holdings Ltd.

  Cayman Islands  

NYL Worldwide Capital Investments LLC

  Delaware  

NYLIFE Thailand, Inc.

  Delaware  

NYLI-VB Asset Management Co. (Mauritius) LLC

  Mauritius     90

Seguros Monterrey New York Life, S.A. de C.V.

  Mexico     99.998 %3 

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%)

   

NYLIM Jacob Ballas India Holdings IV

  Mauritius  

New York Life Investment Management Holdings LLC

  Delaware  

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: 40.18%; NYLIAC: 40.18%)

   

Plainview Funds plc – MacKay Shields Flexible Bond Portfolio (Ireland) (NYLIC: 56.41%; NYLIAC: 23.55%; MacKay: 0.90%)

   

Plainview Funds plc – MacKay Shields Unconstrained Bond Portfolio (Ireland) (NYLIC: 40.80%; MacKay: 0.33%)

   

Plainview Funds plc – MacKay Shields Floating Rate High Yield Fund (Ireland) (NYLIC: 97.03%; MacKay 2.96%)

   

Plainview Funds plc – MacKay Shields Core Plus Opportunities Portfolio (Ireland) (NYL: 0%)

   

MacKay Shields Statutory Trust – High Yield Bond Series

  Connecticut8  

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     14.49 %4 

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%; MSIL: 1%)

   

MacKay Shields General Partner (L/S) LLC

  Delaware  

MacKay Shields Long/Short Fund LP

  Delaware  

MacKay Shields Long/Short Fund (Master), LP

  Delaware  

MacKay Shields Global Derivatives LLC

  Delaware  

MacKay Municipal Managers Puerto Rico Opportunities GP LLC

  Delaware  

MacKay Puerto Rico Opportunities Funds, L.P.

  Delaware  

Madison Capital Funding LLC

  Delaware  

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  

Chancellor Lane, LLC (dba Sullivan Flotation Systems, Inc)

  Delaware  

Electric Avenue, LLC (dba Atlantic-Meeco Holding, Inc.)

  Delaware  

WDC Liquidation Trust (Control is through MFC acting as Trustee-no voting)

   

MCF Capital Management LLC (“MCFCMLLC”)

  Delaware  

Ironshore Investment BL I Ltd. (Bermuda)8 (0 voting ownership)

   

LMF WF Portfolio II, LLC (Delaware)8 (0 voting ownership)

   

OFS Capital WM, 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  

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  

Cornerstone Capital Management Holdings LLC

  Delaware  

Cornerstone Capital Management, LLC

  Delaware     51

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  

NYLCAP III RBG Corp.

  Delaware  

New York Life Capital Partners III-A, L.P.

  Delaware  

NYLCAP III-A RBG Corp.

  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 Partners Mezzanine IV GenPar GP, LLC

  Delaware  

GoldPoint Partners Co-Investment V GenPar GP LLC

  Delaware  

GoldPoint Partners Co-Investment V GenPar, L.P.

  Delaware  

GoldPoint Partners Co-Investment V, L.P.

  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  

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 Fund, LP

  Delaware**  

NYLCAP Mezzanine Partners III, LP

  Delaware**  

NYLCAP Mezzanine III Luxco S.à.r.l.

  Luxembourg  

NYLCAP Mezzanine Partners III Parallel Fund, LP

  Delaware**  

NYLCAP Mezzanine Partners III 2012 Co-Invest, LP

  Delaware**  

NYLCAP Mezzanine III 2012 Luxco S.à.r.l

  Luxembourg  

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 E, 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 %5 

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 %6 

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

   

NYLCAP Holdings

  Mauritius  

Jacob Ballas Capital India PVT. Ltd.

  Mauritius     23.30

Evolvence Asset Manamement, Ltd. (Goldpoint: 24.5%)

   

NYLIM Service Company LLC

  Delaware  

NYL Workforce GP LLC

  Delaware  

New York Life Investment Management LLC

  Delaware  

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  

Metropolis II Construction, LLC

  Delaware  

Streets Las Vegas, LLC

  Arizona     90

NYLIM RE Mezzanine Fund II Investment Corporation

  Delaware  

NYLIM-GCR Fund I, LLC

  Delaware     50

WFHG GP, LLC

  Delaware     50

Workforce Housing Fund I-2007 LP

  Delaware  

New York Life Investments International Limited

  Ireland  

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 (“CANLUX”) (Luxembourg) (NYLIMGH: 97.96%; 1 share held by CANLUXS)

   

Candriam Belgium (Belgium) (“CANBEL”) (99.99%; NYLIMGH: 0.01%)

   

Candriam France (“CANFR”)

   

Candriam Dublin

  Ireland  

Candriam Treasury Management (CANBEL: 7.03%; CANFR: 8.13%)

   

BIL Prime Advanced Cash + 100 (CANLUX: 26.69%; CANBEL: 26.48%) (“BILPAC”)

   

Cordius CIG (Lux) (50.02%; CANBEL: 24.99%; CANFR: 24.99%)

   

Ausbil Investment Management Limited

  Australia     72.31

Ausbil Australia Pty. Ltd.

  Australia  

Ausbil Asset Management Pty. Ltd.

  Australia  

Ausbil IT – Ausbil Microcap Fund

  Australia  

NYLIFE Distributors LLC

  Delaware  

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 Concourse 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     94

Private Advisors L.L.C.

  Delaware     64.25

Alternative Fund LV, LLC

  Delaware  

Alternative Fund LV II, LLC

  Delaware  

Private Advisors Alternative Asset Fund LLC

  Delaware  

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  

Private Advisors Distressed Opportunities Fund, L.P.

  Delaware  

PA Hedged Equity Fund, L.P.

  Delaware  

Private Advisors Hedged Equity Fund QP, L.P.

  Delaware  

Private Advisors Hedged Equity Master Fund

  Delaware7  

PAPEF GP, LLC

  Delaware  

Private Advisors Private Equity Fund, L.P.

  Delaware  

PAPEF Carry Parent, LLC

  Delaware  

PAPEF Carry, LLC

  Delaware  

Private Advisors Income Fund, L.P.

  Delaware  

Private Advisors Small Company Buyout Fund, L.P. (Delaware) (“PASCBF”)

   

Private Advisors Alternative Small Company Buyout Fund, L.P. (Delaware) (“PAASCBF”)

   

Small Company Buyout Blocker Corp. (Delaware) (“Smallco Blocker”)

   

Small Company Buyout ECI, LP (Delaware) (PASCBF: 88.6%; Smallco Blocker: 11.4%)

   

Small Company Buyout Holding, LP (Delaware) (PASCBF: 88.6%; PAASCBF: 11.4%)

   

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  

Montpelier Carry Parent, LLC (Delaware) (PALLC: 50%; MCFCMLLC: 50%)

   

Montpelier Carry, LLC

  Delaware  

Montpelier GP, LLC (Delaware) (PALLC: 50%; MCFCMLLC: 50%)

   

Montpelier Fund, L.P.

  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  

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)

   

PA Stable Value Fund, Ltd.

  Cayman Islands     0

Private Advisors Stable Value ERISA Fund, Ltd.

  Cayman Islands     0

Private Advisors Stable Value Master Fund, Ltd. (Cayman Islands) (owned by two funds above)

   

The Hedged Strategies Fund (QP), Ltd.

  Cayman Islands     0

UVF GP, LLC

  Delaware  

Undiscovered Value Fund, LP

  Delaware  

Undiscovered Value Fund, Ltd.

  Cayman Islands8  

Undiscovered Value Master Fund SPC

  Cayman Islands  

Madison Core Property Fund LLC (Delaware) (NYLIM is Non Member Manager)8

   

MIREF 1500 Quail, LLC

  Delaware  

MIREF Mission Heritage, LLC

  Delaware  

MIREF Linpro Center, LLC

  Delaware  

MIREF Mill Creek, LLC

  Delaware  

MIREF Gateway, LLC

  Delaware  

MIREF Delta Court, LLC

  Delaware  

MIREF Seaside, LLC

  Delaware  

MIREF Zanker Road, 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 Carol Point, 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 250 Montgomery, 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-IND Assateague MD LLC

  Delaware  

MADISON-SP Assateague LLC

  Delaware     90

MADISON-MF Casa Santa Fe AZ LLC

  Delaware  

MADISON-MF Cabrillo AZ LLC

  Delaware  

MADISON-OFC Centerstone I CA LLC

  Delaware  

MADISON-RTL Centerstone II 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

  Delaware8  

NYLIM Flatiron CLO 2004-1 Ltd.

  Cayman Islands  

NYLIM Flatiron CLO 2004-1 Equity Holdings LLC, Series A

  Cayman Islands  

NYLIM Flatiron CLO 2005-1 Ltd.

  Cayman Islands  

NYLIM Flatiron CLO 2006-1 Ltd.

  Cayman Islands  

NYLIM Flatiron CLO 2006-1 Equity Holdings LLC, Series A

  Cayman Islands  

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 2014-2 Ltd.

  Cayman Islands     100

Flatiron CLO 2015-1 Ltd.

  Cayman Islands     100

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  

NYL Midwest Apartments LLC

  Delaware  

REEP-IND Aegean MA LLC

  Delaware  

REEP-IND Chino CA LLC

  Delaware  

REEP-IND Continental NC LLC

  Delaware  

LRC-Patriot, LLC

  Delaware     93

REEP-LRC Industrial LLC

  Delaware  

REEP-IND FREEDOM MA LLC

  Delaware  

REEP-IND Fridley MN LLC

  Minnesota  

REEP-IND Green Oaks IL 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     93

NJIND Hook Road LLC

  Delaware  

NJIND Old Post Road LLC

  Delaware  

NJIND Brunswick Avenue 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 LYMAN MA LLC

  Delaware  

REEP-IND Kent LLC

  Delaware  

REEP-IND RTG NC LLC

  Delaware  

REEP-IND Valwood TX LLC

  Delaware  

REEP-MF Chandler AZ LLC

  Delaware  

REEP-MF Cumberland TN LLC

  Delaware  

Cumberland Apartments, LLC

  Tennessee  

REEP-MF Enclave TX LLC

  Delaware  

Enclave CAF LLC

  Delaware     50

REEP-MF Issaquah WA 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 Mount Vernon GA LLC

  Delaware  

REEP-MF Verde NC LLC

  Delaware  

REEP-MF Summitt Ridge CO LLC

  Delaware  

Summitt Ridge Apartments, LLC

  Delaware     50

REEP-MF Wallingford WA LLC

  Delaware  

REEP-MF Woodridge IL LLC

  Delaware  

REEP-OFC Bellevue WA 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 DRAKES LANDING CA LLC

  Delaware  

REEP OFC Westory DC LLC

  Delaware  

REEP-RTL SASI GA LLC

  Delaware  

REEP-RTL Bradford PA LLC

  Delaware  

2015 DIL PORTFOLIO HOLDINGS LLC

  Delaware  

CT 611 W. JOHNSON AVE LLC

  Delaware  

CT 550 RESEARCH PKWY LLC

  Delaware  

NJ 30 WESLEY ST LLC

  Delaware  

NJ 663 E. CRESCENT AVE LLC

  Delaware  

NJ 1881 ROUTE 46 LLC

  Delaware  

PA 180 KOST RD LLC

  Delaware  

PTC Acquisitions, LLC

  Delaware  

Martingale Road LLC

  Delaware     71.4693

New York Life Funding

  Cayman Islands9  

New York Life Global Funding

  Delaware9  

NYL Equipment Issuance Trust

  Delaware10  

NYL Equipment Issuance Trust 2014-2

  Delaware10  

Government Energy Savings Trust 2003-A (GEST)

  New York10  

UFI-NOR Federal Receivables Trust, Series 2009B

  New York10  

NYLARC Holding Company Inc.

  Arizona9  

New York Life Agents Reinsurance Company

  Arizona9  

Samsung US Dynamic Asset Allocation Securities Feeder Investment Trust H (NYL: 49.1%)

   

 

1 Control is by virtue of NYLIC and subsidiaries being general partners.
2 NYL Cayman Holdings Ltd. owns 92%.
3 NYL Worldwide Capital Investment LLC owns 0.002 %.
4 NYLIC owns 14.19%, NYLIAC owns 0.00%, and MacKay owns .30% for a total ownership of 14.49%.
5 NYLCAP Manager LLC owns 24.66% of the voting management shares. NYLCAP India Funding LLC owns 36% of non-voting carry shares.
6 NYLCAP Manager LLC owns 24.66% of the voting management shares. NYLCAP India Funding III LLC owns 31.36% of non-voting carry shares.
7 Private Advisors Hedged Equity Fund (QP), L.P. owns 33.67% and PA Hedged Equity Fund, L.P. owns 66.33% of the Master Fund.
8 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.
9 Control is through a reliance relationship between NYLIC and this entity, not ownership of voting interests.
10 Control is through financial interest, not ownership of voting interests.

 


ITEM 29. 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 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-8


ITEM 30. PRINCIPAL UNDERWRITERS

(a) Other Activity. 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 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-III

NYLIAC Variable Annuity Separate Account-IV

NYLIAC VLI Separate Account

MainStay Funds

MainStay VP Funds Trust (formerly, MainStay VP Series Fund)

Private Advisors Alternative Strategies Fund

Private Advisors Alternative Strategies Master Fund

(b) Management.

The principal business address of each director and officer of NYLIFE Distributors LLC is 169 Lackawanna Avenue, Parsippany, New Jersey 07054.

 

Names of Directors and Officers

  

Positions and Offices with Underwriter

Fisher, Stephen P.

   Chairman & Chief Executive Officer

Gardner, Robert M.

   Manager

Harte, Frank

   Manager

Hebron, Robert J.

   Executive Vice President, AMN Executive Benefits and Retail Distribution

Akkerman, John W.

   Senior Managing Director, MacKay Shields Institutional Sales

Cruz, David

   Senior Managing Director, Individual Annuities

Harte, Frank

   Senior Managing Director and Chief Financial Officer

Hung, Yie-Hsin

   Senior Managing Director, Investments Boutique

McInerney, Barbara J.

   Senior Managing Director, Compliance

Murphy, Patrick M.

   Senior Managing Director, Retirement Plan Services

Barrack, Robert M.

   Managing Director, GoldPoint Partners Institutional Sales

Childress, Tod K.

   Managing Director, Private Advisors Institutional Sales

Gomez, Mark A.

   Managing Director and General Counsel

Henehan, Joseph J.

   Managing Director, Retirement Plan Services

Hescheles, David S.

   Managing Director, Third Party Distribution

Mueller, Rebekah M.

   Managing Director, Retirement Plan Services

Niziak, Mark S.

   Managing Director, Retirement Plan Services

O’Gara, John J.

   Managing Director, US Life and Agency Product Consulting

Parness, Amanda S.

   Managing Director, GoldPoint Partners Institutional Sales

Sexeny, Steve

   Managing Director, Cornerstone Capital Management Institutional Sales

Wagner, Robin M.

   Managing Director and Chief Compliance Officer

Wickwire, Brian D.

   Managing Director, NYLIM Service Company, Controller and Chief Operating Officer

Bain, Karen A.

   Vice President - Tax

Shively, George S.

   Secretary

Bidwell, Anna Louise

   Assistant Secretary

Hession, Michael

   Assistant Secretary

Sharrier, Elizabeth

   Assistant Secretary

 

C-9


(c) Compensation from the Registrant.

 

Name of
Principal
Underwriter

   Net Underwriting
Discounts and
Commissions
   Compensation on
Events Occasioning the
Deduction of a Deferred
Sales Load
   Brokerage
Commissions
   Other Compensation

NYLIFE Distributors LLC

   -0-    -0-    -0-    -0-

 

ITEM 31. 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 32. MANAGEMENT SERVICES.

Not applicable.

 

ITEM 33. FEE REPRESENTATION.

New York Life Insurance and Annuity Corporation (“NYLIAC”), the sponsoring insurance company of NYLIAC Variable Universal Life Separate Account-I, hereby represents that the fees and charges deducted under the NYLIAC Variable Universal Life Provider Policies are reasonable in relation to the services rendered, the expenses expected to be incurred and the risks assumed by NYLIAC.

 

C-10


SIGNATURES

Pursuant to 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 duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City and State of New York on this 14th day of April, 2015.

 

NYLIAC VARIABLE UNIVERSAL LIFE

SEPARATE ACCOUNT-I

    (Registrant)

By:   /s/ Eric J. Lynn
  Eric J. Lynn
  Vice President and Actuary

 

NEW YORK LIFE INSURANCE AND

ANNUITY CORPORATION

    (Depositor)

By:   /s/ Eric J. Lynn
  Eric J. Lynn
  Vice President and Actuary

Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the date indicated:

 

Andrew F. Amenn*

   Corporate Vice President and Controller
  

(Principal Accounting Officer)

Christopher T. Ashe*

   Director

David G. Bedard*

   Director

Christopher O. Blunt*

   Director

David Cruz*

   Director

John T. Fleurant*

   Director and Chief Financial Officer

Robert M. Gardner*

   Director

John Y. Kim*

   Director

Theodore A. Mathas*

   Chairman and President (Principal Executive Officer)

Mark W. Pfaff*

   Director

Arthur H. Seter*

   Director

Joel M. Steinberg*

   Director

Susan A. Thrope*

   Director

 

By:   /s/ Eric J. Lynn
 

Eric J. Lynn

  Attorney-in-Fact
  April 14, 2015

 

 

* Pursuant to Powers of Attorney previously filed.


EXHIBIT INDEX

 

EXHIBIT NUMBER

 

DESCRIPTION

(k)   Opinion and Consent of Thomas F. English, Esq.
(l)   Opinion and Consent of Preye Okah, Actuary
(m)   Sample Calculation of Illustrations
(n)   Consent of PricewaterhouseCoopers LLP